<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 1998
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<C> <C>
BELLSOUTH BELLSOUTH CAPITAL
CORPORATION FUNDING CORPORATION
A GEORGIA CORPORATION A GEORGIA CORPORATION
I.R.S. EMPLOYER I.R.S. EMPLOYER
NO. 58-1533433 NO. 58-1744323
</TABLE>
1155 PEACHTREE ST., N.E.
ATLANTA, GEORGIA 30309-3610
TELEPHONE NUMBER (404) 249-2000
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AGENT FOR SERVICE
R. KEVIN TODD
BELLSOUTH CORPORATION
15G03 CAMPANILE
1155 PEACHTREE ST., N.E.
ATLANTA, GEORGIA 30309-3610
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PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<C> <C>
CLARENCE B. MANNING KEITH L. KEARNEY
BELLSOUTH CORPORATION DAVIS POLK & WARDWELL
1155 PEACHTREE ST., N.E. 450 LEXINGTON AVENUE
SUITE 1800 NEW YORK, NEW YORK 10017
ATLANTA, GEORGIA 30309-3610
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the Registration Statement becomes effective.
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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]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities.................... $500,000,000 (2) 100% $500,000,000 $147,500
Interests in the Support Agreement
between the Registrants.......... -- (3) -- -- --
=======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee and
exclusive of accrued interest, if any.
(2) If any Debt Securities are issued at an original issue discount, the net
proceeds to be received by BellSouth Capital Funding Corporation shall be
deemed to be the amount to be registered (excluding any fees and
commissions). Any offering of Debt Securities denominated other than in U.S.
dollars will be treated as the equivalent in U.S. dollars based on the
exchange rate applicable to the purchase of such Debt Securities from
BellSouth Capital Funding Corporation.
(3) No separate consideration will be received for the interests in the Support
Agreement.
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
included in this Registration Statement also relates to securities registered
under a Registration Statement (Registration No. 33-51449) previously filed by
Registrants.
---------------------
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8, MAY
DETERMINE.
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<PAGE> 2
PROSPECTUS
$727,265,000
BELLSOUTH CAPITAL FUNDING CORPORATION
DEBT SECURITIES
ISSUED UNDER A SUPPORT AGREEMENT
WITH
BELLSOUTH CORPORATION
BellSouth Capital Funding Corporation (the "Company") may offer its debt
securities (the "Securities"), in one or more series, at such initial public
offering prices as will result in aggregate net proceeds to the Company of up to
U.S. $727,265,000 on terms to be determined at the time the Securities are
offered for sale. When a particular series of the Securities is offered, a
prospectus supplement ("Prospectus Supplement"), together with this Prospectus,
will be delivered setting forth the terms of the Securities, including, where
applicable, the specific designation, aggregate principal amount, currency
(including composite currencies such as the ECU), denominations, maturity, rate
of any interest (or manner of calculation thereof) and time of payment thereof,
whether the Securities are issuable in registered form or bearer form or both,
any redemption provisions, the initial public offering price, the names of any
underwriters, dealers or agents, any compensation to such underwriters, dealers
or agents and any other specific terms in connection with the offering and sale
of such series.
All of the Securities will have the benefit of a Support Agreement dated as
of October 15, 1987, as amended as of August 1, 1992 (the "Support Agreement"),
between the Company and BellSouth Corporation ("BellSouth"), the parent company
and sole shareholder of the Company. In the Support Agreement, BellSouth has
agreed to ensure the timely payment of principal, premium, if any, and interest
owed on the Securities; however, no holder of the Securities will have recourse
to or against the stock or assets of BellSouth Telecommunications, Inc. (the
"Telephone Company") or any interest of BellSouth or the Company in the
Telephone Company.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------
The date of this Prospectus is , 1998.
<PAGE> 3
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, BELLSOUTH OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR
BELLSOUTH SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
BellSouth is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and in accordance therewith
files reports and other information with the Securities and Exchange Commission
("SEC"). Such reports, proxy statements and other information filed by BellSouth
can be inspected and copied at the public reference facilities of the SEC, Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, as well as
at the following SEC Regional Offices: Room 1102, 13th Floor, 7 World Trade
Center, New York, NY 10048 and Suite 1400, Northwestern Atrium Center, 500 West
Madison Street, Chicago, IL 60661-2511. Such material can also be inspected at
the New York, Boston, Midwest, Pacific and Philadelphia Stock Exchanges. Copies
can be obtained from the SEC by mail at prescribed rates. Requests should be
directed to the SEC's Public Reference Section, Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549. Copies of the above documents which
have been electronically filed through the Electronic Data Gathering, Analysis
and Retrieval System are publicly available through the Securities and Exchange
Commission's website (http://www.sec.gov).
The Company is not subject to the informational filing requirements of the
SEC, and no documents have been or will be filed by the Company under the
Exchange Act.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents have been filed by BellSouth with the SEC (File No.
1-8607) and are incorporated herein by reference:
(1) BellSouth's Annual Report on Form 10-K for the year ended December
31, 1996.
(2) BellSouth's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 1997.
(3) BellSouth's Current Reports on Form 8-K for January 23, April 21,
July 1, July 9, July 24, October 20, 1997 and January 22, 1998.
All documents filed by BellSouth pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of any series of Securities shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.
COPIES OF THE ABOVE DOCUMENTS (EXCLUDING EXHIBITS) MAY BE OBTAINED UPON
REQUEST WITHOUT CHARGE FROM THE OFFICE OF THE CONTROLLER OF BELLSOUTH, 1155
PEACHTREE STREET, N.E., 15G03, ATLANTA, GEORGIA 30309-3610 (TELEPHONE NUMBER
404-249-3290).
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<PAGE> 4
BELLSOUTH CAPITAL FUNDING CORPORATION
The Company was incorporated in 1987 under the laws of the State of Georgia
and has its principal executive offices at 1155 Peachtree Street, N.E., Atlanta,
Georgia 30309-3610 (telephone number 404-249-2000). The Company is a
wholly-owned subsidiary of BellSouth.
The Company's purpose is engaging in financing activities that will provide
general working capital for BellSouth, including funds for use in connection
with the diversification of BellSouth and in support of the activities of the
subsidiaries of BellSouth ("Diversified Subsidiaries") other than the Telephone
Company but including such subsidiaries of the Telephone Company whose
operations are not subject to regulation by tariff. The Company will raise funds
through the offering and sale of debt securities (the "Securities") in the
United States, European and other overseas markets and lend the proceeds to
BellSouth or the Diversified Subsidiaries. The Company will not engage in any
separate business operations.
On October 14, 1987, the SEC issued an order exempting the Company from the
provisions of the Investment Company Act of 1940 (the "1940 Act"), provided that
the Company complies with the provisions of Rule 3a-5 under such Act and that
the Securities remain entitled to the benefits of the Support Agreement. See
"Support Agreement" and "Use of Proceeds."
SUPPORT AGREEMENT
Pursuant to the Support Agreement, BellSouth has agreed to cause the
Company to maintain a positive tangible net worth as determined in accordance
with generally accepted accounting principles. The Support Agreement also
provides that BellSouth shall own, directly or indirectly, all the outstanding
voting capital stock of the Company throughout the term of the Support
Agreement.
If the Company is unable to pay when due the principal, interest or
premium, if any, owed on any of the Securities, BellSouth shall provide funds to
the Company to assure that the Company will be able to pay when due such
principal, interest or premium, if any. The Support Agreement provides that in
the event of any default by BellSouth in meeting its obligations under such
Support Agreement or in the event of default by the Company in the timely
payment of principal, interest or premium, if any, owed on any Securities,
holders of Securities or a trustee acting on their behalf shall be entitled to
proceed directly against BellSouth, except that no holder of Securities or
trustee acting on their behalf will have recourse to or against the stock or
assets of the Telephone Company or any interest of BellSouth or the Company in
the Telephone Company. Dividends declared and paid to BellSouth by the Telephone
Company, which in 1996 aggregated approximately $1.6 billion, are not subject to
this limitation. BellSouth's non-Telephone Company net book assets, which would
also be available to holders of Securities under the Support Agreement,
aggregated approximately $6.3 billion at September 30, 1997.
Neither BellSouth nor the Company will be able to amend or terminate the
Support Agreement so as to adversely affect the rights of holders of Securities
without the written consent of all the holders of the then outstanding
Securities maturing in more than one year. The holders of Securities maturing in
less than one year shall have the benefit of the Support Agreement without
giving effect to any such amendment or termination until the Securities held by
them have been retired.
BELLSOUTH CORPORATION
BellSouth was incorporated in 1983 under the laws of the State of Georgia
and has its principal executive offices at 1155 Peachtree Street, N.E., Atlanta,
Georgia 30309-3610 (telephone number 404-249-2000).
The Telephone Company serves, in the aggregate, approximately two-thirds of
the population and one-half of the territory within Alabama, Florida, Georgia,
Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.
The primary businesses conducted by the Diversified Subsidiaries are wireless
and international communications services and advertising and publishing
products.
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<PAGE> 5
USE OF PROCEEDS
The net proceeds from the sale of the Securities will be used to provide
funds for the Diversified Subsidiaries and in connection with the
diversification activities of BellSouth.
The Company will remit to BellSouth or the Diversified Subsidiaries the
cash or cash equivalents raised by the Company as soon as practicable after
receipt thereof, but in no event later than six months after the Company
receives such cash or cash equivalents. In the interim, the Company will invest
any funds held by it only in securities permitted by Rule 3a-5(a)(6) of the SEC
under the 1940 Act.
DESCRIPTION OF SECURITIES
The following description sets forth certain general terms and provisions
of the Securities of any series to which any Prospectus Supplement may relate.
The particular terms and provisions of the series of Securities offered by a
Prospectus Supplement, and the extent to which such general terms and provisions
described below may apply thereto, will be described in the Prospectus
Supplement relating to such series.
The Securities are to be issued under an Indenture dated as of August 1,
1992 among the Company, BellSouth and The Bank of New York, as successor to
Wachovia Bank of Georgia, N.A. (the "Trustee").
The following summaries of certain provisions of the Securities, the
Indenture and the Support Agreement do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all provisions
of the Indenture and the Support Agreement, including the definitions therein of
certain terms. Particular sections of the Indenture which are relevant to the
discussion are cited parenthetically. Capitalized terms used in this Prospectus
which are defined in the Indenture shall have the same meaning herein as in the
Indenture. The term "principal" when used herein includes, when appropriate, the
premium, if any, on any series of Securities.
GENERAL
The Indenture does not limit the amount of Securities which may be issued
thereunder, and additional debt securities may be issued thereunder up to the
aggregate principal amount which may be authorized from time to time by, or
pursuant to, a resolution of the Company's Board of Directors, by a Company
Order signed by two Officers of the Company or by a supplemental indenture.
Reference is made to the Prospectus Supplement for the following terms of the
particular series or issue of Securities being offered hereby: (i) the title of
the Securities of the series; (ii) if denominated in other than United States
dollars, the currency of payment of the principal of and interest on the
Securities of the series; (iii) any limit upon the aggregate principal amount of
the Securities of the series; (iv) the date or dates on which the principal of
the Securities of the series will mature; (v) the rate or rates (or manner of
calculation thereof), if any, at which the Securities of the series will bear
interest, the date or dates from which any such interest will accrue and on
which such interest will be payable, and, with respect to Securities of the
series in registered form, the record date for the interest payable on any
interest payment date and the basis upon which interest shall be calculated if
other than that of a 360-day year of twelve 30-day months; (vi) the place or
places where the principal of and interest on the Securities of the series will
be payable; (vii) any redemption or sinking fund provisions; (viii) if other
than the principal amount thereof, the portion of the principal amount of
Securities of the series which will be payable upon declaration of acceleration
of the maturity thereof; (ix) whether the Securities of the series will be
issuable in registered (and if so, whether such securities will be issuable as
registered global Securities) or bearer form or both, any restrictions
applicable to the offer, sale or delivery of Securities in bearer form
("Unregistered Securities") and whether, and the terms upon which, Unregistered
Securities will be exchangeable for Securities in registered form ("Registered
Securities") and vice versa; (x) if and under what circumstances the Company
will pay additional amounts on the Securities of the series held by a person who
is not a United States person in respect of taxes or similar charges withheld or
deducted and, if so, whether the Company will have the option to redeem such
Securities rather than pay such additional amounts; (xi) any index used to
determine the amount of payments of principal of and interest on the Securities
of the series; (xii) any depositary (a "Depositary") with respect to the
Securities of such series; and (xiii) any
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<PAGE> 6
additional provisions or other special terms not inconsistent with the
provisions of the Indenture, including any terms which may be required by or
advisable under United States laws or regulations or advisable in connection
with the marketing of Securities of such series. (Sections 2.01 and 2.02.)
Unless otherwise indicated in the Prospectus Supplement, Registered
Securities will be issued in denominations of $1,000 and integral multiples
thereof, and Unregistered Securities will not be offered, sold or delivered in
the United States or to United States persons in connection with their original
issuance. Any special federal income tax considerations applicable to
Unregistered Securities will be described in the Prospectus Supplement relating
thereto.
To the extent set forth in the Prospectus Supplement, except in special
circumstances set forth in the Indenture, interest on Unregistered Securities
will be payable only against presentation and surrender of the coupons for the
interest installments evidenced thereby as they mature at a paying agency of the
Company located outside of the United States. (Section 2.05(c).) The Company
will maintain a paying agent outside the United States to which the Unregistered
Securities may be presented for payment and will provide the necessary funds
therefor to such paying agent upon reasonable notice. (Section 2.04.)
Registration of transfer of Registered Securities may be requested upon
surrender thereof at any agency of the Company maintained for such purpose and
upon fulfillment of all other requirements of such agent. Unregistered
Securities and the coupons related thereto will be transferable by delivery.
(Section 2.08.) To the extent not described herein, principal and interest will
be payable, and the transfer of Registered Securities of a particular series
will be registrable, in the manner described in the Prospectus Supplement
relating to such series.
Securities may be issued under the Indenture as Original Issue Discount
Securities to be offered and sold at a substantial discount from the principal
amount thereof. Special federal income tax, accounting and other considerations
applicable thereto will be described in the Prospectus Supplement relating to
such Original Issue Discount Securities. "Original Issue Discount Security"
means any Security which provides for an amount less than the stated principal
amount thereof to be due and payable upon declaration of acceleration of the
maturity thereof or upon the occurrence and continuation of an event of default.
(Section 1.01.)
REGISTERED GLOBAL SECURITIES
The Registered Securities of a series may be issued in the form of one or
more fully registered global Securities (a "Registered Global Security") that
will be deposited with a Depositary or with a nominee for a Depositary
identified in the Prospectus Supplement relating to such series. In such case,
one or more Registered Global Securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of outstanding Registered Securities of the series to be represented by such
Registered Global Security or Securities. Unless and until it is exchanged in
whole or in part for Securities in definitive registered form, a Registered
Global Security may not be transferred except as a whole by the Depositary for
such Registered Global Security to a nominee of such Depositary or by a nominee
of such Depositary to such Depositary or another nominee of such Depositary or
by such Depositary or any such nominee to a successor Depositary or a nominee of
such successor.
The specific terms of the depositary arrangement with respect to any
portion of a series of Securities to be represented by a Registered Global
Security will be described in the Prospectus Supplement relating to such series.
BellSouth anticipates that the following provisions will apply to all depositary
arrangements.
Upon the issuance of a Registered Global Security, the Depositary for such
Registered Global Security will credit, on its book-entry registration and
transfer system, the respective principal amounts of the Securities represented
by such Registered Global Security to the accounts of persons that have accounts
with such Depositary ("participants"). The accounts to be credited shall be
designated by any underwriters or agents participating in the distribution of
such Securities. Ownership of beneficial interests in a Registered Global
Security will be limited to participants or persons that may hold interest
through participants. Ownership of beneficial interest in such Registered Global
Security will be shown on, and the transfer of such ownership will be effected
only through, records maintained by the Depositary for such Registered Global
Security (with respect to interests of participants) and on the records of
participants (with respect to interests of persons other than participants) in
accordance with the procedures of the Depositary. The laws of some
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<PAGE> 7
states may require that certain purchasers of securities take physical delivery
of such securities in definitive form. Such limits and such laws may impair the
ability to own, transfer or pledge beneficial interests in Registered Global
Securities.
So long as the Depositary for a Registered Global Security, or its nominee,
is the registered owner of such Registered Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Securities represented by such Registered Global Security for all purposes
under the Indenture. Except as set forth below, owners of beneficial interests
in a Registered Global Security will not be entitled to have the Securities
represented by such Registered Global Security registered in their names, will
not receive or be entitled to receive physical delivery of such Securities in
definitive form and will not be considered the owners or holders thereof under
the Indenture. Accordingly, each person owning a beneficial interest in a
Registered Global Security must rely on the procedures of the Depositary for
such Registered Global Security and, if such person is not a participant, on the
procedures of the participant through which such person owns its interest, to
exercise any rights of a holder under the Indenture. The Company understands
that under existing industry practices, if the Company requests any action of
holders or if any owner of a beneficial interest in a Registered Global Security
desires to give or take any action which a holder is entitled to give or take
under the Indenture, the Depositary for such Registered Global Security would
authorize the participants holding the beneficial interests to give or take such
action, and such participants would authorize beneficial owners owning through
such participants to give or take such action or would otherwise act upon the
instructions of beneficial owners holding through them.
Principal and interest payments of Securities represented by a Registered
Global Security registered in the name of a Depositary or its nominee will be
made to such Depositary or its nominee, as the case may be, as the registered
owner of such Registered Global Security. None of the Company, BellSouth, the
Trustee or any paying agent for such Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in such Registered Global Security or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Company expects that the Depositary for any Securities represented by a
Registered Global Security, upon receipt of any payment of principal or
interest, will immediately credit participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Registered Global Security as shown on the records of such
Depositary. The Company also expects that payments by participants to owners of
beneficial interests in such Registered Global Security held through such
participants will be governed by standing instructions and customary practices,
as is now the case with the securities held for the accounts for customers
registered in "street names" and will be the responsibility of such
participants.
If the Depositary for any Securities represented by a Registered Global
Security is at any time unwilling or unable to continue as Depositary and a
successor Depositary is not appointed by the Company or BellSouth within 90
days, the Company will issue such Securities in definitive form in exchange for
such Registered Global Security. In addition, the Company may at any time and in
its sole discretion determine not to have any of the Securities of a series
represented by one or more Registered Global Securities and, in such event, will
issue Securities of such series in definitive form in exchange for all of the
Registered Global Security or Securities representing such Securities.
EXCHANGE OF SECURITIES
Registered Securities may be exchanged for an equal aggregate principal
amount of Registered Securities of the same series and date of maturity in such
authorized denominations as may be requested upon surrender of the Registered
Securities at an agency of the Company maintained for such purpose and upon
fulfillment of all other requirements of such agent.
To the extent permitted by the terms of a series of Securities authorized
to be issued in registered form and unregistered form, Unregistered Securities
may be exchanged for an equal aggregate principal amount of Registered or
Unregistered Securities (containing identical terms and provisions) of the same
series and date of maturity in such authorized denominations as may be requested
upon surrender of the bearer Securities
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<PAGE> 8
with all unpaid coupons relating thereto (except as may otherwise be provided in
the Securities) at an agency of the Company maintained for such purpose and upon
fulfillment of all other requirements of such agent. (Section 2.08(b).) As of
the date of this Prospectus, it is expected that the terms of a series of
Securities will not permit Registered Securities to be exchanged for
Unregistered Securities.
LIEN ON ASSETS
If at any time the Company mortgages, pledges or otherwise subjects to any
lien the whole or any part of any property or assets now owned or hereafter
acquired by it, except as hereinafter provided, the Company will secure the
outstanding Securities, and any other obligations of the Company which may then
be outstanding and entitled to the benefit of a covenant similar in effect to
this covenant, equally and ratably with the indebtedness or obligations secured
by such mortgage, pledge or lien, for as long as any such indebtedness or
obligation is so secured. The foregoing covenant does not apply to the creation,
extension, renewal or refunding of purchase-money mortgages or liens, or to the
making of any deposit or pledge to obtain the benefits of any law relating to
workers' compensation, unemployment insurance, old age pensions or other social
security, or with any court, board, commission or governmental agency as
security incident to the proper conduct of any proceeding before it. (Section
4.02.)
Neither the Indenture nor the Support Agreement restricts BellSouth from
pledging or otherwise encumbering any of its assets.
SUCCESSOR ENTITIES
Neither the Company nor BellSouth may consolidate with or merge into, or
transfer or lease its property and assets substantially as an entirety to,
another entity unless the successor entity is a United States corporation and,
in the case of the Company, assumes all the obligations of the Company under the
Securities and any coupons related thereto and the Indenture and, in the case of
BellSouth, assumes all the obligations of BellSouth under the Indenture and the
Support Agreement. Thereafter, except in the case of a lease, all such
obligations of the Company or BellSouth, as the case may be, shall terminate.
(Sections 5.01 and 5.02.)
BellSouth or a subsidiary thereof may assume the payment of the principal
of and interest on all Securities and any coupons and the performance of every
covenant of the Indenture on the part of the Company. Upon such assumption,
BellSouth or such subsidiary shall have the same rights and obligations as the
Company under the Indenture, and the Company shall be released from its
liability thereunder. (Section 5.03.)
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default"
with respect to a series of Securities: (i) default in the payment of interest
on any Security of such series for 90 days; (ii) default in the payment of the
principal of any Security of such series; (iii) failure by the Company or
BellSouth for 90 days after notice to it to comply with any of its other
agreements with respect to the Securities of such series set forth in the
Indenture in any supplemental indenture under which the Securities of that
series may have been issued (other than covenants relating only to other series)
or in the Support Agreement; and (iv) certain events of bankruptcy or insolvency
of the Company. A payment default with respect to one series is not a default
with regard to any other series of Securities issued pursuant to the Indenture.
(Section 6.01.) If an Event of Default occurs with respect to the Securities of
any series, and is continuing, the Trustee or the Holders of at least 25% in
principal amount of all of the outstanding Securities of that series may declare
the principal (or, if the Securities of that series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) of, and any accrued interest on, all the Securities of
that series to be due and payable. Securities of all other series will be
unaffected. Upon such declaration, such principal (or, in the case of Original
Issue Discount Securities, such specified amount) and interest will become due
and payable immediately. (Section 6.02.)
Securityholders may not enforce the Indenture, the Securities or the
Support Agreement, except as provided in the Indenture and the Support
Agreement. (Section 6.06.) The Trustee may require indemnity
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satisfactory to it before it enforces the Indenture, the Securities or the
Support Agreement. (Section 7.01(e).) Subject to certain limitations, holders of
a majority in principal amount of the Securities of each series affected may
direct the Trustee in its exercise of any trust power with respect to Securities
of that series. (Section 6.05.) The Trustee may withhold from Securityholders
notice of any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their interests.
(Section 7.05.)
AMENDMENT AND WAIVER
Subject to certain exceptions, the Indenture and the Securities may be
amended or supplemented by the Company, BellSouth and the Trustee with the
consent of the Holders of a majority in principal amount of the outstanding
Securities of each series affected by the amendment or supplement, and
compliance with any provision may be waived with the consent of the Holders of a
majority in principal amount of outstanding Securities of each series affected
by such waiver. However, without the consent of each Securityholder affected, an
amendment or waiver may not (i) reduce the amount of Securities whose holders
must consent to an amendment or waiver; (ii) reduce the rate of or change the
time for payment of interest on any Security; (iii) reduce the principal of, or
change the fixed maturity of, any Security; (iv) waive a default in the payment
of the principal of or interest on any Security; (v) make any security payable
in money other than that stated in the Security; (vi) impair the right to
institute suit for the enforcement of any payment on or with respect to any
Securities; or (vii) amend or terminate the Support Agreement to the detriment
of the Securityholders. (Section 9.02.)
The Indenture may be amended or supplemented without the consent of any
Securityholder (i) to cure any ambiguity, defect or inconsistency in the
Indenture or in the Securities of any series; (ii) to secure the Securities
under the circumstances set forth under "Liens on Assets" set forth above; (iii)
to provide for the assumption of all the obligations of the Company or
BellSouth, as the case may be, under the Securities and any coupons related
thereto and the Indenture in connection with a merger, consolidation or transfer
or lease of the Company's or BellSouth's property and assets substantially as an
entirety as provided for in the Indenture; (iv) to provide for the assumption by
BellSouth or a subsidiary thereof of all obligations of the Company under the
Securities and any coupons related thereto and the Indenture; (v) to provide for
the issuance of, and establish the form, terms and conditions of, a series of
Securities or to establish the form of any certifications required to be
furnished pursuant to the terms of the Indenture or any series of securities;
(vi) to provide for uncertificated Securities in addition to or in place of
certificated Securities; (vii) to add to rights of Securityholders or surrender
any right or power conferred on the Company; or (viii) to make any change that
does not adversely affect the rights of any Securityholder. (Section 9.01.)
CONCERNING THE TRUSTEE
BellSouth and certain of its affiliates maintain banking relationships in
the ordinary course of business with the Trustee and certain of its affiliates.
PLAN OF DISTRIBUTION
GENERAL
The Company may sell the Securities being offered hereby: (i) directly to
purchasers, (ii) through agents, (iii) through dealers, (iv) through
underwriters or (v) through a combination of any such methods of sale.
The distribution of the Securities may be effected from time to time in one
or more transactions either (i) at a fixed price or prices, which may be
changed, (ii) at market prices prevailing at the time of sale, (iii) at prices
related to such prevailing market prices or (iv) at negotiated prices.
Offers to purchase Securities may be solicited directly by the Company or
by agents designated by the Company from time to time. Any such agent, which may
be deemed to be an underwriter as that term is
8
<PAGE> 10
defined in the Securities Act of 1933, as amended (the "Securities Act"),
involved in the offer or sale of the Securities in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the Prospectus Supplement. Unless
otherwise indicated in the Prospectus Supplement, any such agent will be acting
on a best efforts basis for the period of its appointment (ordinarily five
business days or less).
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company will sell such Securities to the
dealer, as principal. The dealer, which may be deemed to be an underwriter as
that term is defined in the Securities Act, may then resell such Securities to
the public at varying prices to be determined by such dealer at the time of
resale.
If an underwriter or underwriters are utilized in the sale, the Company and
BellSouth will execute an underwriting agreement with such underwriters at the
time of sale to them and the names of the underwriter will be set forth in the
Prospectus Supplement, which will be used by the underwriters to make resales of
the Securities in respect of which the Prospectus is delivered to the public.
Underwriters, dealers, agents and other persons may be entitled, under
agreements which may be entered into with the Company and BellSouth, to
indemnification against certain civil liabilities, including liabilities under
the Securities Act.
DELAYED DELIVERY ARRANGEMENTS
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters, dealers or other persons acting as the Company's agents to solicit
offers by certain institutions to purchase Securities from the Company pursuant
to contracts providing for payment and delivery on a future date or dates.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will not be subject to any conditions except that (a)
the purchase of the Securities shall not at the time of delivery be prohibited
under the laws of the jurisdiction to which such purchaser is subject and (b) if
the Securities are also being sold to underwriters, the Company shall have sold
to such underwriters the Securities not sold for delayed delivery. The
underwriters, dealers and such other persons will not have any responsibility in
respect of the validity or performance of such contracts.
LEGAL OPINIONS
Walter H. Alford, Executive Vice President and General Counsel of
BellSouth, is passing upon the legality of the Securities for the Company. Mr.
Alford may be deemed to beneficially own ____ shares of BellSouth Common Stock,
including interests through various BellSouth employee benefit plans.
On behalf of dealers, underwriters or agents, Davis Polk & Wardwell is
passing upon certain legal matters in connection with the offering of the
Securities.
EXPERTS
The financial statements of BellSouth included in its Annual Report on Form
10-K for the year ended December 31, 1996, and incorporated by reference herein,
have been audited by Coopers & Lybrand L.L.P., independent accountants, to the
extent and for the periods indicated in their report relating to such financial
statements, which is also incorporated by reference herein, and have been so
included in reliance upon the report of Coopers & Lybrand L.L.P., given upon
their authority as experts in auditing and accounting.
9
<PAGE> 11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Securities and Exchange Commission Filing Fee............... $147,500
Rating Agency Fees.......................................... 98,575*
Initial Fees and Expenses of Trustee, Transfer Agent and
Paying Agent.............................................. 8,000*
Printing and Distribution of Registration Statement,
Prospectus, Distribution Agreement, Indenture, Notes and
Miscellaneous Material.................................... 60,000*
Accountants' Fees and Expenses.............................. 10,000*
Legal Fees and Expenses..................................... 10,000*
Miscellaneous Expenses...................................... 15,925*
--------
Total............................................. $350,000*
========
</TABLE>
- ---------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As authorized by the Georgia Business Corporation Code (the "GBCC"),
BellSouth's Articles of Incorporation limit the monetary liability of its
directors to BellSouth or its shareholders for any breach of their duty of care
or any other duty as a director except (i) for misappropriation of any business
opportunity of BellSouth, (ii) for acts or omissions not in good faith or which
constitute intentional misconduct or a knowing violation of law, (iii) for
liability for certain unlawful distributions, or (iv) for any transaction from
which the director derived an improper personal benefit.
As authorized by the GBCC, the shareholders of BellSouth have adopted an
amendment to the Bylaws expanding directors' and officers' indemnification
rights and have approved a form of Indemnity Agreement which BellSouth may enter
with its directors or officers. A person with whom BellSouth has entered into
such an Indemnity Agreement (an "Indemnitee") shall be indemnified against
liabilities and expenses related to such person's capacity as an officer or
director or to capacities served with other entities at the request of
BellSouth, except for claims excepted from the limited liability provisions
described above. An Indemnitee is also entitled to the benefits of any
directors' and officers' liability insurance policy maintained by BellSouth, and
in the event of a "change in control" (as defined in the Indemnity Agreement),
obligations under the Indemnity Agreement will be secured with a letter of
credit in favor of the Indemnitee in an amount of not less than $1,000,000.
BellSouth has entered into Indemnity Agreements with each of its directors.
The GBCC generally empowers a corporation, without shareholder approval, to
indemnify directors against liabilities in proceedings to which they are named
by reason of serving as a director of the corporation, if such person acted in a
manner believed in good faith to be in or not opposed to the best interests of
the corporation and, in the case of a criminal proceeding, had no reasonable
cause to believe his conduct was unlawful. Without shareholder approval,
indemnification is not permitted of a director adjudged liable to the
corporation in a proceeding by or in the right of the corporation or a
proceeding in which the director is adjudged liable based on a personal benefit
improperly received, absent judicial determination that, in view of the
circumstances, such person is fairly and reasonably entitled to indemnification
of reasonable expenses incurred.
The GBCC permits indemnification and advancement of expenses to officers
who are not directors, to the extent consistent with public policy. The GBCC
provides for mandatory indemnification of directors and officers who are
successful in defending against any proceeding to which they are named because
of their serving in such capacity.
BellSouth's Bylaws, and those of the Company, also provide that BellSouth
and the Company, respectively, shall indemnify any person made or threatened to
be made a party to any action (including any
II-1
<PAGE> 12
action by or in the right of BellSouth or the Company, respectively,) by reason
of service as a director or officer of BellSouth or the company, respectively,
(or of another entity at BellSouth's or the Company's request), against
liabilities and expenses to the maximum extent permitted by the GBCC.
The general limitations in the GBCC as to indemnification may be superseded
to the extent of the limited liability provision (with respect to directors) in
BellSouth's Articles of Incorporation and the Indemnity Agreements, as
authorized by the shareholders and as described above.
The directors and officers of BellSouth and the Company are covered by
liability insurance policies pursuant to which (a) they are insured against loss
arising form certain claims made against them, jointly or severally, during the
policy period for any actual or alleged breach of duty, neglect, error,
misstatement, misleading statements, omission or other wrongful act and (b)
BellSouth or the Company, as the case may be, is entitled to have paid by the
insurers, or to have the insurers reimburse BellSouth or the Company, as the
case may be, for amounts paid by it, in respect of such claims if BellSouth or
the Company, as the case may be, is required to indemnify officers and directors
for such claims.
Any agents, dealers or underwriters, who execute any of the agreements
filed as Exhibit 1 to this registration statement, will agree to indemnify
BellSouth's and the Company's directors and their officers who signed the
registration statement against certain liabilities which might arise under the
Securities Act from information furnished to BellSouth and the Company by or on
behalf of any such indemnifying party.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
ITEM
NO. DESCRIPTION
- ----- -----------
<S> <C> <C>
1 -- Form of Distribution Agreement for Medium-Term Notes, Series
C.
1-a* -- Form of Underwriting Agreement. (Exhibit 1-a to Form 8-K of
BellSouth Corporation for July 24, 1997, File No. 1-8607)
4-a* -- Indenture dated as of August 1, 1992 among BellSouth Capital
Funding Corporation, BellSouth Corporation and The Bank of
New York, as successor to Wachovia Bank of Georgia, N.A.
(Exhibit 4-a to Registration Statement No. 33-48929)
4-b -- Global Form of BellSouth Capital Funding Corporation Fixed
Rate Medium-Term Note, Series C.
4-c -- Global Form of BellSouth Capital Funding Corporation
Floating Rate Medium-Term Note, Series C.
4-d -- Global Form of BellSouth Capital Funding Corporation
Amortizing Medium-Term Note, Series C.
4-e* -- Support Agreement dated as of October 15, 1987 between
BellSouth Capital Funding Corporation and BellSouth
Corporation, as amended as of August 1, 1992. (Exhibit 4-e
to Registration Statement No. 33-51449).
5-a -- Opinion of Walter H. Alford, Executive Vice President and
General Counsel of BellSouth Corporation, as to the
legality of the Securities to be issued.
5-b -- Opinion of Davis Polk & Wardwell as to tax matters.
12 -- Computation of Ratio of Earnings to Fixed Charges.
23-a -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.
23-b -- Consent of Walter H. Alford is contained in Exhibit 5-a.
23-c -- Consent of Davis Polk & Wardwell is contained in Exhibit
5-b.
24-a -- Powers of Attorney -- BellSouth Capital Funding Corporation
24-b -- Powers of Attorney -- BellSouth Corporation.
25 -- Statement of Eligibility of Trustee.
99 -- Draft of Medium-Term Note Prospectus Supplement.
</TABLE>
- ---------------
* Exhibit incorporated by reference.
II-2
<PAGE> 13
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) 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; and
(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
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions referred to in Item 15 or otherwise
(other than the insurance policies referred to therein), the registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted against the
registrant by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933 and will
be governed by the final adjudication of such issue.
(d) The undersigned registrant hereby undertakes 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 registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 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-3
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta and State of Georgia, on the 3rd day of
February, 1998.
BELLSOUTH CAPITAL FUNDING
CORPORATION
By /s/ W. PATRICK SHANNON
------------------------------------
W. Patrick Shannon, Controller
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
PRINCIPAL EXECUTIVE OFFICER:
Mark E. Droege* President
PRINCIPAL FINANCIAL OFFICER:
Gary L. Walton* Vice President and Treasurer
PRINCIPAL ACCOUNTING OFFICER:
W. Patrick Shannon* Controller
<TABLE>
<S> <C>
DIRECTORS: *By /s/ W. PATRICK SHANNON
Ronald M. Dykes* ---------------------------------------------------
Mark E. Droege* W. Patrick Shannon, as attorney-in-fact
and on his own behalf as Principal Accounting Officer
February 3, 1998
</TABLE>
- ---------------
* by power of attorney
II-4
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Atlanta and State of Georgia, on the 3rd day of
February, 1998.
BELLSOUTH CORPORATION
By /s/ W. PATRICK SHANNON
------------------------------------
W. Patrick Shannon
Vice President and Controller
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C>
PRINCIPAL EXECUTIVE OFFICER:
F. Duane Ackerman* Chairman of the Board, President and Chief Executive
Officer
PRINCIPAL FINANCIAL OFFICER:
Ronald M. Dykes* Executive Vice President and Chief Financial Officer
PRINCIPAL ACCOUNTING OFFICER:
W. Patrick Shannon* Vice President and Controller
DIRECTORS:
F. Duane Ackerman*
Reuben V. Anderson*
James H. Blanchard*
J. Hyatt Brown*
Armando M. Codina*
Phyllis Burke Davis* *By /s/ W. PATRICK SHANNON
John G. Medlin, Jr.* ----------------------------------------------------
Robin B. Smith* W. Patrick Shannon,
C. Dixon Spangler, Jr.* as attorney-in-fact and
William S. Stavropoulos* on his own behalf as Principal Accounting Officer
Ronald A. Terry*
J. Tylee Wilson* February 3, 1998
</TABLE>
- ---------------
* by power of attorney
II-5
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
ITEM
NO. DESCRIPTION PAGE
- ------- ----------- ----
<C> <S> <C> <C>
1 -- Form of Distribution Agreement for Medium-Term Notes, Series
C...........................................................
4-b -- Global Form of BellSouth Capital Funding Corporation Fixed
Rate Medium-Term Note, Series C.............................
4-c -- Global Form of BellSouth Capital Funding Corporation
Floating Rate Medium-Term Note, Series C....................
4-d -- Global Form of BellSouth Capital Funding Corporation
Amortizing Medium-Term Note, Series C.......................
5-a -- Opinion of Walter H. Alford, Executive Vice President and
General Counsel of BellSouth Corporation, as to the legality
of the Securities to be issued..............................
5-b -- Opinion of Davis Polk & Wardwell as to tax matters..........
12 -- Computation of Ratio of Earnings to Fixed Charges...........
23-a -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants..........................................
23-b -- Consent of Walter H. Alford is contained in Exhibit 5-a.....
23-c -- Consent of Davis Polk & Wardwell is contained in Exhibit
5-b.........................................................
24-a -- Powers of Attorney -- BellSouth Capital Funding
Corporation.................................................
24-b -- Powers of Attorney -- BellSouth Corporation.................
25 -- Statement of Eligibility of Trustee.........................
99 -- Draft of Medium-Term Note Prospectus........................
</TABLE>
<PAGE> 1
EXHIBIT 1
BELLSOUTH CAPITAL FUNDING CORPORATION
$500,000,000
SERIES C
MEDIUM-TERM NOTES
DUE FROM 9 MONTHS TO 40 YEARS FROM DATE OF ISSUE
DISTRIBUTION AGREEMENT
February , 1998
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower, World Financial Center
New York, New York 10281-1298
Dear Sirs:
BellSouth Capital Funding Corporation, a Georgia corporation (the
"Company"), and BellSouth Corporation, a Georgia corporation ("BellSouth"),
confirm their agreement with Morgan Stanley & Co. Incorporated ("Morgan"),
Goldman, Sachs & Co. ("Goldman") and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill") with respect to the issue and sale by
the Company of up to U.S. $500,000,000 (or the equivalent thereof in other
currencies or currency units) aggregate principal amount of the Company's
Medium-Term Notes, Series C, due from 9 months to 40 years from date of issue
(the "Notes"). The Notes are to be issued under an Indenture dated as of August
1, 1992 (the "Indenture") among the Company, BellSouth and The Bank of New York,
as successor to Wachovia Bank of Georgia, N.A. (the "Trustee"), and have the
benefits of a Support Agreement dated as of October 15, 1987, as amended as of
August 1, 1992 (the "Support Agreement"), between the Company and BellSouth,
which contains a limited guaranty by BellSouth of the debt securities of the
Company. The Notes shall be issued in the currency or currency units and shall
have the maturity ranges, annual interest rates (whether fixed or floating),
redemption provisions and other terms set forth in the Prospectus referred to
below as it may be supplemented from time to time, including any pricing
supplement.
Subject to the terms and conditions stated herein and to the reservation by
the Company of the right to sell the Notes directly on its own behalf, the
Company hereby (i) appoints Morgan, Goldman and Merrill (individually an "Agent"
and, collectively, the "Agents") as its exclusive agents for the purpose of
soliciting offers to purchase the Notes from the Company by others and (ii)
agrees that if the Company determines to sell Notes directly to any of the
Agents as principal for resale to others, it will enter into a Terms Agreement,
as defined below, relating to such sale in accordance with the provisions of
Section 2(b) hereof. On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, each Agent
agrees, severally and not jointly, to use its best efforts to solicit offers to
purchase Notes upon terms acceptable to the Company at such times and in such
amounts as the Company shall from time to
<PAGE> 2
time specify. Each Agent shall communicate to the Company, orally or in writing,
each reasonable offer to purchase Notes received by it as agent. Each Agent is
authorized to solicit offers to purchase Notes only in principal amounts of U.S.
$100,000 or any amount in excess thereof which is an integral multiple of U.S.
$1,000 or, if denominated in a currency or currency unit other than U.S.
dollars, then the equivalent, as determined by the noon buying rate in New York
City for cable transfers of the specified currency or currency unit (the
"Specified Currency") as certified for customs purposes by the Federal Reserve
Bank of New York on the Business Day, as defined in the Indenture, immediately
preceding the trade date for such Notes, of U.S. $100,000 (rounded down to an
integral multiple of 1,000 units of such Specified Currency), and any larger
amount that is an integral multiple of 1,000 units of such Specified Currency.
The Company shall have the sole right to accept offers to purchase Notes and may
reject any offer in whole or in part. Each Agent shall have the right to reject
any offer to purchase Notes which it considers to be unacceptable, and any such
rejection shall not be deemed a breach of its agreements contained herein. In
acting under this Agreement and in connection with the sale of any Notes by the
Company (other than Notes sold to any Agent pursuant to a Terms Agreement), each
Agent is acting solely as agent of the Company and does not assume any
obligation towards or relationship of agency or trust with any purchaser of the
Notes.
1. Representations and Warranties. The Company and BellSouth represent and
warrant to and agree with each Agent as follows:
(a) The Company and BellSouth meet the requirement for use of Form S-3
under the Securities Act of 1933, as amended (the "Securities Act"), and
have filed with the Securities and Exchange Commission (the "Commission")
registration statements on such Form (Registration Nos. 33-51449 and
33- ), and such registration statements have become effective, for
the registration under the Securities Act of debt securities, including the
Notes and the obligations of BellSouth under the Support Agreement. Such
registration statements, including the exhibits thereto, as amended at the
date of the sale of any Notes, are collectively hereinafter called the
"Registration Statement". The Indenture has been qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
Company has duly authorized the issuance of the Notes. BellSouth has duly
authorized the execution and delivery of the Support Agreement with regard
to the issuance of the Notes. The Registration Statement, as amended at the
date of this Agreement, meets the requirements set forth in Rule
415(a)(1)(x) under the Securities Act and complies in all other material
respects with said Rule. The Company and BellSouth propose to file with the
Commission from time to time, pursuant to its Rule 424 under the Securities
Act, supplements to the prospectus included in the Registration Statement
relating to the Notes which will describe certain terms of the Notes and
prior to any such filing will advise each Agent of all further information
(financial and other) with respect to the Company and BellSouth to be set
forth therein. Such prospectus in the form in which it appears in
Registration Statement, dated , 1998, is called the "Basic
Prospectus". The Term "Prospectus" means the Basic Prospectus together with
the prospectus supplement dated , 1998 and any other prospectus
supplement or supplements specifically relating to any Notes sold pursuant
to this Agreement (the "Prospectus Supplement"), as filed with, or included
for filing to, the Commission pursuant to Rule 424 under the Securities
Act. Any reference herein to the Registration Statement, Basic Prospectus
and Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which
were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than any documents filed on Form 11-K.
(b)(i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Prospectus complied or
will comply when so filed in all material respects with such Act and the
rules and regulations thereunder, (ii) each part of the Registration
Statement (including the documents incorporated by reference therein),
filed with the Commission pursuant to the Securities Act, when such part
became effective, did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, (iii) the Registration
Statement and the Prospectus comply and, as amended or supplemented, if
applicable, will comply in all material respects with the Securities Act
and the applicable rules and regulations thereunder and (iv) the
Registration Statement and the Prospectus at the date of the
2
<PAGE> 3
Prospectus Supplement do not contain and, as further amended or
supplemented, if applicable, as of their respective dates, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, except that the representations and warranties set forth in
this Section 1(b) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information furnished
to the Company or BellSouth in writing by any Agent expressly for use
therein or to any statements in or omissions from the Statement of
Eligibility and Qualification of the Trustee under the Indenture.
2. Solicitations as Agent; Purchases as Principal.
(a) Solicitations as Agent. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein
set forth, each Agent will use its best efforts to solicit offers to
purchase the Notes upon the terms and conditions set forth in the
Prospectus as then amended or supplemented. The Company reserves the right,
in its sole discretion, to instruct the Agents to suspend at any time, for
any period of time or permanently, the solicitation of offers to purchase
the Notes. Upon receipt of at least one business day's prior notice from
the Company, the Agents will forthwith suspend solicitations of offers to
purchase Notes from the Company until such time as the Company has advised
the Agents that such solicitation may be resumed. During the period of time
that this Agreement is suspended, the Company shall not be required to
deliver any opinions or letters in accordance with Sections 3(i) and (j);
provided, however, that the Agents shall not be required to resume
soliciting offers to purchase Notes until the Company has delivered such
opinions or letters as requested by the Agents if any of the events
described in Section 3(i) and (j) have occurred during the period of
suspension. Unless otherwise agreed between the Company and the Agents, the
Company agrees to pay each Agent, as consideration for soliciting the sale
of any Notes, a commission in the form of a discount from the principal
amount of such Note sold by the Company hereunder as set forth in Schedule
A attached hereto.
(b) Purchases as Principal. Each sale of Notes to an Agent, as
principal, shall be made in accordance with the terms of this Agreement and
a separate agreement which will provide for the sale of such Notes to, and
the purchase and re-offering thereof by, such Agent. Each such separate
agreement is herein referred to as a "Terms Agreement". Each Terms
Agreement will take the form of either (i) a written agreement between the
Agent and the Company, which may be substantially in the form of Exhibit A
hereto, or (ii) an oral agreement between the Agent and the Company
promptly confirmed in writing by the Agent to the Company. An Agent's
commitment to purchase Notes pursuant to any Terms Agreement shall be
deemed to have been made on the basis of the representations and warranties
of the Company and BellSouth herein contained and shall be subject to the
terms and conditions herein set forth. Each Terms Agreement shall specify
the principal amount of any Notes to be purchased by such Agent pursuant
thereto, the maturity date thereof, the price to be paid to the Company for
such Notes, the currency or currency unit in which such Notes shall be
denominated, in which interest, if any, is to be paid and in which the
redemption price, if any, is to be paid, the rate at which interest, if
any, will be paid on the Notes, whether such rate of interest, if any, will
be fixed or floating, the time and place of delivery of and payment for
such Notes (the "Settlement Date") and any other terms of the Notes. Such
Terms Agreement shall also specify any requirements for officers'
certificates, opinions of counsel and letters from the independent
certified public accountants of the Company or BellSouth pursuant to
Section 4 hereof and may also contain additional provisions relating to
defaults by underwriters and other provisions relating to termination as
may be agreed at the time between the Company and the applicable Agent.
(c) Procedures. Each Agent and the Company agree to perform the
respective duties and obligations specifically provided to be performed in
the Medium-Term Note Administrative Procedures (attached hereto as Schedule
B) (the "Procedures"), as amended from time to time. The Procedures may be
amended only by written agreement of the Company and the Agents.
(d) Delivery. The documents required to be delivered by Section 4 of
this Agreement shall be delivered on the date hereof, or at such other time
as the Agents and the Company may agree upon in writing (the "Commencement
Date").
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<PAGE> 4
3. Agreements. The Company and BellSouth agree with the Agents that:
(a) prior to the termination of the offering of the Notes pursuant to
this Agreement, neither BellSouth nor the Company will file any amendment
of the Registration Statement or any Prospectus Supplement relating to the
Notes unless a copy thereof has previously been furnished to each Agent for
their review and neither BellSouth nor the Company will file any such
proposed amendment or supplement to which any Agent shall reasonably
object; provided, however, that the foregoing requirement shall not apply
to any of BellSouth's periodic filings with the Commission required to be
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act,
copies of which filings (other than any documents filed on Form 11-K)
BellSouth will cause to be delivered to each Agent promptly after filing
with the Commission. Subject to the foregoing sentence, the Company will
promptly cause each Prospectus Supplement to be filed with the Commission
pursuant to Rule 424. The Company or BellSouth will promptly advise each
Agent (i) of the filing of any amendment or supplement to the Basic
Prospectus, (ii) of the filing and effectiveness of any amendment to the
Registration Statement, (iii) of any request by the Commission for any
amendment of the Registration Statement or any amendment of or supplement
to the Basic Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution or threatening of any
proceeding for that purpose and (v) of the receipt by the Company or
BellSouth of any notification with respect to the suspension of the
qualification of the Notes for sale in any jurisdiction or the initiation
or threatening of any proceeding for such sale in any jurisdiction or the
initiation or the threatening of any proceeding for such purpose. The
Company and BellSouth will use their best efforts to prevent the issuance
of any such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Securities Act, any event occurs or
condition exists as a result of which the Registration Statement or the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if, in the opinion of the Company
or BellSouth, it is necessary at any time to amend or supplement the
Registration Statement or the Basic Prospectus, as then amended or
supplemented, to comply with the Securities Act, the Company promptly will
notify each Agent to suspend solicitation of offers to purchase Notes and,
if so notified by the Company, each Agent shall forthwith suspend such
solicitation and cease using the Prospectus as then amended or
supplemented; and if the Company or BellSouth shall decide to amend or
supplement the Registration Statement or Prospectus as then amended or
supplemented, to so advise each Agent promptly by telephone (with
confirmation in writing) and to prepare and cause to be filed promptly with
the Commission an amendment or supplement to the Registration Statement or
Prospectus as then amended or supplemented which will include a description
of such facts or events and/or will correct such statement or omission or
effect such compliance and will supply such amended or supplemented
Prospectus to each Agent in such quantities as each Agent may reasonably
request; and, if such amendment or supplement, and any documents,
certificates and opinions furnished to each Agent pursuant to paragraph (f)
below in connection with the preparation or filing of such amendment or
supplement, are satisfactory in all respects to each Agent, upon the filing
of such amendment or supplement with the Commission or effectiveness of an
amendment to the Registration Statement each Agent will resume the
solicitation of offers to purchase Notes hereunder.
(c) The Company and BellSouth will make generally available to the
securityholders and to each Agent, as soon as practicable, an earnings
statement of BellSouth covering a twelve-month period beginning after the
date of the sale of any Notes hereunder which shall satisfy the provisions
of Section 11(a) of the Securities Act and the applicable rules and
regulations thereunder.
(d) The Company and BellSouth will furnish to each Agent, without
charge, two copies of the Registration Statement including exhibits and
materials, if any, incorporated by reference therein and, during the period
mentioned in Section 3(b) above, as many copies of the Prospectus, any
documents incorporated by reference therein and any supplements and
amendments thereto as each Agent may
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<PAGE> 5
reasonably request. The terms "supplement" and "amendment" or "amend" as
used in this Agreement shall include all documents filed by the Company or
BellSouth with the Commission subsequent to the date of the Basic
Prospectus pursuant to the Exchange Act which are incorporated by reference
in the Prospectus (other than any documents filed on Form 11-K).
(e) The Company and BellSouth will use their best efforts to qualify
the Notes or to assist in the qualification of the Notes by or on behalf of
each Agent for the offer and sale under applicable securities or Blue Sky
laws of such jurisdictions as each Agent shall reasonably request and to
pay all expenses (including fees and disbursements of counsel) in
connection with such qualification and in connection with the determination
of the eligibility of the Notes for investment under the laws of such
jurisdictions as each Agent may designate; provided, however, that the
Company or BellSouth shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified.
(f) The Company and BellSouth will pay all expenses incident to the
performance of their obligations under this Agreement, including: (i) the
preparation and filing of the Registration Statement and all amendments
thereto, (ii) the preparation, issuance and delivery of the Notes, (iii)
the fees and disbursements of the Company's and BellSouth's accountants and
of the Trustee, (iv) the qualification of the Notes under the securities
laws in accordance with the provisions of Section 3(e), including filing
fees and the reasonable fees and disbursements of the Agents' counsel in
connection therewith and in connection with the preparation of any Blue Sky
Memorandum and any Legal Investment Memorandum, (v) the printing and
delivery to the Agents in quantities as herein above stated of copies of
the Registration Statement and all amendments thereto, and of the Basic
Prospectus and any amendments or supplements thereto, (vi) the printing and
delivery to each Agent of copies of the Indenture and any Blue Sky
Memorandum and any Legal Investment Memorandum, (vii) any fees charged by
rating agencies for the rating of the Notes, (viii) any advertising
expenses incurred with the approval of the Company or BellSouth, (ix) any
reasonable out-of-pocket expenses incurred with the approval of the Company
or BellSouth and (x) the fees and expenses, if any, incurred with respect
to any filing with the National Association of Securities Dealers, Inc.
The Company shall also reimburse each Agent promptly upon receipt of
an invoice from such Agent for the reasonable fees of counsel for such
Agent incurred in connection with the offering and sale of the Notes
(including the reasonable fees and expenses of special counsel in any state
in the event it should become necessary to obtain opinions of such counsel
as to usury or other matters of local law in order to obtain or maintain
the qualifications referred to in Section 3(e) hereof).
(g) Each acceptance by the Company of an offer for the purchase of
Notes, and each sale of Notes to an Agent pursuant to a Terms Agreement,
shall be deemed to be an affirmation to such Agent that the representations
and warranties of the Company and BellSouth contained in this Agreement and
in any certificate theretofore delivered to such Agent pursuant hereto are
true and correct in all material respects at the time of such acceptance or
sale, as the case may be, and an undertaking that such representations and
warranties will be true and correct in all material respects at the time of
delivery to the purchaser or his agent, or to such Agent, of the Notes
relating to such acceptance or sale, as the case may be, as though made at
and as of each such time (and it is understood that such representations
and warranties shall relate to the Registration Statement and the Basic
Prospectus as amended and supplemented to each such time).
(h) Each time the Registration Statement or the Basic Prospectus is
amended or supplemented (other than by an amendment or supplement providing
solely for a change in the interest rates (excluding any change in the
formula by which such interest rate may be determined) or maturities
offered on the Notes or for a change deemed immaterial in the reasonable
opinion of each Agent) or, if so indicated in the applicable Terms
Agreement, each time the Company sells Notes to an Agent pursuant to a
Terms Agreement, the Company will deliver or cause to be delivered
forthwith to each Agent (or, in the case of a sale of Notes pursuant to a
Terms Agreement to the applicable Agent) a certificate of the Company
signed by the President, any Vice President or the Treasurer of the Company
and of BellSouth, dated the
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<PAGE> 6
date of the effectiveness of such amendment or filing or supplement or
sale, as the case may be, in form reasonably satisfactory to such Agent or
Agents, as the case may be, to the effect that the statements of the
Company and BellSouth contained in the certificate referred to in Section
4(c) that was last furnished to such Agent or Agents, as the case may be
(either pursuant to Section 4(c) or pursuant to this Section 3(h)), are
true and correct as though made at and as of such time (except that such
statements shall be deemed to relate to the Registration Statement and the
Prospectus as amended and supplemented to such time), or, in lieu of such
certificate, a certificate of the same tenor as the certificate referred to
in Section 4(c) relating to the Registration Statement and the Prospectus
as amended and supplemented to the time of delivery of such certificates.
(i) Each time the Registration Statement or the Basic Prospectus is
amended or supplemented, or, if so indicated in the applicable Terms
Agreement, the Company sells Notes to an Agent pursuant to a Terms
Agreement, the Company shall furnish or cause to be furnished forthwith to
each Agent (or, in the case of a sale of Notes pursuant to a Terms
Agreement to the applicable Agent) a written opinion (or opinions) of
counsel of the Company and BellSouth, who may be an employee of BellSouth;
provided, however, that such opinion (or opinions) need not be furnished
with respect to an amendment or supplement (i) providing solely for a
change in the interest rates offered on the Notes (other than a change in
the formula by which such interest rate may be determined) or for a change
deemed immaterial in the reasonable opinion of such Agent or Agents, as the
case may be, or (ii) setting forth or incorporating by reference financial
statements or other information as of and for a fiscal quarter, unless, in
the case of clause (ii) above, in the reasonable judgment of such Agent or
Agents, as the case may be, such financial statements or other information
are of such a nature that an opinion (or opinions) of counsel should be
furnished; provided, further, that such counsel need not provide an opinion
regarding the content or form of such financial statements or schedules or
the accuracy or validity of other numerical data included in the
Registration Statement and the Prospectus. Any such opinion (or opinions)
shall be dated the date of such amendment or supplement, in form
satisfactory to the Agent or Agents, as the case may be, to which such
opinion (or opinions) will be delivered, and shall be of the same tenor as
the opinion (or opinions) referred to in Section 4(b)(i) but modified to
relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such opinion (or opinions). In lieu
of an opinion, counsel last furnishing such an opinion to such Agent or
Agents, as the case may be, may furnish to such Agent or Agents a letter to
the effect that such Agent or Agents may rely on such last opinion to the
same extent as though it were dated the date of such letter authorizing
reliance on such last opinion (except that statements in such last opinion
will be deemed to relate to the Registration Statement and the Prospectus
as amended and supplemented to the time of delivery of such letter
authorizing reliance.)
(j) Each time that the Registration Statement or the Basic Prospectus
is amended or supplemented to set forth amended or supplemental financial
information or such amended or supplemental information is incorporated by
reference in the Registration Statement or the Basic Prospectus or, if so
indicated in the applicable Terms Agreement, each time the Company sells
Notes to an Agent pursuant to a Terms Agreement, BellSouth shall cause its
independent certified public accountants forthwith to furnish each Agent
(or in the case of a sale of Notes pursuant to a Terms Agreement, to the
applicable Agent) with a letter, dated the date of the effectiveness of
such amendment or the date of filing of such supplement, or the date of
such sale, as the case may be, in a form reasonably satisfactory to each
Agent (or in the case of a sale of Notes pursuant to a Terms Agreement, to
the applicable Agent), of the same tenor as the letter referred to in
Section 4(d), with regard to the amended or supplemental financial
information included or incorporated by reference in the Registration
Statement and the Prospectus, as amended or supplemented to the date of
such letter.
(k) Between the date of any Terms Agreement and the Settlement Date
with respect to such Terms Agreement, the Company will not, without the
applicable Agent's prior consent, offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company substantially
similar to the Notes (other than (i) the Securities that are to be sold
pursuant to such Terms Agreement, (ii) debt securities issued
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<PAGE> 7
for consideration other than cash and (iii) commercial paper in the
ordinary course of business), except as may otherwise be provided in any
such Terms Agreement.
(l) The Company will not issue any Notes except as have been duly
authorized by all necessary corporate action on the part of the Company.
4. Conditions of the Obligations of the Agents. The obligations of the
Agents to solicit offers to purchase the Notes as agents of the Company and to
purchase Notes as principals pursuant to any Terms Agreement will be subject to
the accuracy of the representations and warranties on the part of the Company
and BellSouth herein, to the accuracy of the statements of the Company's and
BellSouth's officers made in each certificate furnished pursuant to the
provisions hereof, to the performance and observance by the Company and
BellSouth of all covenants and agreements herein contained on its part to be
performed and observed and to the following additional conditions precedent:
(a) At the Commencement Date and at each Settlement Date with respect
to any applicable Terms Agreement, no stop order suspending the
effectiveness of the Registration Statement shall be in effect and no
proceedings for that purpose shall have been instituted or threatened by
the Commission, and there shall have been no material adverse change and no
development which, in the reasonable judgement of the Agents, involves a
substantial likelihood of a prospective material adverse change in the
condition of BellSouth and its subsidiaries, taken as a whole, from that
set forth in the Registration Statement or the Prospectus, as amended or
supplemented to such date.
(b) At the Commencement Date, each Agent shall have received, and at
each Settlement Date with respect to any applicable Terms Agreement, if
called for by such Terms Agreement, the applicable Agent shall have
received:
(i) The opinion (or opinions), dated as of such date, of counsel
for the Company and BellSouth, who may be an employee of BellSouth, to
the effect that:
(A) Each of the Company and BellSouth has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of the State of Georgia.
(B) This Agreement (and, if the opinion is being given pursuant
to Section 3(i) on account of the Company having entered into a Terms
Agreement, the applicable Terms Agreement) has been duly authorized,
executed and delivered by the Company and BellSouth.
(C) The Indenture has been duly authorized, executed and
delivered by the Company and BellSouth and is a valid and binding
agreement of the Company and of BellSouth enforceable against them in
accordance with its terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, reorganization or other similar
laws of general application, and except that the enforceability of
the obligations of the Company and BellSouth is subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding of equity or at law); the Indenture has
been duly qualified under the Trust Indenture Act of 1939, as
amended.
(D) The Notes, when authorized, executed and authenticated in
accordance with the Indenture and delivered to and paid for by the
purchasers thereof, will be valid and binding obligations of the
Company enforceable against it in accordance with their terms, except
as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws of general
application, and except that the enforceability of the obligations of
the Company is subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding of equity
or at law), except that, in the case of floating rate Notes, no
opinion need be expressed with respect to the validity or
enforceability thereof in the event that the rate of interest
provided for therein, or imputed with respect thereto, exceeds the
maximum rate from time to time permissible under applicable usury
laws; the Notes will be entitled to the benefits of the Indenture.
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<PAGE> 8
(E) The Support Agreement has been duly authorized, executed and
delivered by BellSouth and is a valid and binding agreement of the
Company and BellSouth enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws of general
application, and except that the enforceability of the obligations of
the Company and BellSouth is subject to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding of equity or at law).
(F) The performance of this Agreement will not contravene any
provision of applicable federal law or law of the State of Georgia or
the articles of incorporation or by-laws of the Company or BellSouth
or, to the knowledge of such counsel, any agreement or other
instrument binding upon the Company or BellSouth, and no consent,
approval or authorization of any governmental body is required for
the performance of this Agreement, except that the offer and sale of
the Notes in certain jurisdictions may be subject to the Blue Sky or
securities laws of such jurisdictions.
(G) The statements in the Prospectus under the captions
"Description of Securities" and "Plan of Distribution", insofar as
such statements constitute summaries of the documents and matters
referred to therein, fairly present the information called for with
respect to such documents and matters.
(H)(1) Each document filed pursuant to the Exchange Act (except
as to financial statements or schedules included therein, and except
as to the accuracy or validity of other numerical data included in
the Registration Statement and the Prospectus, as to which such
counsel need not express any conclusion) and incorporated by
reference in the Prospectus complied when so filed as to form in all
material respects with the Exchange Act and the applicable rules and
regulations thereunder; and (2) the Registration Statement and
Prospectus, as amended or supplemented, if applicable (except as to
financial statements or schedules included therein, and except as to
the accuracy or validity of other numerical data included in the
Registration Statement and the Prospectus, as to which such counsel
need not express any conclusion), comply as to form in all material
respects with the Securities Act and the applicable rules and
regulations thereunder.
(I) Nothing has come to the attention of such counsel to cause
him to believe that (1) (except as to financial statements or
schedules included therein, and except as to the accuracy or validity
of other numerical data included in the Registration Statement and
the Prospectus, as to which such counsel need not express any
conclusion) each part of the Registration Statement (including the
documents incorporated by reference therein) filed with the
Commission pursuant to the Securities Act, when such part became
effective, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (2)
(except as to financial statements or schedules included therein, and
except as to the accuracy or validity of other numerical data
included in the Registration Statement and the Prospectus, as to
which such counsel need not express any conclusion) the Registration
Statement and the Prospectus, as amended or supplemented, if
applicable, as of the date of this opinion, contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(J) the discussion set forth under the heading "Taxation" in the
Prospectus Supplement is an accurate summary of the principal United
States Federal income tax consequences of the ownership of the Notes.
With respect to the matters set forth in (I) above, such counsel
may state that its conclusion is based upon its participation in the
preparation of the Registration Statement and the Prospectus and any
amendments and supplements thereto and upon review and discussion
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<PAGE> 9
of the contents thereof, but, except for the statements in the
Prospectus referred to in clause (G) above and in "Item 3 -- Legal
Proceedings" of BellSouth's latest annual report on Form 10-K
incorporated by reference into the Prospectus, is without independent
check or verification except as otherwise specified.
(ii) The opinion dated as of such date, of Davis Polk & Wardwell,
counsel to the Agents, covering the matters in (B), (C), (D), (G),
(H)(2) and (I) above, provided that with respect to (H)(2) and (I)
above, such counsel may state that their conclusion is based upon their
participation in the preparation of the Registration Statement and the
Prospectus and any amendments or supplements thereto (other than
documents incorporated by reference), and review and discussion of the
contents thereof (including documents incorporated by reference) but is
without independent check or verification except as specified.
(c) On the Commencement Date, the Company shall have furnished to each
Agent and at each Settlement Date with respect to any Terms Agreement, the
Company shall have furnished to the applicable Agent, a certificate signed
by the President, any Vice President or the Treasurer of the Company and
BellSouth dated as of the Commencement Date or such Settlement Date, to the
effect that the signers of such certificate have examined the Registration
Statement, the Basic Prospectus, any Prospectus Supplement and this
Agreement and that:
(i) the representations and warranties of the Company and BellSouth
in this Agreement are true and correct in all material respects on and
as of the date of such certificate, and the Company and BellSouth have
complied with all the agreements and satisfied all the conditions on
their part to be performed or satisfied at or prior to the date of such
certificate;
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or, to the Company's or BellSouth's knowledge, threatened by
the Commission; and
(iii) Since the date of the most recent financial statements
included or incorporated by reference in the Prospectus, as amended or
supplemented, there has been no material adverse change and no
development which, in the reasonable judgment of the signer of such
certificate, involves a substantial likelihood of a prospective material
adverse change in the condition of BellSouth and its subsidiaries, taken
as a whole, from that set forth in the Registration Statement and the
Prospectus, as amended or supplemented to such date.
(d) On the Commencement Date, BellSouth's independent certified public
accountants shall have furnished to each Agent, and at each Settlement Date
with respect to any Terms Agreement, if called for by such Terms Agreement,
BellSouth's independent certified public accountants shall have furnished
to the applicable Agent, a letter or letters, dated as of the Commencement
Date or such Settlement Date, in form and substance satisfactory to such
Agent or Agents, as the case may be, confirming that they are independent
accountants within the meaning of the Securities Act and the Exchange Act
and the respective applicable published rules and regulations thereunder,
and containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Registration Statement and the
Prospectus.
In the event that, at the Commencement Date, any of the conditions
specified in (a), (b)(i), (c) or (d) in this Section 4 shall not have been
fulfilled, this Agreement may be terminated by the Agents, by delivering written
notice of termination to the Company. Any such termination shall be without
liability of any party to any other party.
5. Indemnification and Contribution.
(a) The Company and BellSouth agree to indemnify and hold harmless
each Agent and each person, if any, who controls such Agent within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages or
liabilities
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<PAGE> 10
(including the reasonable fees and expenses of counsel in connection with
any governmental or regulatory investigation or proceeding) caused by any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement as originally filed or in any amendment
thereof or the Prospectus (if used within the period set forth in paragraph
(b) of Section 3 hereof and as amended or supplemented if the Company or
BellSouth shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company and BellSouth will not be
liable in any such case to the extent that any such loss, claim, damage or
liability is caused by any such untrue statement or alleged untrue
statement or omission or alleged omission made therein based upon
information furnished in writing to the Company or BellSouth by an Agent
specifically for use in connection with the preparation thereof, or caused
by any statement in or omission from the Statement of Eligibility and
Qualification of the Trustee under the Indenture.
(b) Each Agent agrees, severally and not jointly, to indemnify and
hold harmless the Company, BellSouth, their directors, their officers who
sign the Registration Statement and any person controlling the Company or
BellSouth to the same extent as the foregoing indemnity from the Company
and BellSouth to the Agents, but only with reference to information
relating to such Agent furnished in writing by such Agent expressly for use
in the Registration Statement or the Prospectus.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to either paragraph (a) or (b) above, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing, but the
omission so to notify such indemnifying party of any such action shall not
relieve such indemnifying party from any liability which it or they may
have to the indemnified party otherwise than on account of this agreement.
In case such notice of any such action shall be so given, such indemnifying
party shall be entitled to participate at its own expense in the defense of
such action, or, if it so elects, to assume the defense of such action, and
in the latter event such defense shall be conducted by counsel chosen by
such indemnifying party and satisfactory to the indemnified party who shall
be defendant in such action, and such defendant shall bear the fees and
expenses of any additional counsel retained by them; but if the
indemnifying party shall not elect to assume the defense of such action,
such indemnifying party will reimburse such indemnified party for the
reasonable fees and expenses of any counsel retained by them. In the event
that the parties to any such action (including impleaded parties) include
either the Company or BellSouth and any Agent and either (i) the
indemnifying party and indemnified party mutually agree or (ii)
representation of both the indemnifying party and the indemnified party by
the same counsel is inappropriate under applicable standards of
professional conduct due to actual or potential differing interests between
them, then the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party and will
reimburse such indemnified party for the reasonable fees and expenses of
any counsel retained by them, it being understood that the indemnifying
party shall not, in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to local
counsel) for all such indemnified parties, which firm shall be designated
in writing by the Agent who is a party to the proceedings or, if more than
one Agent is party to the proceedings, by mutual agreement of the agents in
the case of an action in which one or more of the Agents or controlling
persons are indemnified parties and by the Company or BellSouth in the case
of an action in which the Company, BellSouth or any of their respective
directors, officers or controlling persons are indemnified parties. It is
also understood that the fees and expenses referred to in the immediately
preceding sentence shall be reimbursed as they are incurred. The
indemnifying party shall not be liable under this agreement with respect to
any settlement made by any indemnified party or parties without prior
written consent by the indemnifying party or parties to such settlement,
but if settled with such consent or if there is a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such judgment or
settlement. Any indemnifying party shall, prior to agreeing to any
settlement of any pending or threatened
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<PAGE> 11
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, make their best effort to obtain the unconditional release of such
indemnified party from all liability or claims rising out of the subject
matter of such proceeding.
(d) If the indemnification provided for in this Section 5 is
unavailable to an indemnified party under paragraph (a) or (b) hereof or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect primarily the
relative benefits received by the Company and BellSouth on the one hand and
the Agent or Agents, as the case may be, on the other from the offering of
the Notes and also to reflect where appropriate the relative fault of the
Company or BellSouth on the one hand and the Agent or Agents, as the case
may be, on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by
the Company or BellSouth on the one hand and the Agent or Agents, as the
case may be, on the other in connection with the offering of the Notes
shall be deemed to be in the same proportion as the total net proceeds from
the offering of such Notes (before deducting expenses) received by the
Company bear to the total commissions received by the Agent or Agents, as
the case may be. The relative fault of the Company or BellSouth on the one
hand and of the Agent or Agents, as the case may be, on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, by BellSouth or by the Agent or Agents, as the case may be, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The Company, BellSouth and the Agents agree that it would not be
just and equitable if contribution pursuant to this Section 5 were
determined by pro rata allocation or by any other method of allocation
which does not take account of the considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and
liabilities referred to in paragraph (d) above shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Agent shall be required to contribute any
amount in excess of the amount by which the total price at which the Notes
offered and sold to the public through such Agent exceeds the amount of any
damages which such Agent has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
remedies provided for in this Section 5 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
The indemnity and contribution agreements contained in this Section 5 shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement or of any Terms Agreement hereunder, (ii) any investigation
made by any Agent or on its behalf or any person controlling any Agent or by or
on behalf of the Company, its directors or officers or any person controlling
the Company and (iii) acceptance of and payment for any of the Notes.
6. Position of the Agents. In soliciting offers to purchase the Notes,
each Agent is acting solely as agent for the Company, and not as principal. Each
Agent shall make reasonable efforts to assist the Company in obtaining
performance by each purchaser whose offer to purchase Notes has been solicited
by such Agent and accepted by the Company, but such Agent shall not have any
liability to the Company in the event any such purchase is not consummated for
any reason.
7. Termination. This Agreement may be terminated at any time either by the
Company or by BellSouth as to any Agent or by any Agent insofar as this
Agreement relates to such Agent, upon the giving of
11
<PAGE> 12
written notice of such termination to such Agent, the Company or BellSouth, as
the case may be. Any Terms Agreement may be terminated, immediately upon notice
to the Company or BellSouth, at any time prior to the Settlement Date relating
to a Terms Agreement (i) if there has been, since the respective dates as of
which information is given in the Registration Statement, as amended, any
material adverse change in the condition of the Company or BellSouth and its
subsidiaries, taken as a whole, or (ii) if there has occurred any outbreak or
escalation of hostilities or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the judgment of
the applicable Agent, impracticable to market the Notes, or (iii) if trading
generally on the New York Stock Exchange has been suspended or materially
limited or if a general moratorium on commercial banking activities has been
declared by either Federal or New York State authorities. In the event of
termination of this Agreement or any Terms Agreement, no party shall have any
liability to the other parties hereto, except as provided in the last sentence
of Section 2(a), Section 3(f), Section 5 and Section 8; provided that, if at the
time of termination an offer to purchase any of the Notes has been accepted by
the Company but the time of delivery to the purchaser or its agent of the Note
or Notes relating thereto has not occurred, the Company's and BellSouth's
obligations provided in Section 3(g) through 3(k) shall not be terminated.
8. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company and
BellSouth or their officers and the Agents set forth in or made pursuant to this
Agreement or any Terms Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Agents or the
Company or BellSouth or any of the officers, directors or controlling persons
referred to in Section 5 hereof, and will survive delivery of and payment for
the Notes. The provisions of Sections 3(f), 5 and 6 hereof shall survive the
termination or cancellation of this Agreement or the Terms Agreement.
9. Notices. All communications hereunder will be in writing and effective
only on receipt, and, if sent to the Agents, will be mailed, delivered or
telegraphed and confirmed as set forth on Schedule A or, if sent to the Company
or BellSouth, will be mailed, delivered or telegraphed and confirmed to it at
1155 Peachtree St., N.E. Atlanta, GA 30309-3610, Attention: Mark E. Droege.
10. Successors. This Agreement and any Terms Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and the officers and directors and controlling persons referred to in
Section 5 hereof, and no other person will have any right or obligation
hereunder.
11. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
12. Amended and Restated Agreement. This Agreement amends and restates the
Distribution Agreement dated December 1, 1993 among the Company, BellSouth,
Morgan, Goldman and Merrill relating to the Company's Series C Medium-Term
Notes.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and the acceptance of the Agent shall represent a binding agreement
between the Company and the Agents.
Very truly yours,
BELLSOUTH CAPITAL FUNDING CORPORATION
By:
--------------------------------------
Title:
--------------------------------------
BELLSOUTH CORPORATION
By:
--------------------------------------
Title:
--------------------------------------
<PAGE> 13
The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.
MORGAN STANLEY & CO. INCORPORATED
By:
- --------------------------------------
Title:
- --------------------------------------
GOLDMAN, SACHS & CO.
By:
- --------------------------------------
Title:
- --------------------------------------
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
- --------------------------------------
Title:
- --------------------------------------
<PAGE> 14
EXHIBIT A
BELLSOUTH CAPITAL FUNDING CORPORATION
MEDIUM TERM NOTES
TERMS AGREEMENT
BELLSOUTH CAPITAL FUNDING CORPORATION
1155 Peachtree St., N.E.
Atlanta, GA 30309-3610
Attention:
RE: Distribution Agreement
dated February , 1998
The undersigned agrees to purchase the following principal amount of your
Medium-Term Notes:
$
Interest Rate:
Maturity Date:
Purchase Date:
Settlement Date and Time:
Place of Delivery:
(Other terms)
(The certificates referred to in Section 3(h) of the Distribution
Agreement, the opinion referred to in Section 3(i) of the Distribution Agreement
and the accountants' letter referred to in Section 3(j) of the Distribution
Agreement will be required.)
[AGENT'S NAME]
By:
--------------------------------------
Title:
--------------------------------------
Accepted:
BELLSOUTH CAPITAL FUNDING CORPORATION
By:
- --------------------------------------
Title:
- --------------------------------------
<PAGE> 15
SCHEDULE A
Distribution Agreement dated February , 1998
Registration Statement No. 33-
The Company agrees to pay Morgan Stanley & Co. Incorporated ("Morgan"),
Goldman, Sachs & Co. ("Goldman") or Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill") a commission equal to the following
percentage of the principal amount of each Note sold by such Agent.
<TABLE>
<CAPTION>
COMMISSION
PERCENTAGE OF
AGGREGATE PRINCIPAL
RANGE OF NOTE MATURITIES AMOUNT OF SECURITIES SOLD*
- ------------------------ --------------------------
<S> <C>
From 9 months to less than 12 months............... .100%
12 months to less than 18 months............. .150%
18 months to less than 2 years............... .200%
2 years to less than 3 years................. .250%
3 years to less than 4 years................. .350%
4 years to less than 5 years................. .450%
5 years to less than 6 years................. .500%
6 years to less than 7 years................. .550%
7 years to less than 10 years................ .600%
10 years to less than 15 years............... .625%
15 years to less than 20 years............... .700%
20 years to 40 years, inclusive.............. .750%
</TABLE>
- ---------------
* No interpolation
Address for Notice to Agent: The Bank of New York, 101 Barclay Street, New
York, New York 10286. Attention: Marie E. Trimboli, Assistant Treasurer,
Corporate Trust Division.
Notices to Morgan shall be directed to it at 1585 Broadway, New York, New
York 10036. Attention: Managing Director, Short- and Medium-Term Finance
Department, with a copy to Manager, Credit Department.
Notices to Goldman shall be directed to it at 85 Broad Street, New York,
New York 10004. Attention: Credit Department.
Notices to Merrill shall be directed to it at Merrill Lynch World
Headquarters North Tower, 23rd Floor, World Financial Center, New York, New York
10281-1310. Attention: MTN product Management.
<PAGE> 16
SCHEDULE B
SERIES C MEDIUM-TERM NOTE ADMINISTRATIVE PROCEDURES
Medium-Term Notes, Series C (the "Notes") are to be offered on a continuing
basis by BellSouth Capital Funding Corporation (the "Company"). Morgan Stanley &
Co. Incorporated, Goldman, Sachs & Co. and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, as agents (the "Agents"), have agreed to
solicit offers to purchase the Notes and they may also purchase Notes, as
principals, for their own accounts. The Notes are being sold pursuant to a
Distribution Agreement among the Company, BellSouth Corporation ("BellSouth")
and the Agents dated January , 1998 (the "Distribution Agreement"). The Notes
will rank equally with all other unsecured and unsubordinated debt of the
Company, have been registered with the Securities and Exchange Commission (the
"Commission"), will be offered pursuant to a Prospectus and a prospectus
supplement or supplements relating to the Notes (the "Prospectus") and will be
entitled to the benefits of a Support Agreement dated as of October 1, 1987
between the Company and BellSouth, as amended as of August 1, 1992 (the "Support
Agreement"). The Bank of New York ("BONY"), successor to Wachovia Bank of
Georgia, N.A., is the trustee (the "Trustee") under the Indenture dated as of
August 1, 1992 among the Company, BellSouth and the Trustee (the "Indenture").
BONY has been initially appointed to be the Paying Agent, Authenticating Agent
and Registrar thereunder.
Notes may provide for a fixed rate of interest ("Fixed Rate Notes") or a
floating rate of interest ("Floating Rate Notes"), and Fixed Rate Notes may pay
an amount in respect of both interest and principal amortized over the life of
the Notes (the "Amortizing Notes"). Each Note will be represented by either a
global security (a "Global Note") delivered to BONY, as agent for the Depository
Trust Company ("DTC"), with beneficial interests therein recorded in the
book-entry system maintained by DTC (a "Book-Entry Note"), or a certificate
delivered to the holder thereof or a person designated by such holder (a
"Certificated Note"). Except in limited circumstances, an owner of a Book-Entry
Note will not be entitled to receive a Certificated Note.
Administrative procedures and specific terms of the offering are explained
below. Part I contains provisions common to Global/Book-Entry Notes and
Certificated Notes. Part II contains provisions specific to issuances of Global
and Book-Entry Notes and Part III contains provisions specific to issuances of
Certificated Notes. To the extent the procedures set forth below conflict with
the provisions of the Notes, the Indenture or the Distribution Agreement, the
terms and provisions of the Notes, the Indenture and the Distribution Agreement
shall prevail. Unless otherwise defined herein, terms defined in the
Distribution Agreement, the Indenture or the Notes shall be used herein as
therein defined.
PART I: GENERAL
Maturities: Each Note will have a maturity from date of issue
of not less than 9 months and not more than 40
years.
Price to Public: Each Note will be issued at the percentage of the
principal amount specified in the applicable
Company Order, as defined in, and issued pursuant
to Section 2.02(a) of, the Indenture.
Other Terms The currency if not denominated in U.S. dollars
(the "Specified Currency"), denomination, rate of
interest, date of maturity and any other terms with
respect to such Note as are not described in the
Prospectus shall be as set forth in the applicable
pricing supplement to the Prospectus (the "Pricing
Supplement"). The amortization schedule for
Amortizing Notes sold by an Agent will be prepared
by such Agent and delivered to the Company and
BONY.
Denominations: Except as otherwise specified by applicable law,
the denomination of any Note will be a minimum of
U.S. $1,000 or any amount in excess thereof which
is an integral multiple of U.S. $1,000 or the
equivalent, as determined pursuant to the
provisions of the Distribution Agreement
<PAGE> 17
(rounded down to an integral multiple of 1,000
units of such Specified Currency) and any amounts
in excess thereof which is an integral multiple of
1,000 units of such Specified Currency.
Registration: Notes will be issued only in fully registered form.
Interest Payments: The date of issue of each Note will be the date of
its authentication as provided in the Indenture.
The date of authentication of each Note will be the
settlement date. Interest (including payments for
partial periods) on Fixed Rate Notes will be
calculated on the basis of a 360-day year of twelve
30-day months. Interest on Floating Rate Notes will
be determined by the Company and the purchaser
thereof in accordance with provisions of the
Pricing Supplement relating thereto.
Within 10 days following each Record Date, BONY
will furnish the Company with a statement setting
forth the aggregate principal amount of the Notes
denominated in each Specified Currency outstanding
as of such Record Date and the amount of interest
(and principal in the case of Amortizing Notes), to
be paid on the following Interest Payment Date or
Installment Date, for each Note and in total with
respect to each Specified Currency. BONY will
provide monthly to the Company a list of the
principal, if any, and interest with respect to
each Specified Currency to be paid on the Notes
maturing in the next succeeding month.
BONY will pay the principal amount of each Note at
final maturity upon presentment of the Note to it.
Notes presented to BONY at final maturity for
payment will be cancelled and destroyed it. BONY
will provide the Company with a certificate of
destruction.
Procedure for Rate Setting
and Posting: The Company and the Agents will discuss from time
to time the aggregate principal amount of, the
issuance price of and the interest rates to be
borne by Notes that may be sold as a result of the
solicitation of offers by the Agents. If the
Company decides to set prices of, and rates borne
by, any Notes in respect of which the Agents are to
solicit offers (the setting of such prices and
rates to be referred to herein as "posting") or if
the Company decides to change prices or rates
previously posted by it, it will promptly advise
the Agents of the prices and rates to be posted.
Acceptance of Offer: If the Company posts prices and rates as provided
above, each Agent, as agent for and on behalf of
the Company, shall promptly accept offers received
by such Agent to purchase Notes at the prices and
rates so posted, subject to (1) any instructions
from the Company received by such Agent concerning
the aggregate principal amount of Notes to be sold
at the prices and rates so posted or the period
during which such posted prices and rates are to be
in effect, (2) any instructions from the Company
received by such Agent changing or revoking any
posted prices and rates, (3) compliance with the
securities laws of the United States and all other
jurisdictions and (4) such Agent's right to reject
any such offer as provided below.
Each Agent will communicate, orally or in writing,
each reasonable offer to purchase Notes received by
it and if the Company has not posted
2
<PAGE> 18
rates, the proposed rate of interest. The Company
may reject any offer in whole or in part. Each
Agent may reject any offer received by it in whole
or in part.
Preparation of Pricing
Supplement and Delivery
of Prospectus: If the Company accepts an offer to purchase a Note
it will (a) prepare a Pricing Supplement reflecting
the terms of such Note, (b) arrange to file such
Pricing Supplement with the Commission in
accordance with the applicable paragraph of Rule
424(b) under the Act, and (c) as soon as possible
and in any event not later than 11:00 A.M., New
York City time, on the Business Day immediately
following the applicable trade date, deliver the
number of copies of such Pricing Supplement to the
relevant Agent as such Agent shall reasonably
request (which number of copies shall in no event
be greater than 10), at the following addresses:
If to Morgan Stanley:
Morgan Stanley & Co. Incorporated
1585 Broadway, 2nd Floor
New York, NY 10036
Attn: Medium-Term Note Trading Desk,
Carlos Cabrera
Fax: (212) 761-8846
If to Goldman:
Goldman, Sachs & Co.
85 Broad Street, 26th Floor
New York, NY 10004
Attn: Medium-Term Note Trading,
Karen Robertson
Fax: (212) 902-0658
If to Merrill Lynch:
Tritech Services
44-B Colonial Drive
Piscataway, NJ 08854
Attn: Prospectus Operations,
Nachman Kimberling
Fax: (732) 885-2774/5/6
and deliver a copy to BONY.
The selling Agent will affix the Pricing Supplement
to the Prospectus and cause the Prospectus and the
applicable Pricing Supplement to be delivered to
the purchaser of the Note with the earlier of the
delivery of the confirmation of sale or the Note.
Outdated Pricing Supplements and Prospectuses
(other than those retained for files) will be
destroyed.
Settlement: The receipt of immediately available funds by the
Company in payment for a Certificated Note or a
Book-Entry Note shall, with respect to such Note,
constitute "settlement". All orders accepted by the
Company will be settled on the third Business Day,
as defined in the Prospectus, pursuant to the
timetables for settlement set forth in Parts II and
III below unless the Company and the purchaser
agree to settlement on another date; provided,
however, that in the case of a delayed settlement,
3
<PAGE> 19
the Company will notify BONY by the Business Day
immediately prior to the Business Day of
settlement.
Suspension of
Solicitations: Amendment or
Supplements: The Company may instruct Agents to suspend
solicitations of offers for Notes at any time. Upon
receipt of at least one Business Day's prior notice
from the Company, the Agents will forthwith suspend
solicitations until such time as the Company has
advised them that solicitations of offers for Notes
may be resumed.
If the Company decides to amend or supplement the
Registration Statement or the Prospectus, it will
promptly advise the Agents and BONY and will
furnish the Agents and BONY with the proposed
amendment or supplement in accordance with the
terms of the Distribution Agreement. The Company
will file with the Commission any supplement to the
Prospectus (including any supplement which provides
solely for a change in the interest rates or
currencies of the Notes), provide each Agent with
copies of any supplement and confirm to the Agents
that such supplement has been filed with the
Commission.
In the event that at the time the Company suspends
solicitations of offers for Notes (other than to
change currency denominations or interest rates)
there shall be any offers outstanding for
settlement, the Company will promptly advise the
Agents and BONY whether such offers may be settled
and whether copies of the Prospectus as in effect
at the time of the suspension may be delivered in
connection with the settlement of such offers. The
Company will have the sole responsibility for such
decision and for any arrangements which may be made
in the event that the Company determines that such
offers may not be settled or that copies of such
Prospectus may not be so delivered.
Authenticity of Signatures: The Company will cause BONY and any Authenticating
Agent for the Notes (if other than BONY) to furnish
each Agent from time to time with the specimen
signatures of each of BONY's or such Authenticating
Agent's officers, employees or agents who have been
authorized by BONY or such Authenticating Agent to
authenticate Notes, but the Agents will have no
obligation or liability to the Company or the
Trustee in respect of the authenticity of the
signature of any officer, employee or agent of the
Company, BONY or such Authenticating Agent on any
Note.
Payment of Selling
Commission and Expenses: The Company agrees to pay each Agent a commission
as set forth in the Distribution Agreement in the
form of a discount equal to the percentage of the
principal of each Note sold by the Company as a
result of a solicitation made by such Agent.
Advertising Costs: The Company will determine with the Agents the
amount of advertising that may be appropriate in
offering the Notes. Advertising expenses will be
paid by the Company or reimbursed to the Agents by
the Company.
PART II: BOOK-ENTRY NOTES
In connection with the qualification of Book-Entry Notes for eligibility in
the book-entry system maintained by DTC, BONY will perform the custodial,
document control and administrative functions described below, in accordance
with its respective obligations under a Letter of Representation from the
4
<PAGE> 20
Company, BellSouth and BONY to DTC dated as of the date hereof (the "Letter of
Representation"), and a Medium-Term Note Certificate Agreement between BONY and
DTC, dated as of April 4, 1989, and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement System ("SDFS").
Issuance: All Fixed Rate Notes issued as Book-Entry Notes
having the same terms (collectively, the "Fixed
Rate Terms") will be represented initially by a
single Global Note in fully registered form without
coupons; and all Floating Rate Notes issued as
Book-Entry Notes having the same terms, including
the base rate upon which interest may be determined
(the "Base Rate") (collectively, "Floating Rate
Terms"), will be represented initially by a single
Global Note.
Each Global Notes will be dated and issued as of
the date of its authentication by BONY. No Global
Note shall represent any Certificated Note.
Identification: The Company has arranged with the CUSIP Service
Bureau of Standard & Poor's Corporation (the "CUSIP
Service Bureau") for the reservation of 900 CUSIP
numbers which have been reserved for and relating
to Global Notes, and the Company has delivered to
BONY and DTC such list of such CUSIP numbers. Some
of such numbers have previously been assigned to
Global Notes in Series B and C. The Company will
assign CUSIP numbers to Global Notes in connection
with Settlement Procedure B. DTC will notify the
CUSIP Service Bureau periodically of the CUSIP
numbers that the Company has assigned to Global
Notes. BONY will notify the Company at any time
when fewer than 100 of the reserved CUSIP numbers
remain unassigned to Global Notes, and, if it deems
necessary, the Company will reserve additional
CUSIP numbers for assignment to Global Notes. Upon
obtaining such additional CUSIP numbers, the
Company will deliver a list of such additional
numbers to BONY and DTC. Book-Entry Notes having an
aggregate principal amount in excess of
$200,000,000 and otherwise required to be
represented by the same Global Note will instead be
represented by two or more Global Notes which shall
all be assigned the same CUSIP number.
Registration: Each Global Note will be registered in the name of
Cede & Co., as nominee for DTC, on the register
maintained by BONY. The beneficial owner of an
interest in a Global Note (i.e., an owner of a
Book-Entry Note) (or one or more indirect
participants in DTC designated by such owner) will
designate one or more participants in DTC (with
respect to such Book-Entry Note, the
"Participants") to act as agent for such beneficial
owner in connection with the book-entry system
maintained by DTC, and DTC will record in its
book-entry system, in accordance with instructions
provided by such Participants, a credit balance
with respect to such Book-Entry Note in the
accounts of such Participants. The ownership
interest of such beneficial owner in such
Book-Entry Note will be recorded through the
records of such Participants or through the
separate records of such Participants and one or
more indirect participants in DTC.
Transfers: Transfers of a Book-Entry Note will be accomplished
by book entries made by DTC and, in turn, by
Participants (and in certain cases, one or more
indirect participants in DTC) acting on behalf of
beneficial transferors and transferees of such
Book-Entry Note.
5
<PAGE> 21
Exchanges: The Company or BONY may deliver to DTC and the
CUSIP Service Bureau at any time a written notice
specifying (a) the CUSIP numbers of two or more
Global Notes outstanding on such date that
represent Book-Entry Notes having the same Fixed
Rate Terms or Floating Rate Terms, as the case may
be, (other than original issue dates) and for which
interest has been paid to the same date; (b) a
date, occurring at least 30 days after such written
notice is delivered and at least 30 days before the
next Interest Payment Date for the related
Book-Entry Notes, on which such Global Notes shall
be exchanged for a single replacement Global Note;
and (c) a new CUSIP number, obtained from the
Company, to be assigned to such replacement Global
Note. Upon receipt of such a notice, DTC will send
to its participants (including BONY) a written
reorganization notice to the effect that such
exchange will occur on such date. Prior to the
specified exchange date, BONY will deliver to the
CUSIP Service Bureau written notice setting forth
such exchange date and the new CUSIP number and
stating that, as of such exchange date, the CUSIP
numbers of the Global Notes to be exchanged will no
longer be valid. On the specified exchange date,
BONY will exchange such Global Notes for a single
Global note bearing the new CUSIP number, and the
CUSIP numbers of the exchanged Global Notes will,
in accordance with CUSIP Service Bureau procedures,
be cancelled and not reassigned. BONY shall cancel
and destroy the exchanged Global Notes and deliver
to the Company a certificate of destruction.
Denominations: Global Notes will be denominated in principal
amounts not in excess of $200,000,000. If one or
more Book-Entry Notes having identical terms and
comprising the same issue have an aggregate
principal amount in excess of $200,000,000, then
one Global Note will be issued to represent each
$200,000,000 principal amount of such Book-Entry
Notes and an additional Global Note will be issued
to represent any remaining principal amounts.
Payments of Principal and
Interest: Payments Prior to Maturity. Promptly after each
Record Date, BONY will deliver to the Company and
DTC a written notice specifying by CUSIP number the
amount of interest to be paid on each Global Note
on the following Interest Payment Date and the
amounts of principal and interest (an
"Installment") to be paid on each Installment Date
in the case of an Amortizing Note (other than an
Interest Payment Date or Installment Date
coinciding with final maturity) and the total of
such amounts. DTC will confirm the amount payable
on each Global Note on such Interest Payment Date
or Installment Date by reference to the daily bond
reports published by Standard & Poor's. On such
Interest Payment Date or Installment Date, the
Company will pay to BONY, and BONY in turn will pay
to DTC, such total amount of interest and
principal, if any, due (other than at final
maturity), at the times and in the manner set forth
below under "Manner of Payment."
Payments at Final Maturity. On or about the first
Business Day of each month, BONY will deliver to
the Company and DTC a written list of principal,
interest and premium, if any, to be paid on each
Global Note maturing either at stated maturity or
on a redemption date in the following month. BONY,
the Company and DTC will confirm the amounts of
such payments on or about the fifth Business Day
preceding
6
<PAGE> 22
such maturity of such Global Note. At such
maturity, the Company will pay to BONY, and BONY in
turn will pay to DTC, the principal amount of such
Global Note, together with interest and premium, if
any, due at such maturity, at the times and in the
manner set forth below under "Manner of Payment".
If any such maturity of a Global Note is not a
Business Day, the payment due on such day shall be
made on the next succeeding Business Day and no
interest shall accrue on such payment for the
period from and after such maturity. Promptly after
payment to DTC of the principal, interest and
premium, if any, due at such maturity of such
Global Note, BONY will cancel and destroy such
Global Note and deliver to the Company a
certificate of destruction.
Manner of Payment. The total amount of any
principal, interest and premium, if any, due on
Global Notes on any Interest Payment Date or
Installment Date or at final maturity shall be paid
by the Company to BONY in funds available for use
by BONY as of 9:30 a.m., New York City time, on
such date. Prior to 10:00 a.m., New York City time,
on such date or as soon as possible thereafter,
BONY will pay by separate wire transfer (using
Fedwire message entry instructions in a form
previously specified by DTC) to an account at the
Federal Reserve Bank of New York previously
specified by DTC, in funds available for immediate
use by DTC, each payment of interest, principal and
premium, if any, due on a Global Note on such date.
Thereafter on such date, DTC will pay, in
accordance with its SDFS operating procedures then
in effect, such amounts in funds available for
immediate use to the respective Participants in
whose names Book-Entry Notes are recorded in the
book-entry system maintained by DTC. Neither the
Company nor BONY shall have any responsibility or
liability for the payment by DTC of the principal
of, or premium, if any, or interest on, the
Book-Entry Notes to such Participants.
Settlement Procedures: Settlement Procedures with regard to each
Book-Entry Note sold by the Company or through an
Agent (except pursuant to a Terms Agreement, as
defined in the Distribution Agreement), shall be as
follows:
A. The selling Agent will confirm with the
Company by telephone that such Note is a
Book-Entry Note and of the following
settlement information:
1. Principal amount.
2. Maturity date.
3. Interest rate.
4. Interest Payment Dates or Installment
Dates.
5. Redemption provisions, if any.
6. Settlement date.
7. Trade date.
8. Price.
9. Selling Agent's commission, if any,
determined as provided in the
Distribution Agreement.
10. Amortization schedule, if any.
7
<PAGE> 23
11. Any other applicable terms.
B. The Company will advise BONY by telephone or
electronic transmission (confirmed in
writing at any time on the same date) of the
information set forth in Settlement
Procedure "A" above. The Company will assign
a CUSIP number to the Global Note
representing such Book-Entry Note or Notes.
C. BONY will communicate to DTC and the selling
Agent through DTC's Participant Terminal
System, which shall route such information
to Standard & Poor's Corporation and
Interactive Data Corporation, a pending
deposit message specifying the following
settlement information:
1. The information set forth in Settlement
Procedure "A".
2. Identification numbers of the
Participant accounts maintained by DTC
on behalf of BONY and the Agent.
3. Identification as a Fixed-Rate or
Floating-Rate Book-Entry Note.
4. Initial Interest Payment Date for such
Note, (or the initial Installment Date
in the case of an Amortizing Note),
number of days by which such date
succeeds the related Record Date for
DTC purposes (or, in the case of
Floating Rate Notes which reset daily
or weekly, the date five calendar days
preceding the Interest Payment Date)
and, if then calculable, the amount of
interest payable on such Interest
Payment Date (or the amount of
principal and interest payable on such
Installment Date in the case of an
Amortizing Note) (which amount shall
have been confirmed by BONY).
5. CUSIP number of the Global Note
representing such Book-Entry Note.
6. Whether such Global Note represents any
other Book-Entry Notes.
D. BONY will complete and authenticate the Global
Note representing such Book-Entry Note or
Notes.
E. DTC will credit such Global Note to BONY's
Participant account at DTC.
F. BONY will enter an SDFS delivery order through
DTC's Participant Terminal System instructing
DTC to (i) debit such Global Note to BONY's
Participant account and credit interests in
such Global Note to the selling Agent's
Participant account and (ii) debit the selling
Agent's settlement account and credit BONY's
settlement account for an amount equal to the
price of such Global Note, less selling Agent's
commission.
G. Unless the selling Agent purchased such Global
Note as principal, the selling Agent will enter
an SDFS delivery order through DTC's
Participant Terminal System instructing DTC (i)
to debit interests
8
<PAGE> 24
in such Global Note to the selling Agent's
Participant account and credit interests in
such Global Note to the accounts of the
Participants with respect to such Global Note
and (ii) to debit the settlement account of
such Participants and credit the settlement
accounts of the selling Agent for an amount
equal to the price of such Global Note or
relevant interests therein.
H. Transfers of funds in accordance with SDFS
delivery orders described in Settlement
Procedures "F" and "G" will be settled in
accordance with SDFS operating procedures in
effect on the settlement date.
I. BONY will deposit funds in the Company's
account in the amount transferred to BONY in
accordance with Settlement Procedure "F".
J. Unless the selling Agent purchased such
Book-Entry Note or Notes as principal, the
selling Agent will confirm the purchase of
such Book-Entry Note or Notes to the purchaser
either by transmitting to the Participants
with respect to such Book-Entry Note or Notes
a confirmation order or orders through DTC's
institutional delivery system or by mailing a
written confirmation to such purchaser.
Receipt by the customer of the Prospectus,
appropriately amended or supplemented, must
accompany or precede any written offer of the
Book-Entry Note or Notes by the selling Agent
and any confirmation by the selling Agent of
purchase of the Book-Entry Note or Notes.
Settlement Procedures
Timetable: For sales by the Company of Book-Entry Notes to or
through the selling Agent (except pursuant to a
Terms Agreement) for settlement on the first
Business Day after the sale date, the Settlement
Procedures set forth above shall be completed as
soon as possible but not later than the respective
times (New York City time) set forth below:
<TABLE>
<CAPTION>
SETTLEMENT
PROCEDURE TIME
---------- ----
<C> <S>
A 11:00 A.M. on the sale date
B 12:00 Noon on the sale date
C 2:00 P.M. on the sale date
D 9:00 A.M. on the settlement date
E 10:00 A.M. on the settlement date
F-G 2:00 P.M. on the settlement date
H 4:45 P.M. on the settlement date
I-J 5:00 P.M. on the settlement date
</TABLE>
If a sale is to be settled more than one Business
Date after the sale date, Settlement Procedures
"A", "B" and "C" shall be completed as soon as
practicable but no later than 11:00 A.M., 12:00
Noon and 2:00 P.M., respectively, on the first
Business Day after the sale date. Settlement
Procedure "H" is subject to extension in accordance
with any extension of Fedwire closing deadlines and
in the other events specified in the SDFS operating
procedures in effect on the settlement date.
If settlement of a Book-Entry Note is rescheduled
or cancelled, BONY, after receiving notice from the
Company or the selling Agent, will deliver to DTC a
cancellation message through DTC's Participant
Terminal
9
<PAGE> 25
System by no later than 2:00 P.M. on the Business
Day immediately preceding the scheduled settlement
date.
Fails: If BONY fails to enter an SDFS delivery order with
respect to a Book-Entry Note pursuant to Settlement
Procedure "F", BONY may deliver to DTC, through
DTC's Participant Terminal System, as soon as
practicable a withdrawal message instructing DTC to
debit such Book-Entry Note to BONY's Participant
account, provided that BONY's Participant account
contains a principal amount of the Global Note
representing such Book-Entry Note that is at least
equal to the principal amount to be debited. If a
withdrawal message is processed with respect to all
the Book-Entry Notes represented by a Global Note,
BONY will cancel and destroy such Global Note, make
appropriate entries in BONY's records and deliver
to the Trustee and the Company a certificate of
destruction. If a withdrawal message is processed
with respect to one or more, but not all, of the
Book-Entry Notes represented by a Global Note, BONY
will exchange such Global Note for two Global
Notes, one of which shall represent such Book-Entry
Note or Notes and shall be likewise cancelled and
destroyed immediately after issuance and the other
of which shall represent the remaining Book-Entry
Notes previously represented by the surrendered
Global Note and shall bear the CUSIP number of the
surrendered Global Note.
If the purchase price for any Book-Entry Note is
not timely paid to the Participants with respect to
such Note by the beneficial purchaser thereof (or a
person, including an indirect participant in DTC,
acting on behalf of such purchaser), such
Participants, and, in turn, the selling Agent, may
enter SDFS delivery orders through DTC's
Participant Terminal System reversing the orders
entered pursuant to Settlement Procedures "F" and
"G", respectively. Thereafter, BONY will deliver
the withdrawal message and take the related actions
described in the preceding paragraph.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may
take any actions in accordance with SDFS operating
procedures then in effect.
In the event of a failure to settle with respect to
one or more, but not all, of the Book-Entry Notes
to have been represented by a Global Note, BONY
will provide, in accordance with Settlement
Procedures "D" and "F", for the authentication and
issuance of a Global Note representing the
Book-Entry Notes for which settlement is made and
will make appropriate entries in its records.
PART III: CERTIFICATED NOTES
Payments of Principal and
Interest: Upon presentment and delivery of the Certificated
Note, BONY will pay the principal amount of each
Certificated Note at final maturity and the final
installment of interest in immediately available
funds. All interest payments on a Certificated
Note, other than interest due at maturity, and all
Installments on Amortizing Notes, will be made by
check drawn on BONY and mailed by BONY to the
person entitled thereto as provided in the
Certificated Note. However, holders of $10 million
or more in aggregate principal amount of
Certificated Notes having the same Interest Payment
Date or Installment Date (whether having other
10
<PAGE> 26
identical or different terms and provisions) shall
be entitled to receive payments of interest or
Installments, other than at maturity, by wire
transfer of immediately available funds if
appropriate wire transfer instructions have been
received in writing by BONY not less than 15 days
prior to the applicable Interest Payment Date or
Installment Date. Any payment of principal or
interest required to be made on an Interest Payment
Date or Installment Date or at final maturity which
is not a Business Day need not be made on such day,
but may be made on the next succeeding Business Day
with the same force and effect as if made on the
Interest Payment Date or Installment Date or at
maturity, as the case may be, and, except in the
case of payment at final maturity, no interest
shall accrue for the period from and after such
Interest Payment Date or Installment Date or final
maturity.
Certificated Notes presented to BONY at final
maturity for payment will be cancelled by BONY. All
cancelled Certificated Notes held by BONY shall be
destroyed, and BONY shall deliver to the Company a
certificate of destruction.
Settlement Procedures: Settlement Procedures with regard to each
Certificated Note sold by the Company to or through
an Agent (except pursuant to a Terms Agreement)
shall be as follows:
A. The selling Agent will confirm with the
Company by telephone that such Note is a
Certificated Note and of the following
settlement information:
1. Name in which such Note is to be
registered ("Registered Owner").
2. Address of the Registered Owner and
address for payment of principal and
interest.
3. Taxpayer identification number of the
Registered Owner (if available).
4. Principal amount.
5. Maturity date.
6. Interest rate.
7. Interest Payment Dates or Installment
Dates.
8. Redemption provisions, if any.
9. Settlement date.
10. Price.
11. Selling Agent's commission, if any,
determined as provided in the
Distribution Agreement.
12. Amortization schedule, if any.
13. Denomination in which such Note is to be
issued.
14. Any other applicable terms.
B. The Company will advise BONY by telephone or
electronic transmission (confirmed in
writing at any time on the same date) of the
information set forth in Settlement
Procedure "A" above.
C. BONY will complete and distribute a
pre-printed 4-ply Note packet containing the
following documents (or a 1-ply Note with
attached confirmation and 3 appropriately
designated photocopies thereof) in forms
approved by the Company and the selling
Agent:
11
<PAGE> 27
1. Certificated Note with customer
information.
2. Stub (copy) One -- for BONY.
3. Stub (copy) Two -- for the selling
Agent.
4. Stub (copy) Three -- for the Company.
D. BONY will deliver the Certificated Note (with
the confirmation) and Stub (copy) Two to the
selling Agent or to its representative
designated in writing by the selling Agent
(the "Representative") at an office of the
selling Agent or the Representative located
in the borough of Manhattan and south of
Chambers Street, and the selling Agent or its
Representative will acknowledge receipt of
the Certificated Note by stamping the
delivery receipt with the date and time
received and returning it to BONY. Such
delivery will be made only against such
receipt and evidence that instructions have
been given by the selling Agent for payment
to the account of the Company in funds
available for immediate use, of an amount
equal to the principal amount of the
Certificated Note. In the event that the
instructions given by the selling Agent for
payment to the account of the Company are
revoked, the Company will as promptly as
possible wire transfer to the account of the
selling Agent or Representative an amount of
immediately available funds equal to the
amount of such payment.
E. The selling Agent or its Representative will
deliver the Certificated Note (with
confirmation) to the customer against
payment in immediately available funds.
Receipt by the customer of the Prospectus,
appropriately amended or supplemented, must
accompany or precede any written offer of
the Certificated Note by the selling Agent,
any delivery of the Certificated Note by the
selling Agent and any confirmation by the
selling Agent of purchase of the
Certificated Note.
If the selling Agent is instructed by the
purchaser to deliver the Certificated Note
and confirmation to different locations, the
Certificated Note and the confirmation will
each be accompanied or preceded by the
Prospectus, appropriately amended or
supplemented, then in effect.
F. The selling Agent or its Representative will
obtain the acknowledgement of receipt of the
Certificated Note by the customer through
completion of Stub (copy) Two.
G. BONY will send Stub (copy) Three by
first-class mail to the Company.
Periodically, BONY will also send a statement
to the Company setting forth the principal
amount of the Certificated Notes outstanding
as of that date after giving effect to such
transactions.
In the event of a purchase of Certificated
Notes by the Selling Agent, as principal,
appropriate settlement details will be set
forth in the applicable Terms Agreement to be
entered into between the selling Agent,
BellSouth and the Company.
12
<PAGE> 28
Settlement Procedures
Timetable: For offers accepted by the Company, the Settlement
Procedures set forth above shall be completed on or
before the respective times (New York City time)
set forth below:
<TABLE>
<CAPTION>
SETTLEMENT
PROCEDURE TIME
---------- ----
<C> <S>
A 5:00 P.M. on day of offer, if available
B 3:00 P.M. on Business Day prior to settlement
C-D 2:15 P.M. on day of settlement
E-F 5:00 P.M. on day of settlement
G 5:00 P.M. on day of settlement
</TABLE>
Confirmations: The selling Agent shall, for each Certificated Note
offer received by it and accepted by the Company,
issue a confirmation to the purchaser, setting
forth the details set forth above.
Note Deliveries and Cash
Payment: Upon instructions from the Company, BONY will
deliver the Certificated Notes to the selling Agent
or its Representative (for the benefit of the
purchaser).
Delivery by BONY of the Certificated Notes will be
made in accordance with paragraph D of the
Settlement Procedures.
Fails: For offers received by the selling Agent, in the
event that a purchaser shall fail to accept
delivery of and make payment for a Certificated
Note, the selling Agent will notify BONY and the
Company by telephone, confirmed in writing, and
return the Certificated Note to BONY. Upon receipt
of such notice, the Company will immediately wire
transfer to the account of the selling Agent an
amount equal to the amount previously credited
thereto in respect of such Certificated Note. Such
wire transfer will be made on the settlement date,
if possible, and in any event not later than the
Business Day following the settlement date. If such
fail shall have occurred for any reason other than
a default by the selling Agent in the performance
of its obligations hereunder and under the
Distribution Agreement, the company will reimburse
the selling Agent on an equitable basis for its
loss of the use of funds during the period when
such funds were credited to the account of the
Company.
Immediately upon receipt of the Certificated Note
in respect of which the fail occurred, BONY will
make appropriate entries in its records, cancel and
destroy the Certificate Note and deliver to the
Company a certificate of destruction.
13
<PAGE> 1
EXHIBIT 4-B
(FACE)
CUSIP NO.:
REGISTERED REGISTERED
NO. FXR-
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.
BELLSOUTH CAPITAL
FUNDING CORPORATION
MEDIUM-TERM NOTE, SERIES C
(FIXED RATE)
<TABLE>
<S> <C>
ORIGINAL ISSUE DATE: MATURITY DATE:
ISSUE PRICE: INITIAL REDEMPTION DATE:
INTEREST RATE: PRINCIPAL AMOUNT:
INITIAL OPTIONAL REDEMPTION DATE: INITIAL OPTIONAL REDEMPTION PRICE:
PREMIUM REDUCTION AMOUNT:
</TABLE>
BellSouth Capital Funding Corporation, a Georgia corporation (herein
referred to as the "Company"), for value received, hereby promises to pay to
Cede & Co. or its registered assigns, the principal sum of Dollars
($ ) on the maturity date shown above (the "Maturity Date") and to pay
interest thereon at the rate per annum shown above until the principal hereof is
paid or made available for payment.
(Continued on next page)
---------------------------------------------------------------------------
Reference is hereby made to the further provisions of this Note set
forth on the succeeding pages hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, BellSouth Capital Funding Corporation has caused this
Note to be duly executed under its corporate seal.
[CORPORATE SEAL] BELLSOUTH CAPITAL FUNDING CORPORATION
By:
--------------------------------------
Vice President and Treasurer
------------------------------------
Secretary
CERTIFICATION OF AUTHENTICATION
This is one of the Securities of the
series designated herein and referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as
Authenticating Agent
By:
- --------------------------------------
Authorized Officer
<PAGE> 2
(Continued from previous page)
The Company will pay interest semiannually on March 1 and September 1 (each an
"Interest Payment Date"), commencing with the Interest Payment Date immediately
following the Original Issue Date shown above (provided, however, that if the
Original Issue Date is after the date 15 calendar days prior to the
corresponding Interest Payment Date the first payment of interest on this Note
shall be paid on the next succeeding Interest Payment Date to the holder of
record on the Record Date with respect to such succeeding Interest Payment
Date), and on the Maturity Date shown above. Interest on this Note will accrue
from the most recent Interest Payment Date to which interest has been paid or
duly provided for or, if no interest has been paid or duly provided for, from
the Original Issue Date shown above. The amount of interest payable on any
Interest Payment Date shall be computed on the basis of a 360-day year of twelve
30-day months. The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture referred to
below, be paid to the person in whose name this Note is registered at the close
of business on the applicable Record Date. Payment of the principal of and
interest on this Note will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, the City of New York,
State of New York, in such coin or currency of the United States of America as
at the time of payment shall be legal tender for payment of public and private
debts in immediately available funds. If any Interest Payment Date would
otherwise be a day that is not a Business Day (as hereinafter defined), the
interest payment will be postponed to the next day that is a Business Day and no
interest on such payment shall accrue for the period from and after the Interest
Payment Date. "Business Day" means any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close in the City of New York or
Atlanta.
The "Record Date" with respect to any Interest Payment Date shall be the
date 15 calendar days prior to such Interest Payment Date, whether or not such
date shall be a Business Day; provided, with respect to interest payable at
maturity (whether or not the Maturity Date is an Interest Payment Date), the
Record Date for such interest payment due on such date shall be the Maturity
Date.
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been manually signed by the
Authenticating Agent under the Indenture referred to below.
This Note is one of a duly authorized issue of Securities of the Company
(herein referred to as the "Securities"), issued and to be issued in one or more
series under and pursuant to an indenture dated as of August 1, 1992 (the
"Indenture") among the Company, BellSouth Corporation, a Georgia corporation
("BellSouth"), and The Bank of New York, as successor to Wachovia Bank of
Georgia, N.A., as Trustee (the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company, BellSouth and the Holders (the words "Holders" or "Holder"
meaning the registered holders or registered holder) of the Securities and the
terms upon which the Securities are to be authenticated and delivered. All of
the Securities will have the benefit of a Support Agreement dated as of October
15, 1987, as amended as of August 1, 1992 (the "Support Agreement"), between the
Company and BellSouth. In the Support Agreement, BellSouth has agreed to ensure
the timely payment of principal, premium, if any, and interest owed on the
Securities; however, no Holder will have recourse to or against the stock or
assets of BellSouth Telecommunications, Inc. (the "Telephone Company") or any
interest of BellSouth or the Company in the Telephone Company. This Note is one
of the series of Securities designated as Medium-Term Notes, Series C (herein
referred to as "Notes").
In case an Event of Default with respect to the Notes, as defined in the
Indenture, shall have occurred and be continuing, the principal hereof may be
declared, and upon such declaration, shall become due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in the principal amount of the outstanding
Securities of each series affected by any such amendment or modification (with
each series voting as one class). The Indenture also contains
2
<PAGE> 3
provisions permitting the Holders of not less than a majority in principal
amount of the outstanding Securities of each series affected thereby (with each
series voting as one class), on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture. The Indenture also provides that, regarding the Securities of any
series, the Holders of not less than a majority in principal amount of the
outstanding Securities of such series may waive certain past defaults and their
consequences on behalf of the Holders of all Securities of such series. Any such
consent or waiver by the Holder of this Note shall be conclusive and binding
upon such Holder and upon all future holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent or waiver is made upon this Note.
The Indenture contains provisions setting forth certain conditions in the
institution of proceedings by Holders of Securities with respect to the
Indenture or for any remedy under the Indenture.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the place, at the respective times, at the rate and in the coin or currency
herein prescribed.
The Notes are issuable as registered Notes without coupons in denominations
of U.S. $1,000 or any amount in excess thereof which is an integral multiple of
U.S. $1,000. At the office or agency of the Company referred to above and in the
manner and subject to the limitations provided in the Indenture, Notes may be
exchanged without a service charge for a like aggregate principal amount of
Notes of other authorized denominations having the same maturity, interest rate,
redemption provisions and original issue date.
If an Initial Optional Redemption Date is specified above, this Note may be
redeemed in accordance with the terms hereinafter specified, at any time on or
after such Initial Optional Redemption Date at an Initial Redemption Price
specified above (expressed as a percentage of the Outstanding principal amount
hereof), such Initial Optional Redemption Price to be decreased annually on the
anniversary of the Initial Optional Redemption Date specified above by the
Premium Reduction Amount specified above (expressed as a percentage of the
Outstanding principal amount hereof) until the Redemption Price equals 100% of
the outstanding principal amount hereof; provided, that if no such Initial
Optional Redemption Date is shown, this Note is not redeemable. Notice of any
redemption shall be mailed to the registered Holders of the Notes designated for
redemption at their last registered addresses not less than 30 nor more than 90
days prior to the date of redemption, subject to all the conditions and
provisions of the Indenture.
This Note may only be transferred as provided in the Indenture. No service
charge shall be made for any such transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
The Company, the Trustee, and any agent of the Company or the Trustee may
deem and treat the Holder hereof as the absolute owner hereof (whether or not
the Note shall be overdue and notwithstanding any notation of ownership or other
writing hereon) for the purpose of receiving payment of or on account of the
principal hereof and, subject to the provisions above, interest hereon, and for
all other purposes, and neither the Company nor the Trustee nor any such agent
shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Note, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto, against any officer or director as such, past, present or future, of
the Company or of any successor corporation, either directly or through the
Company or of any successor corporation, whether by virtue of any constitution,
statute or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
The Notes will be general unsecured obligations of the Company but will be
entitled to the benefits of the Support Agreement.
3
<PAGE> 4
This Note shall be deemed to be a contract made under the laws of the State
of New York and for all purposes shall be governed by and construed in
accordance with the laws of said State.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
4
<PAGE> 1
EXHIBIT 4-C
(FACE)
REGISTERED REGISTERED
NO. FLR-
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co., has an interest herein.
BELLSOUTH CAPITAL FUNDING CORPORATION
MEDIUM-TERM NOTE, SERIES C
(FLOATING RATE)
<TABLE>
<S> <C>
PRINCIPAL AMOUNT: MATURITY DATE:
ORIGINAL ISSUE DATE: SPREAD:
INDEX MATURITY: SPREAD MULTIPLIER: %
INTEREST PAYMENT PERIOD: MAXIMUM INTEREST RATE:
INTEREST RATE RESET PERIOD: MINIMUM INTEREST RATE:
INTEREST PAYMENT DATES: CALCULATION DATES:
INTEREST RESET DATES: CALCULATION AGENT:
INTEREST DETERMINATION DATES: INITIAL OPTIONAL
INITIAL OPTIONAL REDEMPTION DATE: REDEMPTION PRICE: %
PREMIUM REDUCTION AMOUNT: INITIAL INTEREST RATE:
BASE RATE:
</TABLE>
BellSouth Capital Funding Corporation, a Georgia corporation (herein
referred to as the "Company"), for value received, hereby promises to pay to
Cede & Co. or its registered assigns, the principal sum of Dollars
($ ), at the office or agency of the Company in the Borough of Manhattan,
The City of New York, on the Maturity Date set forth above, in such coin or
currency of the United States of
(Continued on next page)
---------------------------------------------------------------------------
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE SUCCEEDING PAGES. SUCH FURTHER PROVISIONS SHALL HAVE THE SAME EFFECT AS
THOUGH FULLY SET FORTH AT THIS PLACE.
IN WITNESS WHEREOF, BellSouth Capital Funding Corporation has caused this
instrument to be duly executed under its corporate seal.
[CORPORATE SEAL] BELLSOUTH CAPITAL FUNDING CORPORATION
By:
--------------------------------------
Vice President and Treasurer
------------------------------------
Secretary
CERTIFICATION OF AUTHENTICATION
This is one of the Securities of the
series designated herein and referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as
Authenticating Agent
By:
- --------------------------------------
Authorized Officer
<PAGE> 2
(Continued from previous page)
America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest thereon from the Original Issue
Date set forth above, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, on the Interest Payment Dates set
forth above, commencing on the first Interest Payment Date following the
Original Issue Date at the rate per annum determined in accordance with the
following provisions under the heading or headings "Determination of Commercial
Paper Rate", "Determination of LIBOR" or "Determination of Treasury Rate", as
the case may be, depending on the Base Rate specified above, until the principal
hereof is paid or made available for payment (provided, however, that if the
Original Issue Date shown above is after the date 15 calendar days prior to the
corresponding Interest Payment Date, interest payments will commence on the next
succeeding Interest Payment Date) and on the Maturity Date. The interest so
payable on any Interest Payment Date and principal payable upon the Maturity
Date or upon redemption, if applicable, will, subject to certain exceptions
provided in the Indenture hereinafter referred to, be paid to the person in
whose name this Note is registered at the close of business on each Record Date,
as hereinafter defined. Payments of principal and interest due at the Maturity
Date or upon redemption, if applicable, will be made in immediately available
funds, and interest payable at the Maturity Date or upon redemption, if
applicable, will be payable to the person to whom principal is payable.
If an Initial Optional Redemption Date is specified above, this Note may be
redeemed in accordance with the terms hereinafter specified, at any time on or
after such Initial Optional Redemption Date at an Initial Redemption Price
specified above (expressed as a percentage of the Outstanding principal amount
hereof), such Initial Optional Redemption Price to be decreased annually on the
anniversary of the Initial Optional Redemption Date specified above by the
Premium Reduction Amount specified above (expressed as a percentage of the
Outstanding principal amount hereof) until the Redemption Price equals 100% of
the outstanding principal amount hereof; provided, that if no such Initial
Optional Redemption Date is shown, this Note is not redeemable. Notice of any
redemption shall be mailed to the registered Holders of the Notes designated for
redemption at their last registered addresses not less than 30 nor more than 90
days prior to the date of redemption, subject to all the conditions and
provisions of the Indenture.
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been manually signed by the
Authenticating Agent under the Indenture referred to below.
This Note is one of a duly authorized issue of Securities of the Company
(herein referred to as the "Securities"), issued and to be issued in one or more
series under and pursuant to an indenture dated as of August 1, 1992 (the
"Indenture") among the Company, BellSouth Corporation, a Georgia corporation
("BellSouth"), and The Bank of New York, as successor to Wachovia Bank of
Georgia, N.A., as Trustee (the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company, BellSouth and the Holders (the words "Holders" or "Holder"
meaning the registered holders or registered holder) of the Securities, and the
terms upon which the Securities are to be authenticated and delivered. All of
the Securities will have the benefit of a Support Agreement dated as of October
15, 1987, as amended as of August 1, 1992 (the "Support Agreement"), between the
Company and BellSouth. In the Support Agreement, BellSouth has agreed to ensure
the timely payment of principal, premium, if any, and interest owed on the
Securities; however, no Holder will have recourse to or against the stock or
assets of BellSouth Telecommunications, Inc. (the "Telephone Company") or any
interest of BellSouth or the Company in the Telephone Company. This Note is one
of a series of Securities designated as the Medium-Term Notes, Series C (herein
referred to as the "Notes").
Commencing with the first Interest Reset Date specified on the face hereof
following the Original Issue Date, the rate at which interest on this Note is
payable shall be reset daily, weekly, monthly, quarterly, semi-annually or
annually as shown above under "Interest Rate Reset Period"; provided, however,
that the interest rate in effect from the Original Issue Date to the first
Interest Reset Date specified on the face hereof will be
2
<PAGE> 3
the Initial Interest Rate. Each such adjusted rate shall be applicable on and
after the Interest Reset Date to which it relates but not including the next
succeeding Interest Reset Date or until maturity, or redemption, as the case may
be. If any Interest Reset Date specified on the face hereof would otherwise be a
day that is not a Business Day, such Interest Reset Date shall be postponed to
the next day that is a Business Day, except that if (i) the rate of interest on
this Note shall be determined in accordance with the provisions of the heading
"Determination of LIBOR" below, and (ii) such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day. Subject to applicable provisions of law and except as
specified herein, on each Interest Reset Date, the rate of interest on this Note
shall be the rate determined in accordance with the provisions of the applicable
heading below.
Determination of Commercial Paper Rate. If the Interest Rate Basis on
this Note is the Commercial Paper Rate (a "Commercial Paper Rate Note"),
the interest rate with respect to this Note shall equal the Commercial
Paper Rate (calculated as described below) plus or minus the spread, if
any, specified above and multiplied by the Spread Multiplier, if any,
specified above. The Commercial Paper Rate shall equal the Money Market
Yield (calculated as described below) on the Calculation Date (defined
below) determined by the Calculation Agent as of the second Business Day
prior to each Interest Reset Date (the "Commercial Paper Interest
Determination Date") for commercial paper having the Index Maturity
designated on the face hereof as such rate is published by the Board of
Governors of the Federal Reserve System in "Statistical Release H.15(519),
Selected Interest Rates" ("H.15(519)") or any successor publication of the
Board of Governors under the heading "Commercial Paper -- Nonfinancial". In
the event such rate is not published by 9:00 A.M., New York City time, on
the Calculation Date pertaining to such Commercial Paper Interest
Determination Date, then the Commercial Paper Rate shall be the Money
Market Yield on such Commercial Paper Interest Determination Date of the
rate for Commercial Paper of the specified Index Maturity as published by
the Federal Reserve Bank of New York in its daily statistical release,
"Composite 3:30 P.M. Quotations for U.S. Government Securities" ("Composite
Quotations") under the heading "Commercial Paper". If by 3:00 P.M., New
York City time, on such Calculation Date such rate is not yet available in
either H.15(519) or Composite Quotations, then the Commercial Paper Rate
shall be the Money Market Yield of the arithmetic mean (each as rounded to
the nearest one hundred-thousandth of a percentage point) of the offered
rates as of 11:00 A.M., New York City time, on such Commercial Paper
Interest Determination Date of three leading dealers of commercial paper in
the City of New York selected by the Calculation Agent for the commercial
paper Index Maturity designated on the face hereof, placed for an
industrial issuer whose bond rating is "AA", or the equivalent, from a
nationally recognized statistical rating organization; provided, however,
that if the dealers selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, the rate of interest in effect for
the applicable period will be the rate of interest in effect on such
Commercial Paper Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage
rounded to the nearest one hundred-thousandth of a percentage point)
calculated in accordance with the following formula:
<TABLE>
<C> <C> <C> <C> <C>
D X 360
Money Market Yield = ------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to per annum rate for the commercial paper quoted on a
bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Determination of LIBOR. If the Interest Rate Basis on this Note is
LIBOR (a "LIBOR Note") the interest rate payable with respect to this Note
shall be equal to LIBOR (calculated as described
3
<PAGE> 4
below) plus or minus the Spread, if any, specified above and multiplied by
the Spread Multiplier, if any, specified above, LIBOR shall be calculated
as follows:
(i) On the second London Banking Day prior to the Interest Reset
Date (a "LIBOR Determination Date"), the Calculation Agent will
determine (a) the arithmetic mean of the offered rates for deposits in
United States dollars for the period of the Index Maturity which appear
on the Reuters Screen LIBO Page at approximately 11:00 A.M., London
time, on such LIBOR Determination Date, if at least two such offered
rates appear on the Reuters Screen LIBO Page ("LIBOR Reuters"), or (b)
the rate for deposits in United States dollars for the period of the
Index Maturity that appears on the Telerate Page 3750 as of 11:00 a.m.,
London time, on such LIBOR Determination Date ("LIBOR Telerate").
"Reuters Screen LIBO Page" means the display designated as Page "LIBO"
on the Reuters Monitor Money Rate Service (or such other page as may
replace the LIBO page for the purpose of displaying London interbank
offered rates of major banks). "Telerate Page 3750" means the display
designated as page "3750" on the Telerate Service (or such other page as
may replace the 3750 page on that service or such other service or
services as may be nominated by the British Bankers' Association for the
purpose of displaying London interbank offered rates for U.S. dollar
deposits). If neither LIBOR Reuters nor LIBOR Telerate is specified in
the applicable Pricing Supplement, LIBOR will be determined as if LIBOR
Telerate had been specified. If fewer than two offered rates appear on
the Reuters Screen LIBO Page, or if no rate appears on the Telerate Page
3750, as applicable, LIBOR in respect of that LIBOR Interest
Determination Date will be determined as if the parties had specified
the rate described in (ii) below.
(ii) If fewer than two offered rates appear on the Reuters Screen
LIBO Page or if no rate appears on Telerate Page 3750, the Calculation
Agent will request the principal London offices of each of four major
banks in the London interbank market, as selected by the Calculation
Agent, to provide the Calculation Agent with its offered quotations for
deposits in United States dollars for the period of the Index Maturity
to prime banks in the London interbank market at approximately 11:00
A.M., London time, on such LIBOR Determination Date and in a principal
amount equal to an amount of not less than U.S. $1 million that is
representative of a single transaction in such market at such time. If
at least two such quotations are provided, LIBOR will be the arithmetic
mean of such quotations. If fewer than two quotations are provided,
LIBOR in respect of that LIBOR Determination Date will be the arithmetic
mean of rates quoted by three major banks in the City of New York
selected by the Calculation Agent (after consultation with the Company)
at approximately 11:00 A.M., New York City time, on such LIBOR
Determination Date for loans in U.S. dollars to leading European banks,
for the period of the Index Maturity and in a principal amount equal to
an amount of not less than U.S. $1 million that is representative for a
single transaction in such market at such time; provided, however, that
if fewer than three banks selected as aforesaid by the Calculation Agent
are quoting rates as mentioned in this sentence, the rate of interest in
effect for the applicable period will be the rate of interest in effect
on such LIBOR Determination Date.
Determination of Treasury Rate. If the Interest Rate Basis on this
Note is the Treasury Rate (a "Treasury Rate Note"), the interest payable
with respect to this Note shall equal the Treasury Rate (calculated as
described below) plus or minus the Spread, if any, specified above, and
multiplied by the Spread Multiplier, if any, specified above. The Treasury
Rate shall equal the rate for the auction held on the Treasury Rate
Determination Date (as defined below) pertaining to such Interest Reset
Date of direct obligations of the United States ("Treasury Bills") having
the Index Maturity designated in the applicable Pricing Supplement, as
published in H.15(519) under the heading "Treasury Bills-auction average
(investment)" or, if not so published by 9:00 A.M., New York City time, on
the Calculation Date (as defined below) pertaining to such Treasury Rate
Determination Date, the auction average rate (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that
4
<PAGE> 5
the results of the auction of Treasury Bills having the Index Maturity
designated in the applicable Pricing Supplement are not published or
reported as provided above by 3:00 P.M., New York City time, on such
Calculation Date or if no such auction is held on such Treasury Rate
Determination Date, then the Treasury Rate shall be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market
bid rates, as of approximately 3:30 P.M., New York City time, on such
Treasury Rate Determination Date, of three leading primary United States
government securities dealers selected by the Calculation Agent for the
issue of Treasury Bills with a remaining maturity closest to the Index
Maturity designated in the applicable Pricing Supplement; provided,
however, that if the dealers selected as aforesaid by the Calculation Agent
are not quoting bid rates as mentioned in this sentence, the Treasury Rate
for such Interest Reset Date will be the Treasury Rate in effect on such
Treasury Rate Determination Date.
The "Treasury Rate Determination Date" pertaining to an Interest Reset
Date will be the day of the week in which such Interest Reset Date falls on
which Treasury Bills would normally be auctioned. Treasury Bills are
normally sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If,
as a result of a legal holiday, an auction is so held on the preceding
Friday, such Friday will be the Treasury Rate Determination Date pertaining
to the Interest Reset Date occurring in the next succeeding week. If an
auction should fall on an Interest Reset Date, then such Interest Reset
Date shall be postponed to the next succeeding Business Day.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, shown above. The Calculation Agent shall calculate the
interest rate on this Note in accordance with the foregoing on or before each
Calculation Date. The interest rate on this Note will in no event be higher than
the maximum rate permitted by New York law as the same may be modified by United
States law of general applicability.
The Calculation Agent will, upon the request of the Holder of this Note,
provide to such Holder the interest rate hereon then in effect and, if
determined, the interest rate which will become effective as a result of a
determination made with respect to the most recent Interest Determination Date.
The Calculation Date, if applicable, pertaining to any Commercial Paper
Determination Date, LIBOR Determination Date or Treasury Rate Determination Date
(an "Interest Determination Date") shall be the date(s) specified above or, if
no such date is specified, the earlier of (i) the tenth calendar day after such
Interest Determination Date, or, if such day is not a Business Day, the next
succeeding Business Day, or (ii) the Business Day preceding each Interest
Payment Date or Maturity Date, as the case may be.
If any Interest Payment Date specified above would otherwise be a day that
is not a Business Day, the Interest Payment Date shall be postponed to the next
day that is a Business Day, except that if (i) the Note is a LIBOR Note and (ii)
such Business Day is in the next succeeding calendar month, such Interest
Payment Date shall be the immediately preceding Business Day. If the Maturity
Date would fall on a day that is not a Business Day, the payment of principal
and interest will be made on the next succeeding Business Day, and no interest
on such payments shall accrue for the period from and after such Maturity Date.
"Business Day" means any day, other than a Saturday or Sunday, and that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in the City of New York or Atlanta and
with respect to LIBOR Notes, that is also a London Banking Day. "London Banking
Day" means any day on which dealings in deposits in U.S. dollars are transacted
in the London interbank market.
The "Record Date" with respect to any Interest Payment Date shall be the
date 15 calendar days prior to such Interest Payment Date, whether or not such
date shall be a Business Day, provided, that if a Note is issued after the date
15 calendar days prior to an Interest Payment Date and on or before such
Interest Payment Date, the Record Date with respect to interest for the period
from issuance to such Interest Payment
5
<PAGE> 6
Date shall be the next succeeding Record Date, and provided further, with
respect to interest payable at maturity (whether or not the Maturity Date is an
Interest Payment Date) the Record Date for such interest payment due on such
Interest Payment Date shall be the Maturity Date.
Interest payments for this Note will include interest accrued to but
excluding the Interest Payment Dates; provided, however, that if the Interest
Reset Dates with respect to such Note are weekly, interest payable on any
Interest Payment Date, other than interest payable on any date on which
principal hereof is payable, will include interest accrued to and including the
next preceding regular Record Date. Accrued interest hereon from the Original
Issue Date or from the last date to which interest hereon has been paid, as the
case may be, shall be an amount calculated by multiplying the face amount hereof
by an accrued interest factor. Such accrued interest factor shall be computed by
adding the interest factors calculated for each day from the Original Issue Date
or from the last date to which interest shall have been paid, as the case may
be, to the date for which accrued interest is being calculated. The interest
factor (expressed as a decimal rounded upward to the nearest one
hundred-thousandth of a percentage point) for each such day will be computed by
dividing the interest rate (expressed as a decimal, rounded upward to the
nearest one hundred-thousandth of a percentage point) applicable to such day by
360, in the case of LIBOR Notes or Commercial Paper Rate Notes, or by the actual
number of days in the year in the case of the Treasury Rate Notes.
In case an Event of Default with respect to the Notes, as defined in the
Indenture, shall have occurred and be continuing, the principal hereof may be
declared and, upon such declaration, shall become due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture permits, with certain exceptions as herein provided the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in the principal amount of the outstanding
Securities of each series affected by any such amendment or modification (with
each series voting as one class). The Indenture also contains provisions
permitting the Holders of not less than a majority in principal amount of the
outstanding Securities of each series affected thereby (with each series voting
as one class), on behalf of the Holders of all Securities of such series to
waive compliance by the Company with certain provisions of the Indenture. The
Indenture also provides that, regarding the Securities of any series, the
Holders of not less than a majority in principal amount of the outstanding
Securities of such series may waive certain past defaults and their consequences
on behalf of the Holders of all Securities of such series. Any such consent or
waiver by the Holder of this Note should be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note.
The Indenture contains provisions setting forth certain conditions to the
institution of proceedings by Holders or Securities with respect to the
Indenture or for any remedy under the Indenture.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the place, at the respective times, at the rate and in the coin or currency
herein prescribed.
The Notes are issuable as registered Notes without coupons in the
denominations of U.S. $1,000 or any amount in excess thereof which is an
integral multiple of U.S. $1,000. At the office or agency of the Company
referred to above and in the manner and subject to the limitations provided in
the Indenture, Notes may be exchanged without a service charge for a like
aggregate principal amount of Notes of other authorized denominations having the
same maturity, interest rate, optional redemption provisions and original issue
date.
This Note may only be transferred as provided in the Indenture. No service
charge shall be made for any such transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
6
<PAGE> 7
The Company, the Trustee, and any agent of the Company or the Trustee may
deem and treat the Holder hereof as the absolute owner hereof (whether or not
this Note shall be overdue and notwithstanding any notation of ownership or
other writing hereon) for the purpose of receiving payment of or on account of
the principal hereof and, subject to the provisions above, interest hereon, and
for all other purposes, and neither the Company nor the Trustee nor any such
agent shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Note, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto, against any officer or director as such, past, present or future, of
the Company or of any successor corporation, either directly or through the
Company or of any successor corporation, whether by virtue of any constitution,
statute or rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
The Notes will be general unsecured obligations of the Company but will be
entitled to the benefits of the Support Agreement.
This Note shall be deemed to be a contract made under the laws of the State
of New York and for all purposes shall be governed by and construed in
accordance with the laws of said State.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
7
<PAGE> 1
EXHIBIT 4-D
(FACE)
REGISTERED REGISTERED
NO. RA
Unless this certificate is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
Cede & Co. has an interest herein.
BELLSOUTH CAPITAL
FUNDING CORPORATION
MEDIUM-TERM NOTE, SERIES C
(AMORTIZING NOTE)
<TABLE>
<S> <C>
ORIGINAL ISSUE DATE: MATURITY DATE:
ISSUE PRICE: INITIAL REDEMPTION DATE:
INTEREST RATE: PRINCIPAL AMOUNT:
INITIAL OPTIONAL REDEMPTION DATE: NO. OF INSTALLMENTS:
PREMIUM REDUCTION AMOUNT: INITIAL OPTIONAL REDEMPTION PRICE:
</TABLE>
BellSouth Capital Funding Corporation, a Georgia corporation (herein
referred to as the "Company"), for value received, hereby promises to pay to
Cede & Co. or its registered assigns, the principal sum of Dollars
($ ) on the maturity date shown above (the "Maturity Date") and to pay
interest thereon at the rate per annum shown above until the principal hereof is
paid or made available for payment
(Continued on next page)
---------------------------------------------------------------------------
Reference is hereby made to the further provisions of this Note set forth
on the succeeding pages hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, BellSouth Capital Funding Corporation has caused this
Note to be duly executed under its corporate seal.
[CORPORATE SEAL] BELLSOUTH CAPITAL FUNDING CORPORATION
By:
--------------------------------------
Vice President and Treasurer
------------------------------------
Secretary
CERTIFICATION OF AUTHENTICATION
This is one of the Securities of the
series designated herein and referred
to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as
Authenticating Agent
By:
- --------------------------------------
Authorized Officer
<PAGE> 2
(Continued from previous page)
in the number of installments set forth above (each an "Installment") of an
amount for each $1,000.00 principal amount as set forth on Schedule I hereto, on
March 1 and September 1 (each an "Installment Date"), commencing with the
Installment Date immediately following the Original Issue Date shown above and
at maturity (provided, however, that if the Original Issue Date is after the
date 15 calendar days prior to the corresponding Installment Date the first
Installment on this Note shall be paid on the next succeeding Installment Date
to the holder of record on the Record Date with respect to such succeeding
Installment Date), and on the Maturity Date shown above. Interest on this Note
will accrue from the most recent Installment Date to which interest has been
paid or duly provided for or, if no interest has been paid or duly provided for,
from the Original Issue Date shown above. The amount of interest payable on any
Installment Date shall be computed on the basis of a 360-day year of twelve
30-day months. The interest so payable, and punctually paid or duly provided
for, on any Installment Date will, as provided in the Indenture referred to
below, be paid to the person in whose name this Note is registered at the close
of business on the applicable Record Date. Payment of the principal of and
interest on this Note will be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, the City of New York,
State of New York, in such coin or currency of the United States of America as
at the time of payment shall be legal tender for payment of public and private
debts in immediately available funds. If any Installment Date would otherwise be
a day that is not a Business Day (as hereinafter defined), the interest payment
will be postponed to the next day that is a Business Day and no interest on such
payment shall accrue for the period from and after the Installment Date.
"Business Day" means any day, other than a Saturday or Sunday, that is neither a
legal holiday nor a day on which banking institutions are authorized or required
by law or regulation to close in the City of New York or Atlanta.
The "Record Date" with respect to any Interest Payment Date shall be the
date 15 calendar days prior to such Installment Date, whether or not such date
shall be a Business Day; provided, with respect to interest payable at maturity
(whether or not the Maturity Date is an Installment Date), the Record Date for
such interest payment due on such date shall be the Maturity Date.
This Note shall not be valid or become obligatory for any purpose until the
certificate of authentication hereon shall have been manually signed by the
Authenticating Agent under the Indenture referred to below.
This Note is one of a duly authorized issue of Securities of the Company
(herein referred to as the "Securities"), issued and to be issued in one or more
series under and pursuant to an indenture dated as of August 1, 1992 (the
"Indenture") among the Company, BellSouth Corporation, a Georgia corporation
("BellSouth"), and The Bank of New York, as successor to Wachovia Bank of
Georgia, N.A., as Trustee (the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company, BellSouth and the Holders (the words "Holders" or "Holder"
meaning the registered holders or registered holder) of the Securities and the
terms upon which the Securities are to be authenticated and delivered. All of
the Securities will have the benefit of a Support Agreement dated as of October
15, 1987, as amended as of August 1, 1992 (the "Support Agreement"), between the
Company and BellSouth. In the Support Agreement, BellSouth has agreed to ensure
the timely payment of principal, premium, if any, and interest owed on the
Securities; however, no Holder will have recourse to or against the stock or
assets of BellSouth Telecommunications, Inc. (the "Telephone Company") or any
interest of BellSouth or the Company in the Telephone Company. This Note is one
of a series of Securities designated as Medium-Term Notes, Series C (herein
referred to as the "Notes").
In case an Event of Default with respect to the Notes, as defined in the
Indenture, shall have occurred and be continuing, the principal hereof may be
declared, and upon such declaration, shall become due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
2
<PAGE> 3
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in the principal amount of the outstanding
Securities of each series affected by any such amendment or modification (with
each series voting as one class). The Indenture also contains provisions
permitting the Holders of not less than a majority in principal amount of the
outstanding Securities of each series affected thereby (with each series voting
as one class), on behalf of the Holders of all Securities of such series, to
waive compliance by the Company with certain provisions of the Indenture. The
Indenture also provides that, regarding the Securities of any series, the
Holders of not less than a majority in principal amount of the outstanding
Securities of such series may waive certain past defaults and their consequences
on behalf of the Holders of all Securities of such series. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent or waiver is made upon this Note.
The Indenture contains provisions setting forth certain conditions in the
institution of proceedings by Holders of Securities with respect to the
Indenture or for any remedy under the Indenture.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the place, at the respective times, at the rate and in the coin or currency
herein prescribed.
The Notes are issuable as registered Notes without coupons in denominations
of U.S. $1,000 or any amount in excess thereof which is an integral multiple of
U.S. $1,000. At the office or agency of the Company referred to above and in the
manner and subject to the limitations provided in the Indenture, Notes may be
exchanged without a service charge for a like aggregate principal amount of
Notes of other authorized denominations having the same maturity, interest rate,
redemption provisions and original issue date.
If an Initial Optional Redemption Date is specified above, this Note may be
redeemed in accordance with the terms hereinafter specified, at any time on or
after such Initial Optional Redemption Date at an Initial Redemption Price
specified above (expressed as a percentage of the Outstanding principal amount
hereof), such Initial Optional Redemption Price to be decreased annually on the
anniversary of the Initial Optional Redemption Date specified above by the
Premium Reduction Amount specified above (expressed as a percentage of the
Outstanding principal amount hereof) until the Redemption Price equals 100% of
the outstanding principal amount hereof; provided, that if no such Initial
Optional Redemption Date is shown, this Note is not redeemable. Notice of any
redemption shall be mailed to the registered Holders of the Notes designated for
redemption at their last registered addresses not less than 30 nor more than 90
days prior to the date of redemption, subject to all the conditions and
provisions of the Indenture.
This Note may only be transferred as provided in the Indenture. No service
charge shall be made for any such transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
The Company, the Trustee, and any agent of the Company or the Trustee may
deem and treat the Holder hereof as the absolute owner hereof (whether or not
the Note shall be overdue and notwithstanding any notation of ownership or other
writing hereon) for the purpose of receiving payment of or on account of the
principal hereof and, subject to the provisions above, interest hereon, and for
all other purposes, and neither the Company nor the Trustee nor any such agent
shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Note, or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto, against any officer or director as such, past, present or future, of
the Company or of any successor corporation, either directly or through the
Company or of any successor corporation, whether by
3
<PAGE> 4
virtue of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
The Notes will be general unsecured obligations of the Company but will be
entitled to the benefits of the Support Agreement.
This Note shall be deemed to be a contract made under the laws of the State
of New York and for all purposes shall be governed by and construed in
accordance with the laws of said State.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
4
<PAGE> 5
SCHEDULE I
INTEREST AND PRINCIPAL COMPONENTS OF INSTALLMENTS
<TABLE>
<CAPTION>
INSTALLMENT BEGINNING TOTAL ENDING
DATE BALANCE INTEREST PRINCIPAL PAYMENT BALANCE
- ----------- --------- -------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
5
<PAGE> 1
EXHIBIT 5-a
February 3, 1998
BellSouth Capital Funding Corporation
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610
BellSouth Corporation
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610
Dear Sirs:
I refer to the Registration Statement which BellSouth Capital Funding
Corporation (the "Company") and BellSouth Corporation ("BellSouth") propose to
file on or about the date hereof with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, relating to $500,000,000 of debt
securities (the "Securities") to be issued by the Company and which are entitled
to the benefits (the "Obligations") of a Support Agreement dated October 15,
1987, as amended as of August 1, 1992 (the "Support Agreement"), between
BellSouth and the Company. The Securities will be issued under an indenture (the
"Indenture") dated as of August 1, 1992, among the Company, BellSouth and The
Bank of New York, as successor to Wachovia Bank of Georgia, N.A.
I, or attorneys under my supervision, have examined originals, or copies of
originals certified to my satisfaction, of such agreements, documents,
certificates and other statements of government officials and corporate officers
and representatives and have reviewed and discussed other papers and matters of
fact and law as we have deemed relevant and necessary as a basis for the
following opinions. We have assumed the authenticity of all documents submitted
as originals and the conformity with the original documents of any copies of
such documents submitted for examination.
In this regard, I am of the opinion that:
1. The Company and BellSouth are validly organized and existing
corporations under the laws of the State of Georgia.
2. The execution and delivery of the Indenture and issuance of the
Securities and the Obligations have been duly authorized by appropriate
corporate action.
3. The execution and delivery of the Support Agreement has been duly
authorized by appropriate corporate action.
4. The Indenture is a valid and binding agreement of the Company and
BellSouth in accordance with its terms; the Securities, when duly executed
and authenticated in accordance with the terms of the Indenture and
delivered pursuant to an underwriting, distribution or like agreement, will
be legal, valid and binding obligations of the Company in accordance with
their terms; and the Support Agreement is a valid and binding agreement of
the Company and BellSouth in accordance with its terms.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission in connection with the filing of the Registration Statement
referred to above. I also consent to the making of the statement with respect to
me in the related prospectus under the heading "Legal Opinions."
Very truly yours,
/s/ WALTER H. ALFORD
--------------------------------------
<PAGE> 1
EXHIBIT 5-b
February 3, 1998
BellSouth Corporation
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610
BellSouth Capital Funding Corporation
1155 Peachtree Street, N.E.
Atlanta, Georgia 30309-3610
Gentlemen:
We have acted as special tax counsel to you in connection with the
Registration Statement (the "Registration Statement") proposed to be filed by
you on or about the date hereof with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, relating to the registration
of $500,000,000 of debt securities (the "Securities") of the Company for
offering on a continuous or delayed basis and which are entitled to the benefits
of a Support Agreement dated October 15, 1987, as amended as of August 1, 1992,
between BellSouth and the Company. The Securities will be issued under an
indenture dated as of August 1, 1992 among the Company, BellSouth and The Bank
of New York, as successor to Wachovia Bank of Georgia, N.A., as Trustee. You
have asked that we, acting in such capacity, render an opinion to you concerning
the discussion of certain United States federal income tax consequences of the
ownership of the Securities as set forth under the heading "TAXATION" in the
form of Prospectus Supplement filed as Exhibit 99 to the Registration Statement
(the "Form of Prospectus Supplement").
In rendering the opinion expressed herein, we have examined only the Form
of Prospectus Supplement. We have assumed, with your consent, that all
photocopies or facsimiles of the Form of Prospectus Supplement submitted to us
faithfully reproduce the original thereof, and that all statements set forth in
the Form of Prospectus Supplement are accurate.
Based upon the foregoing, it is our opinion that the discussion set forth
under the heading "TAXATION" in the Form of Prospectus Supplement is an accurate
summary of the principal United States federal income tax consequences of the
ownership of the Securities by United States persons.
Our opinion and the discussion set forth in the Form of Prospectus
Supplement are based upon existing statutory, regulatory, and judicial
authority, any of which may be changed at any time with retroactive effect. Our
opinion cannot be relied upon if any of the facts stated in the Form of
Prospectus Supplement are inaccurate. This opinion is expressed as of the date
hereof, and we do not undertake to supplement or revise our opinion to reflect
any changes (including changes that have retroactive effect) (i) in applicable
law or (ii) that cause any information, document or facts referred to herein to
be untrue or incorrect. Finally, our opinion is limited to the tax matters
specifically discussed under the heading "TAXATION" in the Form of Prospectus
Supplement, and we have not been asked to address, nor have we addressed, any
other tax consequences relating to the Securities.
We understand that this opinion letter will be filed with the Securities
and Exchange Commission as an exhibit to the Registration Statement of which the
Form of Prospectus Supplement is an exhibit thereto. We further understand that
reference will be made to the opinion expressed herein and to our firm's name
under the heading "TAXATION" in the Form of Prospectus Supplement. We hereby
consent to such use of our opinion and firm name.
Very truly yours,
/s/ DAVIS POLK & WARDWELL
--------------------------------------
<PAGE> 1
EXHIBIT 12
BELLSOUTH CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
MILLIONS OF DOLLARS
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
---------------------- ------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------------- ------ ------ ------ ------ ------ ------
<C> <C> <S> <C> <C> <C> <C> <C> <C> <C>
1. Earnings
(a) Income from continuing
operations before
deductions for taxes and
interest................. $4,756 $4,098 $5,329 $3,312 $4,069 $2,318 $3,354
(b) Portion of rental expense
representative of
interest factor.......... 68 67 90 84 100 104 104
(c) Equity in losses from
less-than-50% owned
investments (accounted
for under the equity
method of accounting).... 61 49 68 163 79 45 23
(d) Excess of earnings over
distributions of
less-than-50%-owned
investments (accounted
for under the equity
method of accounting).... (62) (29) (53) (45) (53) (37) (15)
------ ------ ------ ------ ------ ------ ------
Total.................... $4,823 $4,185 $5,434 $3,514 $4,195 $2,430 $3,466
====== ====== ====== ====== ====== ====== ======
2. Fixed Charges
(a) Interest................. $ 582 $ 545 $ 739 $ 745 $ 686 $ 712 $ 761
(b) Portion of rental expense
representative of
interest factor.......... 68 67 90 84 100 104 104
------ ------ ------ ------ ------ ------ ------
Total.................... $ 650 $ 612 $ 829 $ 829 $ 786 $ 816 $ 865
====== ====== ====== ====== ====== ====== ======
7.42 6.84 6.55 4.24 5.34 2.98 4.00
Ratio (1 divided by 2)........
====== ====== ====== ====== ====== ====== ======
</TABLE>
<PAGE> 1
EXHIBIT 23-a
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
of BellSouth Corporation on Form S-3 of our report, which includes an
explanatory paragraph related to a change in an accounting method, dated
February 3, 1997, on our audits of the consolidated financial statements of
BellSouth Corporation included in the Annual Report on Form 10-K of BellSouth
Corporation for the year ended December 31, 1996. We also consent to the
reference to our Firm under the caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
--------------------------------------
Atlanta, Georgia
February 3, 1998
<PAGE> 1
EXHIBIT 24-A
BELLSOUTH CAPITAL FUNDING CORPORATION
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, each of the undersigned hereby constitutes and appoints Mark
E. Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for him in his name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
he might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand on
the date indicated.
<TABLE>
<C> <C>
/s/ MARK E. DROEGE November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
Mark E. Droege Date
President, Director
(Principal Executive Officer)
/s/ GARY L. WALTON November 25, 1997
- ----------------------------------------------------- -----------------------------------------------------
Gary L. Walton Date
Vice President and Treasurer
(Principal Financial Officer)
/s/ W. PATRICK SHANNON November 25, 1997
- ----------------------------------------------------- -----------------------------------------------------
W. Patrick Shannon Date
Controller
(Principal Accounting Officer)
</TABLE>
<PAGE> 2
BELLSOUTH CAPITAL FUNDING CORPORATION
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, the undersigned hereby constitutes and appoints Mark E.
Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for him in his name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
he might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date
indicated.
<TABLE>
<C> <C>
/s/ RONALD M. DYKES November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
Ronald M. Dykes Date
Director
</TABLE>
<PAGE> 1
EXHIBIT 24-B
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, each of the undersigned hereby constitutes and appoints Mark
E. Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for him in his name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
he might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand on
the date indicated.
<TABLE>
<C> <C>
/s/ F. DUANE ACKERMAN November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
F. Duane Ackerman Date
President and
Chief Executive Officer
Director
(Principal Executive Officer)
/s/ RONALD M. DYKES November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
Ronald M. Dykes Date
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
/s/ W. PATRICK SHANNON November 29, 1997
- ----------------------------------------------------- -----------------------------------------------------
W. Patrick Shannon Date
Vice President and Controller
(Principal Accounting Officer)
</TABLE>
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, the undersigned hereby constitutes and appoints Mark E.
Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for him in his name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
he might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date
indicated.
<TABLE>
<C> <C>
/s/ ARMANDO M. CODINA November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
Armando M. Codina Date
Director
</TABLE>
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, the undersigned hereby constitutes and appoints Mark E.
Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for him in his name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
he might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date
indicated.
<TABLE>
<C> <C>
/s/ REUBEN V. ANDERSON November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
Reuben V. Anderson Date
Director
</TABLE>
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, the undersigned hereby constitutes and appoints Mark E.
Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for him in his name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
he might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date
indicated.
<TABLE>
<C> <C>
/s/ JAMES H. BLANCHARD November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
James H. Blanchard Date
Director
</TABLE>
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, the undersigned hereby constitutes and appoints Mark E.
Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for her in her name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
she might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand on the date
indicated.
<TABLE>
<C> <C>
/s/ PHYLLIS BURKE DAVIS November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
Phyllis Burke Davis Date
Director
</TABLE>
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, the undersigned hereby constitutes and appoints Mark E.
Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for him in his name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
he might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date
indicated.
<TABLE>
<C> <C>
/s/ J. HYATT BROWN November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
J. Hyatt Brown Date
Director
</TABLE>
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, the undersigned hereby constitutes and appoints Mark E.
Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for him in his name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
he might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date
indicated.
<TABLE>
<C> <C>
/s/ JOHN G. MEDLIN, JR. November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
John G. Medlin, Jr. Date
Director
</TABLE>
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, the undersigned hereby constitutes and appoints Mark E.
Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for her in her name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
she might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand on the date
indicated.
<TABLE>
<C> <C>
/s/ ROBIN B. SMITH November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
Robin B. Smith Date
Director
</TABLE>
<PAGE> 9
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, the undersigned hereby constitutes and appoints Mark E.
Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for him in his name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
he might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date
indicated.
<TABLE>
<C> <C>
/s/ C. DIXON SPANGLER, JR. November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
C. Dixon Spangler, Jr. Date
Director
</TABLE>
<PAGE> 10
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, the undersigned hereby constitutes and appoints Mark E.
Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for him in his name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
he might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date
indicated.
<TABLE>
<C> <C>
/s/ WILLIAM S. STAVROPOULOS November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
William S. Stavropoulos Date
Director
</TABLE>
<PAGE> 11
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, the undersigned hereby constitutes and appoints Mark E.
Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for him in his name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
he might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date
indicated.
<TABLE>
<C> <C>
/s/ RONALD A. TERRY November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
Ronald A. Terry Date
Director
</TABLE>
<PAGE> 12
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
WHEREAS, BELLSOUTH CAPITAL FUNDING CORPORATION, a Georgia corporation (the
"Company"), and BELLSOUTH CORPORATION, a Georgia corporation ("BellSouth"),
propose to file with the Securities and Exchange Commission, under the
Securities Act of 1933, as amended, a registration statement (the "Registration
Statement") to register, respectively, $500,000,000 of debt securities of the
Company and obligations of BellSouth with respect thereto in the nature of a
guaranty thereof.
NOW THEREFORE, the undersigned hereby constitutes and appoints Mark E.
Droege, Gary L. Walton and W. Patrick Shannon, and each of them, as attorneys
for him in his name, place and stead to execute and file the Registration
Statement, including the related prospectus, with respect to the securities of
BellSouth to be offered and sold under the Registration Statement therein
described and thereafter to execute and file an amended registration statement
or amendments or supplements thereto, to increase or deregister securities, to
withdraw the Registration Statement or otherwise, hereby giving and granting to
said attorneys full power and authority (including substitution and revocation)
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully, to all intents and purposes, as
he might or could do if personally present at the doing thereof, hereby
ratifying and confirming all that said attorneys may or shall lawfully do, or
cause to be done, by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand on the date
indicated.
<TABLE>
<C> <C>
/s/ J. TYLEE WILSON November 24, 1997
- ----------------------------------------------------- -----------------------------------------------------
J. Tylee Wilson Date
Director
</TABLE>
<PAGE> 1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)[ ]
------------------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 WALL STREET, NEW YORK, N.Y. 10286
(Address of principal executive offices) (Zip code)
</TABLE>
------------------------------
BELLSOUTH CORPORATION
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
GEORGIA 58-1533433
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1155 PEACHTREE STREET, N.E. 30309-3610
ATLANTA, GEORGIA (Zip code)
(Address of principal executive offices)
</TABLE>
------------------------------
BELLSOUTH CAPITAL FUNDING CORPORATION
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
GEORGIA 58-1744323
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1155 PEACHTREE STREET, N.E. 30309-3610
ATLANTA, GEORGIA (Zip code)
(Address of principal executive offices)
</TABLE>
------------------------------
DEBT SECURITIES
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. General information. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
<TABLE>
<CAPTION>
NAME ADDRESS
- ---- -------
<S> <C>
Superintendent of Banks of the State of New 2 Rector Street, New York, N.Y. 10006, and
York...................................... Albany, N.Y. 12203
Federal Reserve Bank of New York............ 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation....... Washington, D.C. 20429
New York Clearing House Association......... New York, New York 10005
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29
under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to commence
business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to
Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215,
Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672
and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
2
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 9th day of January, 1998.
THE BANK OF NEW YORK
By: /s/ WALTER N. GITLIN
------------------------------------
Name: Walter N. Gitlin
Title: Vice President
3
<PAGE> 4
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
THE BANK OF NEW YORK
OF 48 WALL STREET, NEW YORK, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business September 30, 1997, published in accordance
with a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
--------------
<S> <C> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin........ $ 5,004,638
Interest-bearing balances................................. 1,271,514
Securities:
Held-to-maturity securities............................... 1,105,782
Available-for-sale securities............................. 3,164,271
Federal funds sold and Securities purchased under agreements
to resell................................................. 5,723,829
Loans and lease financing receivables:
Loans and leases, net of unearned income.................. 34,916,196
LESS: Allowance for loan and lease losses................. 581,177
LESS: Allocated transfer risk reserve..................... 429
Loans and leases, net of unearned income, allowance, and
reserve................................................. 34,334,590
Assets held in trading accounts............................. 2,035,284
Premises and fixed assets (including capitalized leases).... 671,664
Other real estate owned..................................... 13,306
Investments in unconsolidated subsidiaries and associated
companies................................................. 210,685
Customers' liability to this bank on acceptances
outstanding............................................... 1,463,446
Intangible assets........................................... 753,190
Other assets................................................ 1,784,796
-----------
Total assets....................................... $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices....................................... $27,270,824
Noninterest-bearing....................................... 12,160,977
Interest-bearing.......................................... 15,109,847
In foreign offices, Edge and Agreement subsidiaries, and
IBFs.................................................... 14,687,806
Noninterest-bearing....................................... 657,479
Interest-bearing.......................................... 14,030,327
Federal funds purchased and Securities sold under agreements
to repurchase............................................. 1,946,099
Demand notes issued to the U.S. Treasury.................... 283,793
Trading liabilities......................................... 1,553,539
Other borrowed money:
With remaining maturity of one year or less............... 2,245,014
With remaining maturity of more than one year through
three years............................................. 0
With remaining maturity of more than three years.......... 45,664
Bank's liability on acceptances executed and outstanding.... 1,473,588
Subordinated notes and debentures........................... 1,018,940
Other liabilities........................................... 2,193,031
-----------
Total liabilities.................................. 52,718,298
-----------
EQUITY CAPITAL
Common stock................................................ 1,135,284
Surplus..................................................... 731,319
Undivided profits and capital reserves...................... 2,943,008
Net unrealized holding gains (losses) on available-for-sale
securities................................................ 25,428
Cumulative foreign currency translation adjustments......... (16,342)
-----------
Total equity capital............................... 4,818,697
-----------
Total liabilities and equity capital............... $57,536,995
===========
</TABLE>
<PAGE> 5
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
J. Carter Bacot
Thomas A. Renyi
Alan R. Griffith
Directors
<PAGE> 1
Exhibit 99
PROSPECTUS SUPPLEMENT
(To Prospectus dated February , 1998)
U.S. $500,000,000
BellSouth Capital Funding Corporation
MEDIUM-TERM NOTES, SERIES C
------------------------
Due from 9 Months to 40 Years from Date of Issue
------------------------
BellSouth Capital Funding Corporation (the "Company") may offer from time to
time its Medium-Term Notes, Series C (the "Notes") at such initial public
offering prices as will result in aggregate net proceeds to the Company of up to
U.S.$500,000,000, or the equivalent thereof in other currencies, including
composite currencies such as the European Currency Unit (the "Specified
Currency"). Such amount may be reduced by the aggregate principal amount of an
additional series of medium-term notes of the Company in bearer or registered
form to be offered outside the United States concurrently with the offering of
the Notes (the "Euro Notes"). See "Plan of Distribution." The interest rate on
each Note will be either a fixed rate (a "Fixed Rate Note") established by the
Company at the date of issue of such Note, which may be zero in the case of
certain Notes issued at a price representing a substantial discount from the
principal amount payable upon maturity, or a floating rate (a "Floating Rate
Note") as set forth therein and specified in the applicable Pricing Supplement.
Fixed Rate Notes may pay an amount in respect of both interest and principal
amortized over the life of the Note (an "Amortizing Note").
Interest on each Note (and principal on each Amortizing Note) is payable on
the dates set forth herein or in the applicable Pricing Supplement. Unless
otherwise specified in the applicable Pricing Supplement, the Notes may not be
redeemed by the Company prior to maturity and will be issued in fully registered
form in denominations of U.S.$1,000 (or, in the case of Notes not denominated in
U.S. dollars, the equivalent thereof in the Specified Currency, rounded down to
the nearest 1,000 units of the Specified Currency) or any amount in excess
thereof which is an integral multiple of 1,000 U.S. dollars or units of the
Specified Currency.
Notes issued in Specified Currencies other than the U.S. dollar may subject
a U.S. holder to currency exchange risks. See "Important Currency Exchange
Information" and "Foreign Currency Risks" beginning on page S-2 for certain
information that should be considered by prospective investors.
Each Note will be issued either in certificated form (a "Certificated Note")
registered in the name of the holder or its nominee or in global form (a "Global
Note") registered in the name of a nominee of The Depository Trust Company, the
depositary (the "Depositary"), as set forth in the applicable Pricing
Supplement. Interests in Global Notes will be shown on, and transfers thereof
will be effected only through, records maintained by the Depositary and its
participants ("Book-Entry Notes"). Book-Entry Notes will not be issuable as
Certificated Notes except under the circumstances described in the accompanying
Prospectus.
------------------------
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 ANY SUPPLEMENT HERETO OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
<TABLE>
<CAPTION>
Price to Agents' Proceeds to
Public(1) Commissions(2) Company(2)(3)
--------- -------------- -------------
<S> <C> <C> <C>
Per Note............................ 100% .100%-.750% 99.900%-99.250%
Total(4)(5)......................... $500,000,000 $500,000-$3,750,000 $499,500,000-$496,250,000
</TABLE>
- ---------------
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes will
be issued at 100% of their principal amount.
(2) The Company will pay to the Agents named below or others (collectively, the
"Agents") a commission ranging from .100% to .750% of the principal amount
of any Note, depending upon the maturity of the Note, sold through such
Agent. The Company may also sell Notes to the Agents or others, as
principal, at negotiated discounts, for resale to investors and other
purchasers.
(3) Assuming Notes are issued at 100% of their principal amount and before
deducting expenses payable by the Company estimated at $350,000, including
reimbursement of certain of the Agents' expenses.
(4) Or the equivalent thereof in other currencies, including composite
currencies.
(5) As such amount may be reduced by the aggregate principal amount issued and
sold of the Euro Notes. See "Plan of Distribution."
----------------------------
Offers to purchase the Notes are being solicited from time to time by the
Agents on behalf of the Company. The Agents have agreed to use their reasonable
best efforts to solicit purchases of such Notes. The Company may also sell Notes
to the Agents acting as principal for their own account for resale to one or
more investors and other purchasers at varying prices related to prevailing
market prices at the time of resale, to be determined by the Agents. In
addition, the Company may sell the Notes directly to investors in those
jurisdictions where such offering by the Company is authorized. No termination
date for the offering of the Notes has been established. The Company or the
Agents may reject any offer in whole or in part. The Notes will not be listed on
any securities exchange, and there can be no assurance that the Notes offered
hereby will be sold or that there will be a secondary market for the Notes. See
"Plan of Distribution."
------------------------
MORGAN STANLEY DEAN WITTER
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
February , 1998
<PAGE> 2
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN OR THEREIN, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, BELLSOUTH CORPORATION ("BELLSOUTH") OR BY THE AGENTS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY OR BELLSOUTH SINCE THE DATES AS OF WHICH INFORMATION
IS GIVEN HEREIN OR THEREIN. THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION
IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION.
------------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE NOTES.
SPECIFICALLY, THE AGENTS MAY OVERALLOT IN CONNECTION WITH THE OFFERING, AND MAY
BID FOR, AND PURCHASE, THE NOTES IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "PLAN OF DISTRIBUTION."
------------------------------
IMPORTANT CURRENCY EXCHANGE INFORMATION
Purchasers are required to pay for the Notes in the Specified Currency, and
payments of principal of, and interest on, such Notes will be made in the
Specified Currency, unless otherwise provided in the applicable Pricing
Supplement. Currently, there are limited facilities in the United States for the
conversion of U.S. dollars into foreign currencies, and vise versa. Accordingly,
payment of principal of and interest on Notes in a Specified Currency other than
U.S. dollars will be made from an account at a bank outside of the United
States, unless alternative arrangements are made. (See "Description of Notes"
and "Foreign Currency Risks.")
If the applicable Pricing Supplement provides for payments of principal and
interest on a non-U.S. dollar denominated Note to be made in U.S. dollars, or
for payments of principal and interest on a U.S. dollar denominated Note to be
made in a Specified Currency other than U.S. dollars, the conversion of the
Specified Currency into U.S. dollars or U.S. dollars into the Specified
Currency, as the case may be, will be handled by The Bank of New York in its
capacity as Exchange Rate Agent. The costs of such conversion will be borne by
the holder of a Note through deduction from such payments.
References herein to "U.S. dollars" or "U.S.$" or "$" are to the currency
of the United States of America.
FOREIGN CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Notes that are denominated in a Specified Currency other
than U.S. dollars entails significant risks that are not associated with a
similar investment in a security denominated in U.S. dollars. Such risks
include, without limitation, the possibility of significant changes in rates of
exchange between the U.S. dollar and the various foreign currencies and the
possibility of the imposition or modification of foreign exchange controls by
either the U.S. or foreign governments. Such risks generally depend on economic
and political events over which the Company and BellSouth have no control. In
recent years, rates of exchange between U.S. dollars and certain foreign
currencies have been highly volatile and such volatility may be expected to
continue in the future. Fluctuations in any particular exchange rate that have
occurred in the past are not necessarily indicative, however, of fluctuations in
such rate that may occur during the term of any Note. Depreciation of the
currency specified in a Note against the U.S. dollar would result in a decrease
in the
S-2
<PAGE> 3
effective yield of such Note below its coupon rate, and in certain circumstances
could result in a loss to the investor on a U.S. dollar basis.
THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED PROSPECTUS DO NOT DESCRIBE ALL
THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED IN A FOREIGN CURRENCY OR A
COMPOSITE CURRENCY AND THE COMPANY AND BELLSOUTH DISCLAIM ANY RESPONSIBILITY TO
ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS
PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME. PROSPECTIVE
INVESTORS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS
ENTAILED BY AN INVESTMENT IN NOTES DENOMINATED IN SPECIFIED CURRENCIES OTHER
THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR INVESTORS
WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Notes denominated in foreign currencies other than ECUs will not be sold
in, or to residents of, the country of the Specified Currency in which
particular Notes are denominated.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers who are United States residents, and the Company and
BellSouth disclaim any responsibility to advise prospective purchasers who are
residents of countries other than the United States with respect to any matters
that may affect the purchase of, holding of, or receipt of payments of principal
of and interest on, the Notes. Such persons should consult their own counsel
with regard to such matters.
Governments have imposed from time to time, and may in the future impose,
exchange controls which could affect exchange rates as well as the availability
of a specified foreign currency at the time of payment of principal of, and
premium, if any, or interest on a Note. Even if there are no actual exchange
controls, it is possible that the Specified Currency for any particular Note
would not be available at such Note's maturity. In that event, the Company would
make required payments in U.S. dollars on the basis of the Market Exchange Rate
on the date of such payment, or if such rate of exchange is not then available,
on the basis of the Market Exchange Rate as of the most recent Record Date. (See
"Description of Notes -- Payment Currency.")
GOVERNING LAW AND JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. In the event an action based on Notes denominated in a
Specified Currency other than U.S. dollars were commenced in a court in the
United States, it is likely that such court would grant judgment relating to the
Notes only in U.S. dollars. If an action based on Notes denominated in a
Specified Currency other than U.S. dollars were commenced in a New York court,
however, such court would render or enter a judgment or decree in the Specified
Currency. Such judgment would then be converted into U.S. dollars at the rate of
exchange prevailing on the date of entry of the judgment or decree. The
Indenture provides that the rate of exchange to be used in determining any such
judgment shall be such reasonable basis for exchange as the Company may specify
in a written notice to the Trustee or, in absence of such written notice, as the
Trustee may determine.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges for
BellSouth Corporation ("BellSouth") and its consolidated subsidiaries for the
periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30 YEARS ENDED DECEMBER 31
- ----------------- --------------------------------
1997 1996 1996 1995 1994 1993 1992
- ------- ------- ---- ---- ---- ---- ----
<C> <C> <C> <C> <C> <C> <C>
7.42x 6.84x 6.55x 4.24x 5.34x 2.98x 4.00x
</TABLE>
For the purpose of this ratio: (i) earnings have been calculated by adding
income before income taxes, gross interest expense, such portion of rental
expense representative of the interest factor on such rentals and equity in
losses from less-than-50%-owned investments (accounted for under the equity
method of account-
S-3
<PAGE> 4
ing) less the excess of earnings over distributions from less-than-50%-owned
investments (accounted for under the equity method of accounting); (ii) fixed
charges are comprised of gross interest expense and such portion of rental
expense representative of the interest factor on such rentals.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Securities set forth in
the Prospectus, to which description reference is hereby made. The particular
terms of the Notes offered by any pricing supplement (a "Pricing Supplement")
will be described therein. The terms and conditions set forth in "Description of
Notes" will apply to each Note unless otherwise specified herein or in the
applicable Pricing Supplement and in such Note.
If any Note is not to be denominated in U.S. dollars, the applicable
Pricing Supplement will specify the currency or currencies, including composite
currencies such as the European Currency Unit ("ECU"), in which the principal
and interest with respect to such Note are to be paid, along with any other
terms relating to the non-U.S. dollar denomination, including exchange rates for
the Specified Currency as against the U.S. dollar at selected times during the
last five years, and any exchange controls affecting such Specified Currency.
(See "Foreign Currency Risks.")
GENERAL
The Notes offered hereby constitute a single series of Notes, and the Euro
Notes, if any, will constitute a separate single series of notes to be issued
under the Indenture referred to in the Prospectus. The Notes and the Euro Notes
may be issued from time to time in such amounts as will result in aggregate net
proceeds to the Company of up to $500,000,000 or the equivalent thereof in one
or more foreign or composite currencies. Such amount may be increased from time
to time as authorized by, or pursuant to authority delegated by, the Board of
Directors of the Company.
The Notes will mature on any day from nine months to 40 years from the date
of issue, as selected by the purchaser and agreed to by the Company. For this
purpose, (i) the principal amount of any Original Issue Discount Note (as
defined below) means the Issue Price (as defined below) of such Note and (ii)
the principal amount of any Note issued in a foreign currency or composite
currency means the U.S. dollar equivalent on the trade date of the Issue Price
of such Note. Except as may be specified for Notes denominated in foreign
currencies or ECUs or as otherwise provided in the Pricing Supplement, the Notes
will be issued only in fully registered form in denominations of U.S. $1,000 or
any amount in excess thereof which is an integral multiple of U.S. $1,000.
Except as otherwise required by applicable law, notes denominated in a
Specified Currency will be issued in denominations of the equivalent of U.S.
$1,000 (rounded down to an integral multiple of 1,000 units of such Specified
Currency), or any amount in excess thereof which is an integral multiple of
1,000 units of such Specified Currency as determined by the Federal Reserve Bank
of New York for the noon buying rate in New York City for cable transfers of
such Specified Currency (the "Market Exchange Rate") on the Business Day
immediately preceding the date of issuance; provided, however, in the case of
ECUs, Market Exchange Rate shall be the rate of exchange determined by the
Commission of the European Communities (or any successor thereto) as published
in the Official Journal of the European Communities, or any successor
publication, on the Business Day immediately preceding the date of issuance.
The Notes will be offered on a continuing basis. Interest rates offered by
the Company with respect to the Notes may differ depending upon, among other
things, the aggregate principal amount of Notes purchased in any single
transaction.
The applicable Pricing Supplement will specify whether the related Note
will be issued as a Certificated Note or a Book-Entry Note, the interest rate or
interest rate formula, maturity and any other terms on which each Note will be
issued.
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Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund and will not be redeemable prior to
maturity.
Principal and interest will be payable, transfer of the Notes will be
registrable and the Notes will be exchangeable (except as described in
"Book-Entry System") at the agency in the Borough of Manhattan, the City of New
York, which on the date hereof is at the office of The Bank of New York, 101
Barclay Street, New York, New York.
Payments of interest on Notes in a currency other than U.S. dollars will be
made by mailing a check, a draft or by wire transfer as agreed to by the
Noteholders and the Company in the Specified Currency from an account at a bank
outside of the United States.
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in the City of New York or Atlanta and
(i) with respect to Notes denominated in a Specified Currency other than U.S.
dollars or ECUs, in the principal financial center of the country of the
Specified Currency, (ii) with respect to Notes denominated in ECUs or other
composite currencies, in Brussels, that is not a non-ECU clearing day (as
determined by the ECU Banking Association in Paris) and (iii) with respect to
LIBOR Notes (as defined below), that is also a London Banking Day. "London
Banking Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
An "Interest Payment Date" or "Installment Date" with respect to any Note
shall be a date on which, under the terms of such Note, regularly scheduled
interest or, in the case of an Amortizing Note, principal and interest,
respectively, shall be payable.
"Original Issue Discount Note" means (i) any Note that provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to the Indenture
and (ii) any other Note which for United States federal income tax purposes
would be considered an original issue discount note.
The "Record Date" with respect to any Interest Payment Date shall be the
date 15 calendar days prior to such Interest Payment Date, whether or not such
Interest Payment Date shall be a Business Day; provided, with respect to
interest payable at maturity (whether or not the date of maturity is an Interest
Payment Date) the Record Date for such interest payment due on such date shall
be the date of maturity.
The Notes will be general unsecured obligations of the Company but will be
entitled to the benefits of a Support Agreement with BellSouth as described in
the accompanying Prospectus.
PAYMENT CURRENCY
If the applicable Pricing Supplement provides for payments of interest and
principal on non-U.S. dollar denominated Notes to be made, at the option of the
Noteholders, in U.S. dollars, conversion of the Specified Currency into U.S.
dollars will be based on the highest bid quotation in the City of New York
received by the Exchange Rate Agent at approximately 11:00 A.M. New York City
time on the second Business Day preceding the applicable payment date from three
recognized foreign exchange dealers (one of which may be the Exchange Rate
Agent) for the purchase by the quoting dealer of the Specified Currency for U.S.
dollars for settlement on such payment date in the aggregate amount of the
Specified Currency payable to the holders of Notes and at which the applicable
dealer commits to execute a contract. If such bid quotations are not available,
payments will be made in the Specified Currency. All currency exchange costs
will be borne by the holders of Notes by deductions from such payments.
Except as set forth below, if the principal of, or interest on, any Note is
payable in a Specified Currency other than U.S. dollars and such Specified
Currency is not available to the Company for making payments thereof due to the
imposition of exchange controls or other circumstances beyond the control of the
Company, or is no longer used by the government of the country issuing such
currency or for the settlement of transactions by public institutions within the
international banking community, the Company will be entitled to satisfy its
obligations to holders of the Notes by making such payments in U.S. dollars on
the basis of the
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Market Exchange Rate on the date of such payment or if such date of exchange is
not available as of the most recent available date. Any payment made under such
circumstances in U.S. dollars where the required payment is in a Specified
Currency other than U.S. dollars will not constitute an Event of Default, as
defined in the accompanying Prospectus.
If payment in respect of a Note is required to be made in ECUs and ECUs are
unavailable due to the imposition of exchange controls or other circumstances
beyond the Company's control or are no longer used in the European Monetary
System, then all payments in respect of such Note shall be made in U.S. dollars
until ECUs are again available or so used. The amount of each payment in U.S.
dollars shall be computed on the basis of the equivalent of the ECU in U.S.
dollars, determined as described below, as of the second Business Day prior to
the date on which such payment is due.
The equivalent of the ECU in U.S. dollars as of any date shall be
determined by the Company or its agent on the following basis. The component
currencies of the ECU for this purpose (the "Components") shall be the currency
amounts that were components of the ECU as of the last date on which the ECU was
used in the European Monetary System. The equivalent of the ECU in U.S. dollars
shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by the Company or such agent on the basis of the most recently
available Market Exchange Rates for such Components.
PAYMENTS OF PRINCIPAL AND INTEREST
Each Fixed Rate Note will bear interest from the date of issuance at the
annual rate stated on the face thereof until the principal thereof is paid or
made available for payment. Unless otherwise specified in the applicable Pricing
Supplement, interest on Fixed Rate Notes will be computed on the basis of a
360-day year of twelve 30-day months. Interest will be payable to the person in
whose name the Note is registered at the close of business on the applicable
Record Date; provided, that interest payable at maturity (whether or not the
date of maturity is an Interest Payment Date) will be payable to the person to
whom principal is payable. Unless otherwise specified in the applicable Pricing
Supplement, payments of principal and interest on Amortizing Notes will be made
either quarterly on the 1st day of March, June, September and December or
semiannually on the 1st day of March and September, as set forth in the
applicable Pricing Supplement, and at maturity. The initial interest payment on
a Note will be made on the first Interest Payment Date falling after the date
the Note is issued; provided, however, that payments of interest (or, in the
case of an Amortizing Note, principal and interest) on a Note issued less than
15 calendar days before an Interest Payment Date or Installment Date may be paid
on the next succeeding Interest Payment Date or Installment Date to the holder
of record on the Record Date with respect to such succeeding Interest Payment
Date or Installment Date. (See "Taxation -- Original Issue Discount Notes".) If
any Interest Payment Date relating to a Fixed Rate Note or Installment Date for
any Note would otherwise be a day that is not a Business Day, the payment will
be postponed to the next day that is a Business Day, and no interest on such
payment shall accrue for the period from and after the Interest Payment Date or
Installment Date. Interest rates are subject to change without notice by the
Company from time to time, but no such change will affect any Notes theretofore
issued.
Payment of interest (or, in the case of Amortizing Notes, principal and
interest other than principal and interest due at maturity ("Installments")) on
Notes in registered form may be made by check mailed to the address of the
person entitled thereto as it appears on the Note register. Notwithstanding the
foregoing, (a) the Depositary, as holder of record of Global Notes, shall be
entitled to receive payments of interest or Installments by wire transfer of
immediately available funds and (b) a holder of record of $10 million or more in
aggregate principal amount of Certificated Notes having the same Interest
Payment Date or Installment Date (whether or not other terms of such
Certificated Notes are identical) shall be entitled to receive payments of
interest or Installments by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received by the Paying Agent
not less than 15 days prior to the applicable Interest Payment Date or
Installment Date. Payments at maturity will be made only upon presentation and
surrender thereof at the corporate trust office of the Paying Agent or such
other office or agency designated by BellSouth.
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Certain of the Notes may be considered to be issued with original issue
discount which must be included in income for United States federal income tax
purposes. (See "Taxation -- Original Issue Discount Notes".) Special
considerations applicable to any such Notes will be described in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, interest
on Fixed Rate Notes will be payable on March 1 and September 1 of each year and
at maturity. Except as provided below, unless otherwise specified in the
applicable Pricing Supplement, interest on Floating Rate Notes will be payable:
(i) in the case of Notes with a daily, weekly or monthly Interest Reset Date (as
defined below), on the third Wednesday of each month or on the third Wednesday
of March, June, September and December, as specified in the applicable Pricing
Supplement; (ii) in the case of Notes with a quarterly Interest Reset Date, on
the third Wednesday of March, June, September and December; (iii) in the case of
Notes with a semiannual Interest Reset Date, on the third Wednesday of the two
months specified in the applicable Pricing Supplement; and (iv) in the case of
Notes with an annual Interest Reset Date, on the third Wednesday of the month
specified in the applicable Pricing Supplement. If any Interest Payment Date
(other than the maturity date) for any Floating Rate Note would fall on a day
that is not a Business Day, such Interest Payment Date will be postponed to the
following day that is a Business Day, except that in the case of a LIBOR Note,
if such Business Day is in the next succeeding calendar month, such Interest
Payment Date shall be the immediately preceding day that is a Business Day. If
the maturity date of a Floating Rate Note (including a LIBOR Note) would fall on
a day that is not a Business Day, the payment of principal and interest will be
made on the next succeeding Business Day, and no interest on such payments shall
accrue for the period from and after such maturity date.
Each Floating Rate Note will bear interest at a rate determined by
reference to an interest rate basis (the "Base Rate"), which may be adjusted by
a Spread or Spread Multiplier (each as defined below). The applicable Pricing
Supplement will designate one of the following Base Rates as applicable to each
Floating Rate Note: (a) the Commercial Paper Rate (a "Commercial Paper Rate
Note"), (b) LIBOR (a "LIBOR Note"), (c) the Treasury Rate (a "Treasury Rate
Note") or (d) such other Base Rate as is set forth in such Pricing Supplement
and in such Floating Rate Note. The "Index Maturity" for any Floating Rate Note
is the period of maturity of the instrument or obligation from which the Base
Rate is calculated and will be specified in the applicable Pricing Supplement.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum limitation, or ceiling,
on the rate of interest which may accrue during any interest period ("Maximum
Interest Rate"); and (ii) a minimum limitation, or floor, on the rate of
interest which may accrue during any interest period ("Minimum Interest Rate").
In addition to any Maximum Interest Rate which may be applicable to any Floating
Rate Note pursuant to the above provisions, the interest rate on a Floating Rate
Note will in no event be higher than the maximum rate permitted by New York law,
as the same may be modified by United States law of general application. Under
present New York law, the maximum rate of interest, with certain exceptions, is
25% per annum on a simple interest basis.
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semiannually or annually (an "Interest Reset Date"),
as specified in the applicable Pricing Supplement. Unless otherwise specified in
the Pricing Supplement, the Interest Reset Date will be, in the case of Floating
Rate Notes which reset daily, each Business Day; in the case of Floating Rate
Notes (other than Treasury Rate Notes) which reset weekly, the Wednesday of each
week; in the case of Treasury Rate Notes which reset weekly, the Tuesday of each
week (except as provided below); in the case of Floating Rate Notes which reset
monthly, the third Wednesday of each month; in the case of Floating Rate Notes
which reset quarterly, the third Wednesday of March, June, September and
December; in the case of Floating Rate Notes which reset semiannually, the third
Wednesday of two months of each year, as specified in the applicable Pricing
Supplement; and in the case of Floating Rate Notes which reset annually, the
third Wednesday of one month of each year, as specified in the applicable
Pricing Supplement; provided, however, that the interest rate in effect from the
date of issue to the first Interest Reset Date with respect to a Floating Rate
Note will be the Initial Interest Rate (as set forth in the applicable Pricing
Supplement). If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Reset Date shall be
postponed to the next succeeding Business Day, except that in the case of a
LIBOR Note, if such Business
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Day is in the next succeeding calendar month, such Interest Reset Date shall be
the immediately preceding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate on each Floating Rate Note will be calculated by reference to the
specified Base Rate (i) plus or minus the Spread, if any, or (ii) multiplied by
the Spread Multiplier, if any. The "Spread" is the number of basis points (one
one-hundredth of a percentage point) specified in the applicable Pricing
Supplement as being an adjustment to the interest rate for such Floating Rate
Note, and the "Spread Multiplier" is the percentage specified in the applicable
Pricing Supplement as being applicable to the interest rate for such Floating
Rate Note.
Unless otherwise specified in the applicable Pricing Supplement, interest
payments shall be the amount of interest accrued from the date of issue or from
the last date to which interest has been paid to, but excluding, the Interest
Payment Date (an "Interest Period"). In the case of a Floating Rate Note on
which interest is reset daily or weekly, interest payments shall be, unless
otherwise specified, the amount of interest accrued from the date of issue or
from the last date to which interest has been paid, as the case may be, to, and
including, the Record Date immediately preceding such Interest Payment Date,
except that at maturity, the interest payable will include interest accrued to,
but excluding, the maturity date.
With respect to a Floating Rate Note, accrued interest shall be calculated
by multiplying the principal amount of such Floating Rate Note by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the Interest Period or from the last
date from which accrued interest is being calculated. The interest factor for
each such day is computed by dividing the interest rate applicable to such day
by 360, in the cases of Commercial Paper Rate Notes and LIBOR Notes, or by the
actual number of days in the year in the case of Treasury Rate Notes. The
interest rate applicable to any day that is an Interest Reset Date is the
interest rate for such Interest Reset Date. The interest rate applicable to any
other day is the interest rate from the immediately preceding Interest Reset
Date (or, if none, the Initial Interest Rate, as described below).
The applicable Pricing Supplement shall specify a calculation agent (the
"Calculation Agent") with respect to any issue of Floating Rate Notes. Upon the
request of the holder of any Floating Rate Note, the Calculation Agent will
provide the interest rate then in effect and, if determined, the interest rate
which will become effective on the next Interest Reset Date with respect to such
Floating Rate Note.
All percentages resulting from any calculation on the rate of interest on a
Floating Rate Note will be rounded, if necessary, to the nearest one
hundred-thousandth of a percentage point (.0000001), with five one-millionths of
a percentage point rounded upward, and all dollar amounts used in or resulting
from such calculation on Floating Rate Notes will be rounded to the nearest cent
(with one-half cent rounded upward).
The interest rate in effect with respect to a Floating Rate Note from the
Issue Date to the first Interest Reset Date (the "Initial Interest Rate") will
be specified in the applicable Pricing Supplement. The interest rate for each
subsequent Interest Reset Date will be determined by the Calculation Agent as
follows:
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rate
(calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any) specified in the Commercial Paper Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each Interest Reset Date will be determined on the
Calculation Date (as defined below) by the Calculation Agent as of the second
Business Day prior to such Interest Reset Date (a "Commercial Paper Interest
Determination Date") and shall be the Money Market Yield (as defined below) on
such Commercial Paper Interest Determination Date of the rate for commercial
paper having the Index Maturity specified in the applicable Pricing Supplement,
as such rate shall be published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest Rates"
("H.15(519)"), or any successor publication, under the caption "Commercial
Paper -- Nonfinancial". In the event that such rate is not published prior to
9:00 A.M., New York City time, on the Calculation Date, then the Commercial
Paper Rate shall be the
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Money Market Yield on such Commercial Paper Interest Determination Date of the
rate for commercial paper of the specified Index Maturity as published by the
Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 P.M. Quotations for U.S. Government Securities" ("Composite Quotations")
under the heading "Commercial Paper". If by 3:00 P.M., New York City time, on
such Calculation Date such rate is not yet available in either H.15(519) or
Composite Quotations, then the Commercial Paper Rate shall be the Money Market
Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New York
City time, on such Commercial Paper Interest Determination Date of three leading
dealers of commercial paper in the City of New York selected by the Calculation
Agent for commercial paper of the specified Index Maturity, placed for an
industrial issuer whose bond rating is "AA", or the equivalent, from a
nationally recognized rating agency; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting offered rates as
mentioned in this sentence, the rate of interest in effect for the applicable
period will be the rate of interest in effect on such Commercial Paper Interest
Determination Date.
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
<TABLE>
<C> <C> <S>
D X 360
Money Market Yield = -------------------- X 100
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the period for which interest is being calculated.
The interest rate for each such Interest Reset Date shall be the Commercial
Paper Rate applicable to such Interest Reset Date plus or minus the Spread or
multiplied by the Spread Multiplier, as specified in the applicable Pricing
Supplement; however, the interest rate in effect for the period from the Issue
Date to the first Interest Reset Date will be the Initial Interest Rate. In
addition, if any Commercial Paper Rate Note is issued between a Record Date and
the related Interest Payment Date, and such Note has weekly Interest Reset
Dates, then, notwithstanding the fact that an Interest Reset Date will occur
prior to such Interest Payment Date, the Initial Interest Rate set forth in the
Pricing Supplement applicable to such Note shall remain in effect through the
first Interest Reset Date occurring on or subsequent to such Interest Payment
Date. Unless otherwise specified in the applicable Pricing Supplement, the
"Calculation Date" pertaining to a Commercial Paper Interest Determination Date
will be the earlier of (i) the 10th calendar day after such Commercial Paper
Interest Determination Date, or, if such day is not a Business Day, the next
succeeding Business Day, or (ii) the Business Day preceding each Interest
Payment Date or Maturity Date, as the case may be.
LIBOR Notes
LIBOR Notes will bear interest at the interest rate (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any) specified in the
LIBOR Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "LIBOR"
for each Interest Reset Date will be determined by the Calculation Agent as
follows:
(i) On the second London Banking Day prior to the Interest Reset Date
(a "LIBOR Determination Date"), the Calculation Agent will determine (a)
the arithmetic mean of the offered rates for deposits in United States
dollars for the period of the Index Maturity which appear on the Reuters
Screen LIBO Page at approximately 11:00 A.M., London time, on such LIBOR
Determination Date if at least two such offered rates appear on the Reuters
Screen LIBO Page ("LIBOR Reuters"), or (b) the rate for deposits in United
States dollars for the period of the Index Maturity that appears on the
Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR
Determination Date ("LIBOR Telerate"). "Reuters Screen LIBO Page" means the
display designated as Page "LIBO" on the Reuters Monitor Money Rate Service
(or such other page as may replace the LIBO page on the service for the
purpose of displaying London interbank offered rates of major banks).
"Telerate Page 3750" means the display designated as page "3750" on the
Telerate Service (or such other page as may replace the 3750 page on
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that service or such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
offered rates for U.S. dollar deposits). If neither LIBOR Reuters nor LIBOR
Telerate is specified in the applicable Pricing Supplement, LIBOR will be
determined as if LIBOR Telerate had been specified. If fewer than two
offered rates appear on the Reuters Screen LIBO Page, or if no rate appears
on the Telerate Page 3750, as applicable, LIBOR in respect of that LIBOR
Interest Determination Date will be determined as if the parties had
specified the rate described in (ii) below.
(ii) If fewer than two offered rates appear on the Reuters Screen LIBO
Page or the rate appears on Telerate Page 3750, the Calculation Agent will
request the principal London offices of each of four major banks in the
London interbank market, as selected by the Calculation Agent, to provide
the Calculation Agent with its offered quotations for deposits in the
United States dollars for the period of the Index Maturity to prime banks
in the London interbank market at approximately 11:00 A.M., London time, on
such LIBOR Determination Date and in a principal amount equal to an amount
of not less than U.S. $1 million that is representative of a single
transaction in such market at such time. If at least two such quotations
are provided, LIBOR will be the arithmetic mean of such quotations. If
fewer than two quotations are provided, LIBOR in respect of that LIBOR
Determination Date will be the arithmetic mean of rates quoted by three
major banks in the City of New York selected by the Calculation Agent
(after consultation with the Company) at approximately 11:00 A.M., New York
City time, on such LIBOR Determination Date for loans in U.S. dollars to
leading European banks, for the period of the Index Maturity and in a
principal amount equal to an amount of not less than U.S. $1 million that
is representative for a single transaction in such market to such time;
provided, however, that if fewer than three banks selected as aforesaid by
the Calculation Agent are quoting rates as mentioned in this sentence, the
rate of interest in effect for the applicable period will be the rate of
interest in effect on such LIBOR Interest Determination Date.
The interest rate for each Interest Reset Date shall be LIBOR plus or minus
the Spread or multiplied by the Spread Multiplier as specified in the applicable
Pricing Supplement; provided, however, the interest rate in effect for the
period from the Issue Date to the first Interest Reset Date will be the Initial
Interest Rate. In addition, if any LIBOR Note is issued between a Record Date
and the related Interest Payment Date, and such Note has weekly Interest Reset
Dates, then, notwithstanding the fact that an Interest Reset Date will occur
prior to such Interest Payment Date, the Initial Interest Rate set forth in the
Pricing Supplement applicable to such Note shall remain in effect through the
first Interest Reset Date occurring on or subsequent to such Interest Payment
Date.
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if any)
specified in the Treasury Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" means, with respect to any Interest Reset Date, the rate for the
auction held on the Treasury Rate Determination Date, as defined below,
pertaining to such Interest Reset Date of direct obligations of the United
States ("Treasury Bills") having the Index Maturity designated in the applicable
Pricing Supplement, as published in H.15(519) under the heading "Treasury
Bills -- auction average (investment)" or, if not so published by 9:00 A.M., New
York City time, on the Calculation Date pertaining to such Treasury Rate
Determination Date, the auction average rate (expressed as a bond equivalent, on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) as otherwise announced by the United States Department of the Treasury.
In the event that the results of the auction of Treasury Bills having the Index
Maturity designated in the applicable Pricing Supplement are not published or
reported as provided above by 3:00 P.M., New York City time, on such Calculation
Date or if no such auction is held on such Treasury Rate Determination Date,
then the Treasury Rate shall be calculated by the Calculation Agent and shall be
a yield to maturity (expressed as a bond equivalent, on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic
mean of the secondary market bid rates, as of approximately 3:30 P.M., New York
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City time, on such Treasury Rate Determination Date, of three leading primary
United States government securities dealers selected by the Calculation Agent
for the issue of Treasury Bills with a remaining maturity closest to the Index
Maturity designated in the applicable Pricing Supplement; provided, however,
that if the dealers selected as aforesaid by the Calculation Agent are not
quoting bid rates as mentioned in this sentence, the Treasury Rate for such
Interest Reset Date will be the Treasury Rate in effect on such Treasury Rate
Determination Date.
The "Treasury Rate Determination Date" pertaining to an Interest Reset Date
will be the day of the week in which such Interest Reset Date falls on which
Treasury Bills would normally be auctioned. Treasury Bills are normally sold at
auction on Monday of each week, unless that day is a legal holiday, in which
case the auction is normally held on the following Tuesday, except that such
auction may be held on the preceding Friday. If, as a result of a legal holiday,
an auction is so held on the preceding Friday, such Friday will be the Treasury
Rate Determination Date pertaining to the Interest Reset Date occurring in the
next succeeding week. If an auction should fall on an Interest Reset Date, then
such Interest Reset Date shall be postponed to the next succeeding Business Day.
The interest rate for each such Interest Reset Date shall be the Treasury
Rate plus or minus the Spread or multiplied by the Spread Multiplier as
specified in the applicable Pricing Supplement; provided, however, the interest
rate in effect for the period from the Issue Date to the first Interest Reset
Date will be the Initial Interest Rate. In addition, if any Treasury Rate Note
is issued between a Record Date and the related Interest Payment Date, and such
Note has weekly Interest Reset Dates, then, notwithstanding the fact that an
Interest Reset Date will occur prior to such Interest Payment Date, the Initial
Interest Rate set forth in the Pricing Supplement applicable to such Note shall
remain in effect through the first Interest Reset Date occurring on or
subsequent to such Interest Payment Date. The "Calculation Date" pertaining to a
Treasury Rate Determination Date will be the earlier of (i) the 10th calendar
day after such Treasury Rate Determination Date, or, if such day is not a
Business Day, the next succeeding Business Day, or (ii) the Business Day
preceding each Interest Payment Date or Maturity Date, as the case may be.
PAYMENTS ON AMORTIZING NOTES
Amortizing Notes are securities for which payments of principal and
interest are made in Installments over the life of the security. Interest on
each Amortizing Note will be computed on the basis of a 360-day year of twelve
30-day months. Payments with respect to Amortizing Notes will be applied first
to interest due and payable thereon and then to the reduction of the unpaid
principal amount thereof. A table setting forth repayment information in respect
of each Amortizing Note will be provided to the original purchaser and will be
available, upon request, to subsequent holders.
BOOK-ENTRY SYSTEM
Upon issuance, all Book-Entry Notes having the same issue date, interest
rate, if any, amortization schedule, if any, and maturity date will be
represented by a single Global Note. Each Global Note representing Book-Entry
Notes will be deposited with, or on behalf of, the Depositary and registered in
the name of a nominee of the Depositary. Certificated Notes will not be
exchangeable for Book-Entry Notes and, except under the circumstances described
in the Prospectus under "Description of Securities -- Registered Global
Securities," Book-Entry Notes will not be exchangeable for Certificated Notes
and will not otherwise be issuable as Certificated Notes.
A further description of the Depositary's procedures with respect to Global
Notes representing Book-Entry Notes is set forth in the Prospectus under
"Description of Securities -- Registered Global Securities." The Depositary has
confirmed to the Company that it intends to follow such procedures.
TAXATION
In the opinion of Davis Polk & Wardwell, special tax counsel to the Company
and BellSouth, the following summary accurately describes the principal United
States federal income tax consequences of
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ownership and disposition of the Notes. The discussion addresses only initial
holders who purchase the Notes at their "issue price," that is, the first price
at which a substantial amount of such Notes is sold for money to the public (not
including bond houses, brokers or similar persons or organizations acting in the
capacity of underwriters, placement agents or wholesalers). This summary
discusses only Notes held as capital assets within the meaning of Section 1221
of the Code. 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 financial institutions, tax-exempt
organizations, insurance companies, regulated investment companies, dealers in
securities or foreign currencies, persons holding Notes as a hedge or as a
position in a "straddle," conversion transaction, or other integrated
transaction, or whose functional currency (as defined in Section 985 of the
Code) is not the United States dollar. This summary is based on the Internal
Revenue Code of 1986, as amended to the date hereof (the "Code"), existing
administrative pronouncements and judicial decisions and existing and proposed
Treasury Regulations currently in effect, including regulations concerning the
treatment of debt instruments issued with original issue discount (the "OID
Regulations"), changes to any of which subsequent to the date of this Prospectus
Supplement may affect the tax consequences described herein. Persons considering
the purchase of Notes should consult their tax advisors with regard to the
application of the United States federal income tax laws to their particular
situations as well as any tax consequences arising under the laws of any state,
local or foreign taxing jurisdiction.
As used herein, the term "Holder" means an owner of a Note that is for
United States federal income tax purposes (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, or (iii) an estate or trust the income of which is subject
to United States federal income taxation regardless of its source.
Payments of Interest. Interest paid on a Note will generally be taxable to
a Holder as ordinary interest income at the time it accrues or is received in
accordance with the Holder's method of accounting for federal income tax
purposes. Under the OID Regulations, all payments of interest on a Note that
matures one year or less from its date of issuance will be included in the
stated redemption price at maturity of the Notes and will be taxed in the manner
described below under "Original Issue Discount Notes." Special rules governing
the treatment of interest paid with respect to Original Issue Discount Notes,
including certain Floating Rate Notes and Foreign Currency Notes, are described
under "Original Issue Discount Notes" and "Foreign Currency Notes".
Original Issue Discount Notes. A Note that is issued for an amount less
than its stated redemption price at maturity will generally be considered to
have been issued at an original issue discount for federal income tax purposes
(an "Original Issue Discount Note"). The stated redemption price at maturity of
a Note will equal the sum of all payments required under the Note other than
payments of "qualified stated interest." "Qualified stated interest" is stated
interest unconditionally payable as a series of payments in cash or property
(other than debt instruments of the issuer) at least annually during the entire
term of the Note and equal to the outstanding principal balance of the Note
multiplied by a single fixed rate of interest. In addition, stated interest on
Floating Rate Notes that is based on a single qualified floating rate (such as
Commercial Paper Rate, LIBOR or Treasury Rate) will generally constitute
qualified stated interest if such interest is unconditionally payable at least
annually during the term of the Note. If interest on a debt instrument is stated
at a fixed rate for an initial period of one year or less followed by a variable
rate that is a qualified floating rate for a subsequent period, and the value of
the variable rate on the issue date is intended to approximate the fixed rate,
the fixed rate and the variable rate together constitute a single qualified
floating rate. Two or more rates will be conclusively presumed to meet the
requirements of the preceding sentences if the values of the applicable rates on
the issue date are within 1/4 of 1 percent of each other. Special tax
considerations (including possible original issue discount) may arise with
respect to Floating Rate Notes providing for (i) one Base Rate followed by one
or more Base Rates, (ii) a single fixed rate followed by a qualified floating
rate or (iii) a Spread Multiplier. Purchasers of Floating Rate Notes with any of
such features should carefully examine the applicable Pricing Supplement and
should consult their tax advisors with respect to such a feature since the tax
consequences will depend, in part, on the particular terms of the purchased
Note. Special rules may also apply if a Floating Rate Note is subject to a cap,
floor, governor or similar restrictions that is not fixed
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throughout the term of the Note and is reasonably expected as of the issue date
to cause the yield on the Note to be significantly less or more than the
expected yield determined without the restriction.
If the difference between a Note's stated redemption price at maturity and
its issue price is a de minimis amount, i.e., less than 1/4 of 1 percent of the
stated redemption price at maturity multiplied by the number of complete years
to maturity, then the Note will not be considered to have original issue
discount. Holders of Notes with a de minimis amount of original issue discount
will generally include such original issue discount in income, as capital gain,
on a pro rata basis as principal payments are made on the Note.
A Holder of Original Issue Discount Notes will be required to include any
qualified stated interest payments in income in accordance with the Holder's
method of accounting for federal income tax purposes. Holders of Original Issue
Discount Notes that mature more than one year from their date of issuance will
be required to include original issue discount in income for federal income tax
purposes as it accrues, in accordance with a constant yield method based on a
compounding of interest, regardless of whether cash payments attributable to
such income are received.
Under the OID Regulations, a Note that matures one year or less from its
date of issuance will be treated as a "short-term Original Issue Discount Note."
In general, a cash method Holder of a short-term Original Issue Discount Note is
not required to accrue original issue discount for United States federal income
tax purposes unless it elects to do so. Holders who make such an election,
Holders who report income for federal income tax purposes on the accrual method
and certain other Holders, including banks and dealers in securities, are
required to include original issue discount in income on such short-term
Original Issue Discount Notes as it accrues on a straight-line basis, unless an
election is made to accrue the original issue discount according to a constant
yield method based on daily compounding. In the case of a Holder who is not
required and who does not elect to include original issue discount in income
currently, any gain realized on the sale, exchange or retirement of the
short-term Original Issue Discount Note will be ordinary income to the extent of
the original issue discount accrued on a straight-line basis (or, if elected,
according to a constant yield method based on daily compounding), reduced by any
interest received, through the date of sale, exchange or retirement. In
addition, such Holders will be required to defer deductions for any interest
paid on indebtedness incurred to purchase or carry short-term Original Issue
Discount Notes in an amount not exceeding the deferred interest income, until
such deferred interest income is recognized.
Under the OID Regulations, a Holder may make an election (the "Constant
Yield Election") to include in gross income all interest that accrues on a Note
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) in accordance with a constant yield method based on the
compounding of interest.
The OID Regulations contain aggregation rules stating that in certain
circumstances if more than one type of Note is issued as part of the same
issuance of securities to a single holder, some or all of such Notes may be
treated together as a single debt instrument with a single issue price, maturity
date, yield to maturity and stated redemption price at maturity for purposes of
calculating and accruing any original issue discount. Unless otherwise provided
in the related Pricing Supplement, the Company does not expect to treat any of
the Notes as being subject to the aggregation rules for purposes of computing
original issue discount.
Sale, Exchange or Retirement of the Notes. Upon the sale, exchange or
retirement of a Note, a Holder generally will recognize taxable gain or loss
equal to the difference between the amount realized on the sale, exchange or
retirement and such Holder's adjusted tax basis in the Note. For these purposes,
the amount realized does not include any amount attributable to accrued interest
on the Note. Amounts attributable to accrued interest are treated as interest as
described under "Payments of Interest" above. A Holder's adjusted tax basis in a
Note generally will equal the cost of the Note to such Holder, increased by the
amounts of any original issue discount previously includible in income by the
Holder with respect to such Note and reduced by any principal payments received
by the Holder, any amortizable bond premium used to offset qualified stated
interest or allowed as a deduction as described below under "Amortizable Bond
Premium" and, in the case of an Original Issue Discount Note, by the amounts of
any other payments that do not constitute qualified stated interest (as defined
above).
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Subject to the discussion under "Foreign Currency Notes" below, gain or
loss realized on the sale, exchange or retirement of a Note generally will be
capital gain or loss (except, in the case of a short-term Original Issue
Discount Note, to the extent of any original issue discount not previously
included in the Holder's taxable income), and will be long-term capital gain or
loss if at the time of sale, exchange or retirement the Note has been held for
more than one year. See "Original Issue Discount Notes" above. Prospective
investors should consult their tax advisers regarding the treatment of capital
gains (which may be taxed at lower rates than ordinary income for certain
taxpayers who are individuals) and losses (the deductibility of which is subject
to limitations).
Amortizable Bond Premium. Under the Code and regulations, including new
regulations generally effective for bonds acquired on or after March 2, 1998 (or
by a certain election), if a Holder purchases a Note for an amount that is
greater than the amount payable at maturity, the Holder will be considered to
have purchased the Note with "amortizable bond premium" equal in amount to such
excess, and may elect as prescribed in regulations to amortize such premium over
the remaining term of the Note, based on the Holder's yield to maturity with
respect to the Note as determined under the bond premium rules. A Holder may
generally use the amortizable bond premium allocable to an accrual period to
offset qualified stated interest required to be included in the holder's income
with respect to the Note in that accrual period. Under the new regulations, if
the amortizable bond premium allocable to an accrual period exceeds the amount
of qualified stated interest allocable to such accrual period, such excess would
be allowed as a deduction for such accrual period, but only to the extent of the
Holder's prior interest inclusions on the Note; any excess is generally carried
forward and allocable to the next accrual period. A Holder who elects to
amortize bond premium must reduce his tax basis in the Note as described above
under "Sale, Exchange or Retirement of the Notes." An election to amortize bond
premium applies to all taxable debt obligations held by the Holder at the
beginning of the first taxable year to which the election applies or thereafter
acquired and may be revoked only with the consent of the Internal Revenue
Service. The new regulations provide a restrictive automatic consent for a
Holder to change its method of accounting for eligible bond premium in certain
circumstances, if the change is made for the first taxable year for which the
Holder must account for the bond under the new regulations.
If a Holder makes a Constant Yield Election for a Note with amortizable
bond premium, such election will result in a deemed election to amortize bond
premium for all of the Holder's appertaining debt instruments with amortizable
bond premium and may be revoked only with the permission of the Internal Revenue
Service with respect to debt instruments acquired after revocation.
Foreign Currency Notes. The following summary relates to Notes that are
denominated in a currency or currency unit other than the U.S. dollar ("Foreign
Currency Notes").
A Holder who uses the cash method of accounting and who receives a
qualified stated interest payment in a foreign currency with respect to a
Foreign Currency Note will be required to include in income the U.S. dollar
value of the foreign currency payment (determined on the date such payment is
received) regardless of whether the payment is in fact converted to U.S. dollars
at that time, and such U.S. dollar value will be the Holder's tax basis in the
foreign currency. A cash method Holder who receives such a payment in U.S.
dollars pursuant to an option available under such Note will be required to
include the amount of such payment in income upon receipt.
To the extent the above paragraph is not applicable, a Holder will be
required to include in income the U.S. dollar value of the amount of interest
income (including original issue discount, but reduced by amortizable bond
premium to the extent applicable) that has accrued and is otherwise required to
be taken into account with respect to a Foreign Currency Note during an accrual
period. The U.S. dollar value of such accrued income will be determined by
translating such income at the average rate of exchange for the accrual period
or, with respect to an accrual period that spans two taxable years, at the
average rate for the partial period within the taxable year. Such Holder will
recognize ordinary income or loss with respect to accrued interest income on the
date such income is actually received. The amount of ordinary income or loss
recognized will equal the difference between the U.S. dollar value of the
foreign currency payment received (determined on the date such payment is
received) in respect of such accrual period (or, where a Holder
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receives U.S. dollars, the amount of such payment in respect of such accrual
period) and the U.S. dollar value of interest income that has accrued during
such accrual period (as determined above). A Holder may elect to translate
interest income (including original issue discount) into U.S. dollars at the
spot rate on the last day of the interest accrual period (or, in the case of a
partial accrual period, the spot rate on the last day of the taxable year) or,
alternatively, if the date of receipt is within five business days of the last
day of the interest accrual period, the spot rate on the date of receipt. A
Holder that makes such an election must apply it consistently to all debt
instruments from year to year and cannot change the election without the consent
of the Internal Revenue Service.
Original issue discount and amortizable bond premium on a Foreign Currency
Note are to be determined in the relevant foreign currency.
Any loss realized on the sale, exchange or retirement of a Foreign Currency
Note with amortizable bond premium by a Holder who has not elected to amortize
such premium under Section 171 of the Code will be a capital loss to the extent
of such bond premium. If such an election is made, amortizable bond premium
taken into account on a current basis will reduce interest income in units of
the relevant foreign currency. Exchange gain or loss is realized on such
amortized bond premium with respect to any period by treating the bond premium
amortized in such period as a return of principal.
Gain or loss realized upon the sale, exchange or retirement of a Foreign
Currency Note that is attributable to fluctuations in currency exchange rates
will be ordinary income or loss which will not be treated as interest income or
expense. Gain or loss attributable to fluctuations in exchange rates will equal
the difference between (i) the U.S. dollar value of the foreign currency
principal amount (as determined pursuant to regulations under Section 988 of the
Code) of such Note, and any payment with respect to accrued interest, determined
on the date such payment is received or such Note is disposed of, and (ii) the
U.S. dollar value of the foreign currency principal amount of such Note,
determined on the date such Holder acquired such Note, and the U.S. dollar value
of the accrued interest received, determined by translating such interest at the
average exchange rate (or at the spot rate elected as described above) for the
accrual period. Such foreign currency gain or loss will be recognized only to
the extent of the total gain or loss realized by a Holder on the sale, exchange
or retirement of the Foreign Currency Note. The source of such foreign currency
gain or loss will be determined by reference to the residence of the Holder or
the "qualified business unit" of the Holder on whose books the Note is properly
reflected. Any gain or loss realized by such a Holder in excess of such foreign
currency gain or loss will generally be capital gain or loss (except, in the
case of a short-term Original Issue Discount Note, to the extent of any original
issue discount not previously included in the Holder's income).
A Holder will have a tax basis in any foreign currency received on the
sale, exchange or retirement of a Foreign Currency Note equal to the U.S. dollar
value of such foreign currency, determined at the time of such sale, exchange or
retirement. Regulations issued under Section 988 of the Code provide a special
rule for purchases and sales of publicly traded Foreign Currency Notes by a cash
method taxpayer under which units of foreign currency paid or received are
translated into U.S. dollars at the spot rate on the settlement date of the
purchase or sale. Accordingly, no exchange gain or loss will result from
currency fluctuations between the trade date and the settlement of such a
purchase or sale. An accrual method taxpayer may elect the same treatment
required of cash-method taxpayers, provided the election is applied
consistently. Such election cannot be changed without the consent of the
Internal Revenue Service. Any gain or loss realized by a Holder on a sale or
other disposition of foreign currency (including its exchange for U.S. dollars
or its use to purchase Foreign Currency Notes) will be ordinary income or loss.
Backup Withholding. Certain noncorporate Holders may be subject to backup
withholding at a rate of 31% on payments of principal, premium and interest
(including original issue discount, if any) on, and the proceeds of disposition
of, a Note. Backup withholding will apply only if the Holder (i) fails to
furnish its Taxpayer Identification Number ("TIN") which, for an individual,
would be his Social Security number, (ii) furnishes an incorrect TIN, (iii) is
notified by the Internal Revenue Service that it has failed to properly report
payments of interest and dividends or (iv) under certain circumstances, fails to
certify, under penalties of perjury, that it has furnished a correct TIN and has
not been notified by the Internal Revenue Service that
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it is subject to backup withholding for failure to report interest and dividend
payments. Holders should consult their tax advisors regarding their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption if applicable.
The amount of any backup withholding from a payment to a Holder will be
allowed as a credit against such Holder's United States federal income tax
liability and may entitle such Holder to a refund, provided that the required
information is furnished to the Internal Revenue Service.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Company through
the Agents, who have agreed to use their reasonable best efforts to solicit such
offers. The Company will have the sole right to accept offers to purchase Notes
and may reject any offer to purchase Notes in whole or in part. The Agents will
have the right to reject any offer to purchase Notes solicited by them in whole
or in part. Payment of the purchase price of the Notes will be required to be
made in immediately available funds. The Company will pay the Agents a
commission, in connection with sales of Notes to purchasers solicited by such
Agents, ranging from .100% to .750% of the principal amount of Notes so sold,
depending upon the maturity of the Notes.
The Company may also sell Notes to the Agents as principal for their own
account at discounts to be agreed upon at the time of sale. Unless otherwise
specified in the applicable Pricing Supplement, any Note sold to an Agent as
principal will be purchased by such Agent at 100% of the principal amount
thereof less a commission equal to an agency sale of identical maturity and may
be resold to investors and other purchasers at varying prices related to
prevailing market prices at the time of resale or, if so agreed, at a fixed
public offering price. The Agents may offer the Notes it has purchased as
principal to other dealers. The Agents may sell the Notes to any dealer at a
discount and, unless otherwise specified in the applicable Pricing Supplement,
such discounts allowed to any dealer will not be in excess of the discount to be
received by the Agents from the Company. After the initial public offering of
Notes that are to be resold by the Agents to investors and other purchasers on a
fixed public offering price basis, the public offering price, concession and
discount may be changed.
In order to facilitate the offering of the Notes, the Agents may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Notes. Specifically, the Agents may overallot in connection with the offering,
creating a short position in the Notes for their own account. In addition, to
cover overallotments or to stabilize the price of the Notes, the Agents may bid
for, and purchase, the Notes in the open market. Finally, the Agents may reclaim
selling concessions allowed to a dealer for distributing the Notes in the
offering, if the Agents repurchase previously distributed Notes in transactions
to cover short positions established in connection with the offering of the
Notes, in stabilizing transactions or otherwise. Any of these activities may
stabilize or maintain the market price of the Notes above independent market
levels. The Agents are not required to engage in these activities and may end
any of these activities at any time.
The Company has reserved the right to sell the Notes directly to investors,
and may solicit and accept offers to purchase Notes directly from investors from
time to time on its own behalf.
Each of the Agents may be deemed to be an "underwriter" within the meaning
of the Securities Act of 1933. The Company has agreed to indemnify the Agents
against certain liabilities, including liabilities under such Act, and will
reimburse the Agents for certain expenses.
The Agents in the ordinary course of their business engage from time to
time in securities transactions with and perform investment banking services for
the Company and BellSouth.
Concurrently with the offering of the Notes through the Agents as described
herein, the Company may offer outside the United States an additional series of
medium-term notes, which may have terms substantially similar to the terms of
the Notes offered hereby (but will constitute a separate series for purposes of
the Indenture), and which may be offered in bearer or registered form. Such Euro
Notes will be offered pursuant to agency agreements with Morgan Stanley & Co.
International Limited, Goldman Sachs International and/or Merrill Lynch
International, acting as agents for the Company. Pursuant to such agency
agreements,
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Morgan Stanley & Co. International Limited, Goldman Sachs International and
Merrill Lynch International may also purchase Euro Notes as principals for their
own accounts for resale, and the Company may make direct sales of the Euro Notes
on its own behalf. For this purpose, "United States" means the United States of
America (including the States and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction. Any Euro Notes so
offered and sold will reduce correspondingly the principal amount of Notes which
may be offered by this Prospectus Supplement and the Prospectus.
The Company has been advised by the Agents that the Agents intend to make a
market in the Notes and the Series A and B Notes, but that the Agents are not
obligated to do so and that the Agents may discontinue making a market at any
time without notice. No assurance can be given as to the liquidity of the
trading market for the Notes.
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