AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 21, 1998
REGISTRATION NOS. 333-
333- -01
333- -02
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
THE SOUTHERN COMPANY
SOUTHERN COMPANY CAPITAL FUNDING, INC.
SOUTHERN COMPANY CAPITAL TRUST IV
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 58-0690070
DELAWARE 58-2318047
DELAWARE 58-6363807
(State or other jurisdiction of incorporation or
organization) (I.R.S. Employer Identification Number)
</TABLE>
---------------------
270 PEACHTREE STREET, N.W.
ATLANTA, GEORGIA 30303
(770) 393-0650
(Address, including zip code, and telephone number, including area code, of each
registrant's principal executive offices)
TOMMY CHISHOLM, SECRETARY
THE SOUTHERN COMPANY
270 PEACHTREE STREET, N.W.
ATLANTA, GEORGIA 30303
(770) 393-0650
(Name, address, including zip code, and telephone number, including area code,
of agent for service of each registrant)
---------------------
PLEASE SEND COPIES OF ALL CORRESPONDENCE TO:
<TABLE>
<S> <C>
W.L. WESTBROOK JOHN D. MCLANAHAN
FINANCIAL VICE PRESIDENT TROUTMAN SANDERS LLP
THE SOUTHERN COMPANY 600 PEACHTREE STREET, N.E., SUITE 5200
270 PEACHTREE STREET, N.W. ATLANTA, GEORGIA 30308
ATLANTA, GEORGIA 30303 (404) 885-3000
(770) 393-0650
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.
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. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Preferred Securities, Liquidation Amount $25 8,000,000
per Preferred Security, of Southern Company Preferred
Capital Trust IV........................... Securities $25 $200,000,000 $59,000
- ---------------------------------------------------------------------------------------------------------------------------------
Series D Junior Subordinated Deferrable
Interest Notes of Southern Company Capital
Funding, Inc.(2)...........................
- ---------------------------------------------------------------------------------------------------------------------------------
The Southern Company Preferred Securities
Guarantee(2)(3)............................
- ---------------------------------------------------------------------------------------------------------------------------------
The Southern Company Junior Subordinated
Notes Guarantee(2)(3)......................
- ---------------------------------------------------------------------------------------------------------------------------------
Total(4)..................................... $200,000,000 $59,000
=================================================================================================================================
</TABLE>
(1) Estimated for the sole purpose of computing the registration fee.
(2) Pursuant to Rule 457(n) under the Securities Act, no separate fee is payable
with respect to the Junior Subordinated Notes, the Preferred Securities
Guarantee or the Junior Subordinated Notes Guarantee.
(3) Includes the rights of holders of Preferred Securities of Southern Company
Capital Trust IV under the Trust Agreement, the rights of holders of Junior
Subordinated Notes under the Indenture, the rights of the holders of such
Preferred Securities under the Preferred Securities Guarantee, the rights of
holders of the Junior Subordinated Notes under the Notes Guarantee and
certain backup undertakings as described herein.
(4) Such amount represents the liquidation amount of the Southern Company
Capital Trust IV Preferred Securities being registered hereunder and the
principal amount of Junior Subordinated Notes that may be distributed to
holders of such Preferred Securities upon any liquidation of Southern
Company Capital Trust IV.
-------------------------
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(A),
MAY DETERMINE.
================================================================================
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 21, 1998
8,000,000 PREFERRED SECURITIES
SOUTHERN COMPANY CAPITAL TRUST IV
% TRUST ORIGINATED PREFERRED SECURITIES(SM)("TOPRS(SM)")
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
(SOUTHERN COMPANY LOGO)
---------------------------
The % Trust Originated Preferred Securities (the "Preferred Securities")
offered hereby evidence preferred undivided beneficial interests, representing
97% undivided beneficial interests in the assets of Southern Company Capital
Trust IV, a statutory business trust created under the laws of the State of
Delaware (the "Trust"). Southern Company Capital Funding, Inc., a Delaware
corporation ("Capital") and an indirect, wholly-owned subsidiary of The Southern
Company, a Delaware corporation ("Southern"), will own all the common securities
(the "Common Securities" and, together with the Preferred Securities, the "Trust
Securities") representing the remaining 3% undivided beneficial interests in the
assets of the Trust. The Trust exists for the sole purpose of issuing the
Preferred Securities and Common Securities and investing the proceeds thereof in
an equivalent amount of Capital's Series D % junior subordinated deferrable
interest notes due March 31, 2038 (the "Junior Subordinated Notes"). Southern
will irrevocably and unconditionally guarantee the due and punctual payment of
the Junior Subordinated Notes (the "Notes Guarantee"). See "Description of the
Notes Guarantee."
(Continued on next page)
---------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR CERTAIN INFORMATION RELEVANT TO
AN INVESTMENT IN THE PREFERRED SECURITIES.
---------------------------
Application has been made to list the Preferred Securities on the New York
Stock Exchange, Inc. (the "NYSE"). If approved, trading of the Preferred
Securities on the NYSE is expected to commence within a 30-day period after the
initial delivery of the Preferred Securities. See "Underwriting."
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
======================================================================================================================
Initial Public Underwriting Proceeds to
Offering Price(1) Discount(2) Trust(2)(3)(4)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Preferred Security..................... $ (3) $
- ----------------------------------------------------------------------------------------------------------------------
Total...................................... $ (3) $
======================================================================================================================
</TABLE>
(1) Plus accrued distributions, if any, from the Issue Date.
(2) Southern, Capital and the Trust have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933, as amended. See "Underwriting."
(3) Because the proceeds of the sale of the Preferred Securities will be
invested in the Junior Subordinated Notes, Southern has agreed to pay to the
Underwriters, as compensation (the "Underwriters' Compensation") for
arranging the investment therein of such proceeds, $ per Preferred
Security, except for Preferred Securities sold to certain institutions, for
which the Underwriters' Compensation will be $ per Preferred Security.
Therefore, to the extent that Preferred Securities are sold to such
institutions, the actual amount of Underwriters' Compensation will be less
than and the Proceeds to Trust will be greater than the aggregate amounts
specified above. See "Underwriting."
(4) Expenses of the offering to be paid by Southern are estimated to be
approximately $ .
---------------------------
The Preferred Securities are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that delivery of
the Preferred Securities will be made in book-entry only form through the
facilities of The Depository Trust Company on or about , 1998 (the "Issue
Date") against payment therefor in immediately available funds.
---------------------------
MERRILL LYNCH & CO.
---------------------------
The date of this Prospectus is April , 1998.
(SM)"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co., Inc.
<PAGE>
(Continued from the previous page)
The Junior Subordinated Notes will be unsecured obligations of Capital and
will be subordinate and junior in right of payment to all Senior Indebtedness of
Capital, as described herein. See "Description of the Junior Subordinated
Notes -- Subordination." The Notes Guarantee will be an unsecured obligation of
Southern and will be subordinate and junior in right of payment to all Senior
Indebtedness of Southern. See "Description of the Notes Guarantee." Holders of
the Preferred Securities are entitled to receive cumulative cash distributions
at the rate of % per annum (the "Securities Rate"), accruing from the date of
original issuance and payable, unless deferred, quarterly in arrears on March
31, June 30, September 30 and December 31 of each year (each, a "Distribution
Date").
The Securities Rate and the Distribution Dates for the Preferred Securities
will correspond to the interest rate and interest and other payment dates on the
Junior Subordinated Notes, which will constitute substantially all the assets of
the Trust. As a result, if principal or interest is not paid on the Junior
Subordinated Notes, no amounts will be paid on the Preferred Securities. CAPITAL
HAS THE RIGHT TO DEFER PAYMENTS OF INTEREST ON THE JUNIOR SUBORDINATED NOTES BY
EXTENDING THE INTEREST PAYMENT PERIOD ON THE JUNIOR SUBORDINATED NOTES, AT ANY
TIME AND FROM TIME TO TIME, FOR UP TO 20 CONSECUTIVE QUARTERS (EACH, AN
"EXTENSION PERIOD"). If interest payments are so deferred, distributions on the
Preferred Securities also will be deferred and neither Southern nor Capital will
be permitted, subject to certain exceptions described herein, to declare or pay
any dividend or distribution on any of its capital stock or make any guarantee
payments with respect to the foregoing, or make any payment on any debt
securities issued by it which rank pari passu (equal in priority) with or junior
to the Junior Subordinated Notes or the Notes Guarantee. During any Extension
Period, holders of Preferred Securities will be required to include income in
the form of original issue discount ("OID") in their gross income for United
States federal income tax purposes in advance of the receipt of the cash
payments attributable to such deferred interest. See "Description of the Junior
Subordinated Notes -- Option to Extend Interest Payment Period," "Risk
Factors -- Option to Extend Interest Payment Period" and "Certain Federal Income
Tax Considerations -- Original Issue Discount" and "--Market Discount." Deferred
installments of interest on the Junior Subordinated Notes will bear interest,
compounded quarterly, at a rate per annum equal to the Securities Rate to the
extent permitted by applicable law. The payment of such deferred interest,
together with interest thereon, will be distributed to the holders of the
Preferred Securities as received at the end of any Extension Period.
The Trust Securities are subject to mandatory redemption upon repayment of
the Junior Subordinated Notes at maturity or their earlier redemption. The
Junior Subordinated Notes are redeemable at the option of Capital (in whole or
in part), from time to time, on or after , 2003, or at any time in
whole upon the occurrence of a Tax Event or Investment Company Act Event
(either, a "Special Event"). Capital will have the right at any time to
terminate the Trust and cause the Junior Subordinated Notes to be distributed to
the holders of the Preferred Securities in liquidation of the Trust. See
"Description of the Preferred Securities -- Special Event Redemption or
Distribution." If the Junior Subordinated Notes are distributed to the holders
of the Preferred Securities, Southern and Capital will use their best efforts to
have the Junior Subordinated Notes listed on the NYSE or on such other exchange
as the Preferred Securities are then listed. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution", "-- Liquidation
Distribution Upon Dissolution" and "Description of the Junior Subordinated
Notes."
The payment of distributions on the Preferred Securities is guaranteed by
Southern under the Preferred Securities Guarantee Agreement, but only to the
extent that the Trust has funds legally and immediately available therefor (the
"Preferred Securities Guarantee"). If Capital fails to make required payments on
the Junior Subordinated Notes, the Trust will not have sufficient funds to pay
such distributions, and the Preferred Securities Guarantee does not cover the
payment of distributions when the Trust does not have sufficient funds legally
available therefor. In such event, the remedy of a holder of Preferred
Securities is to enforce the Junior Subordinated Notes and the Notes Guarantee.
See "Description of the Junior Subordinated Notes" and "Description of the Notes
Guarantee." Southern's obligations under the Preferred Securities Guarantee are
subordinate and junior in right of payment to all of its other liabilities and
will rank pari passu with the most senior preferred stock of Southern which may
be issued. See "Description of the Preferred Securities Guarantee." Southern and
Capital have, through the Preferred Securities Guarantee, the Notes Guarantee,
2
<PAGE>
the Subordinated Note Indenture, the Junior Subordinated Notes, the Trust
Agreement and the Agreement as to Expenses and Liabilities, fully and
unconditionally guaranteed, subject to certain subordination provisions, all the
Trust's obligations with respect to the Preferred Securities.
In the event of the redemption of the Junior Subordinated Notes or the
voluntary or involuntary dissolution, winding-up or termination of the Trust,
the holders of the Preferred Securities will be entitled to receive, for each
Preferred Security, a liquidation amount of $25 plus accrued and unpaid
distributions thereon (including interest thereon) to the date of payment (the
"Redemption Price"), unless in connection with such dissolution, winding-up or
termination, the Junior Subordinated Notes are distributed to the holders of the
Preferred Securities. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Dissolution."
The Preferred Securities initially will be represented by a global
certificate or certificates registered in the name of The Depository Trust
Company ("DTC") or its nominee. Beneficial interests in such Preferred
Securities will be shown on, and transfers thereof will be effected only
through, records maintained by Participants (as defined herein) in DTC. Except
as described herein, Preferred Securities in certificated form will not be
issued in exchange for the global certificates. See "Description of the
Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company."
---------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED
SECURITIES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, IN
CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
3
<PAGE>
AVAILABLE INFORMATION
Southern, Capital and the Trust have filed with the Securities and Exchange
Commission (the "Commission") a combined registration statement on Form S-3 (the
"Registration Statement," which term encompasses any amendments thereof and
exhibits thereto) under the Securities Act of 1933, as amended (the "1933 Act").
As permitted by the rules and regulations of the Commission, this Prospectus
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto, to which reference is hereby made.
Southern is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information may be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices at 7 World Trade Center, 13th Floor, Suite 1300, New York, New York
10048 and Suite 1400, Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material may also be obtained at prescribed rates
by writing to the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants including Southern that file electronically at
http://www.sec.gov. In addition, reports and other material concerning Southern
may be inspected at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005, on which Exchange the common stock of Southern is
listed.
No separate financial statements of Capital or the Trust have been included
herein. Southern, Capital and the Trust do not consider that such financial
statements would be material to holders of the Preferred Securities because each
of Capital and the Trust is a special purpose entity, has no operating history
or independent operations and is not engaged in and does not propose to engage
in any activity other than, in the case of Capital, obtaining financing for
Southern and direct and indirect subsidiaries of Southern other than the
operating affiliates (as defined herein) and, in the case of the Trust, holding
as trust assets the Junior Subordinated Notes, issuing the Trust Securities and
engaging in other activities as are necessary, advisable or incidental thereto.
See "Southern Company Capital Funding, Inc.," "Southern Company Capital Trust
IV," "Description of the Preferred Securities," "Description of the Junior
Subordinated Notes," Description of the Notes Guarantee" and "Description of the
Preferred Securities Guarantee." In addition, Southern does not expect that
Capital or the Trust will file reports, proxy statements and other information
under the 1934 Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by Southern with the Commission
pursuant to the 1934 Act and are incorporated herein by reference and made a
part of this Prospectus:
(a) Southern's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997; and
(b) Southern's Current Report on Form 8-K dated February 11, 1998.
All documents filed by Southern with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated herein by reference and made a part of this Prospectus from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
SOUTHERN WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROSPECTUS
IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY
OR ALL DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN THE EXHIBITS TO
SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE).
SUCH REQUESTS SHOULD BE DIRECTED TO TOMMY CHISHOLM, SECRETARY, THE SOUTHERN
COMPANY, 270 PEACHTREE STREET, N.W., ATLANTA, GEORGIA 30303, TELEPHONE: (770)
393-0650.
4
<PAGE>
SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information contained elsewhere in this
Prospectus or incorporated herein by reference. Capitalized terms not otherwise
defined shall have the meanings assigned in the Glossary.
THE SOUTHERN COMPANY
Southern was incorporated under the laws of Delaware on November 9, 1945.
Southern is domesticated under the laws of Georgia and is qualified to do
business as a foreign corporation under the laws of Alabama. The principal
executive offices of Southern are located at 270 Peachtree Street, N.W.,
Atlanta, Georgia 30303, and the telephone number is (770) 393-0650.
Southern owns all the outstanding common stock of Alabama Power Company
("ALABAMA"), Georgia Power Company ("GEORGIA"), Gulf Power Company ("GULF"),
Mississippi Power Company ("MISSISSIPPI") and Savannah Electric and Power
Company ("SAVANNAH")(ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH being
collectively referred to herein as the "operating affiliates"), each of which is
an operating public utility company, and of Southern Company Services, Inc. (the
system service company). ALABAMA and GEORGIA each owns 50% of the outstanding
common stock of Southern Electric Generating Company ("SEGCO"). The operating
affiliates supply electric service in the states of Alabama, Georgia, Florida,
Mississippi and Georgia, respectively, and SEGCO owns generating units at a
large electric generating station which supplies power to ALABAMA and GEORGIA.
Southern also owns all the outstanding common stock of Southern Energy, Inc.
("Southern Energy"), Southern Company Energy Solutions, Inc. ("Energy
Solutions"), Southern Nuclear Operating Company, Inc. ("Southern Nuclear") and
Southern Communications Services, Inc. ("Southern Communications"). Southern
Energy designs, builds, owns and operates power production and delivery
facilities and provides a broad range of technical services to industrial
companies and utilities in the United States and a number of international
markets. Energy Solutions explores, develops and markets energy management
services and other business lines relating to Southern's core business of
generating and distributing energy. Southern Nuclear provides services to the
Southern electric system's nuclear plants. Southern Communications provides
digital wireless communications services to the operating affiliates and
regional non-affiliates.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
TWELVE
MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------- 1998(1)
1993 1994(1) 1995(1) 1996(1) 1997(1) (UNAUDITED)
------ ------- ------- ------- ------- -----------
(MILLIONS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues....................... $8,489 $8,297 $9,180 $10,358 $12,611 $12,540
Income Before Interest Charges........... $1,827 $1,756 $1,900 $ 1,944 $ 2,037 $ 2,123
Consolidated Net Income.................. $1,002 $ 989 $1,103 $ 1,127 $ 972 $ 1,026
Earnings per Share of Common Stock....... $ 1.57 $ 1.52 $ 1.66 $ 1.68 $ 1.42 $ 1.49
Dividends Paid per Share of Common
Stock.................................. $ 1.14 $ 1.18 $ 1.22 $ 1.26 $ 1.30 $ 1.31
Ratio of Earnings to Fixed Charges(2).... 3.41 3.63 3.75 3.68 2.87 2.83
Ratio of Earnings to Fixed Charges Plus
Preferred Dividend Requirements (Pre-
Income Tax Basis)(3)................... 2.84 3.01 3.13 3.12 2.67 2.69
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
CAPITALIZATION AS OF
DECEMBER 31, 1997
-------------------------------
ACTUAL AS ADJUSTED(4)
--------- -------------------
(MILLIONS, EXCEPT PERCENTAGES)
<S> <C> <C> <C>
Common Stock Equity......................................... $ 9,647 $ 9,647 42.3%
Preferred Stock of Subsidiaries............................. 493 493 2.2
Subsidiary Obligated Mandatorily Redeemable Capital and
Preferred Securities...................................... 1,744 1,989 8.7
Long-Term Debt.............................................. 10,274 10,685 46.8
------- ------- -----
Total, excluding amounts due within one year of
$784 million.................................... $22,158 $22,814 100.0%
======= ======= =====
</TABLE>
- ---------------
(1) "Income Before Interest Charges" and "Consolidated Net Income" for the years
ended December 31, 1994, 1995, 1996 and 1997 and the twelve months ended
March 31, 1998 reflect charges of approximately $61,000,000, $17,000,000,
$53,000,000, $31,000,000 and $30,000,000, respectively, after taxes relating
to benefits provided pursuant to work force reduction programs. In
addition, "Income Before Interest Charges" and "Consolidated Net Income" for
the year ended December 31, 1997 and the twelve months ended March 31, 1998
reflect a charge of $111,000,000, after taxes, resulting from a windfall
profits tax assessed against Southern's South Western Electricty subsidiary
in the United Kingdom.
(2) This ratio is computed as follows: (i) "Earnings" have been calculated by
adding to "Income Before Interest Charges" all income taxes deducted
therefrom and the debt portion of allowance for funds used during
construction; and (ii) "Fixed Charges" consist of "Net Interest Charges"
plus the debt portion of allowance for funds used during construction.
(3) In computing this ratio, "Preferred Dividend Requirements" represent the
before-tax earnings necessary to pay such dividends, computed at the
effective tax rates for the applicable periods.
(4) Reflects (i) the issuance in January 1998 by Gulf Power Capital Trust II, a
statutory business trust created solely for the purpose of holding GULF's
Series C Junior Subordinated Notes and issuing preferred and common
securities, of $45,000,000 aggregate liquidation amount of its 7.00%
Quarterly Income Preferred Securities for the benefit of GULF, (ii) the
issuance in January 1998 by GEORGIA of $145,000,000 principal amount of its
Series A 6 7/8% Senior Public Income Notes due December 31, 2047, (iii) the
issuance in February 1998 by ALABAMA of $200,000,000 principal amount of its
Series B 7% Senior Quarterly Interest Notes due December 31, 2047, (iv) the
issuance in March 1998 by SAVANNAH of $30,000,000 principal amount of its
Series A 6 5/8% Senior Retail Intermediate Bonds due March 17, 2015 and the
use of the proceeds to redeem in April 1998 the $28,900,000 outstanding
principal amount of its First Mortgage Bonds, 8.30% Series due July 1, 2022,
(v) the issuance in April 1998 by ALABAMA of $190,000,000 principal amount
of its Series C 7% Senior Notes due March 31, 2048 and the proposed use of
a portion of the proceeds to redeem in May 1998 the $124,155,000 outstanding
principal amount of its First Mortgage Bonds, 8 3/4% Series due December 1,
2021 and(vi) the issuance of the Preferred Securities offered hereby.
6
<PAGE>
SOUTHERN COMPANY CAPITAL FUNDING, INC.
Capital was established to obtain financing for Southern and direct and
indirect subsidiaries of Southern other than the operating affiliates. Capital
does not and will not engage in business activities other than such financing.
Capital was incorporated under the laws of Delaware on January 24, 1997 and
is a wholly-owned subsidiary of Southern Energy, Inc. (formerly known as SEI
Holdings, Inc.), which itself is a wholly-owned subsidiary of Southern. The
principal executive offices of Capital are located at 270 Peachtree Street,
N.W., Atlanta, Georgia 30303, and the telephone number is (770) 393-0650.
[GRAPH]
7
<PAGE>
THE OFFERING
The Trust.................. Southern Company Capital Trust IV is a statutory
business trust created under Delaware law solely
for the purpose of holding Capital's Junior
Subordinated Notes and issuing Preferred Securities
and Common Securities evidencing the entire
beneficial interest therein (and engaging in
activities necessary, appropriate, convenient or
incidental thereto).
The Trustees............... Bankers Trust Company will act as property trustee
(the "Property Trustee") of the Trust. Two
employees of a subsidiary of Southern also will act
as trustees (the "Administrative Trustees") of the
Trust. Bankers Trust (Delaware) will be an
additional trustee (the "Delaware Trustee") of the
Trust. Bankers Trust Company also will act as
trustee (the "Indenture Trustee") under the
Subordinated Note Indenture pursuant to which the
Junior Subordinated Notes will be issued and will
act as trustee under the Preferred Securities
Guarantee (the "Guarantee Trustee").
The Property Trustee, Delaware Trustee and
Administrative Trustees are sometimes referred to
as the "Securities Trustees."
Preferred Securities
Offered.................... The Trust will offer 8,000,000 Preferred Securities
evidencing preferred undivided beneficial interests
in the assets of the Trust. Holders of the
Preferred Securities are entitled to receive
cumulative cash distributions at the Securities
Rate, accruing from the date of original issuance
and payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year,
commencing on June 30, 1998 (each, a "Distribution
Date"). The Securities Rate and the Distribution
Dates for the Preferred Securities will correspond
to the interest rate and payment dates on the
Junior Subordinated Notes, which will constitute
substantially all the assets of the Trust. As a
result, if principal or interest is not paid on the
Junior Subordinated Notes, no amounts will be paid
on the Preferred Securities. See "Description of
the Preferred Securities" herein.
Record Date................ The record date for each Distribution Date will be
the close of business on the 15th calendar day
prior to such Distribution Date.
Junior Subordinated
Notes...................... The Trust will invest the proceeds from the
issuance of the Preferred Securities and Common
Securities in an equivalent amount of Capital's
Series D % junior subordinated deferrable
interest notes due March 31, 2038. The Junior
Subordinated Notes will be subordinate and junior
in right of payment to all indebtedness for
borrowed money and other obligations of Capital
included in the definition of Senior Indebtedness.
See "Description of the Junior Subordinated
Notes -- Subordination."
Preferred Securities
Guarantee and Notes
Guarantee................ The payment of distributions on the Preferred
Securities is guaranteed by Southern under the
Preferred Securities Guarantee, but only to the
extent the Trust has funds legally and immediately
available to make such distributions. If Capital
does not make principal or interest payments on the
Junior Subordinated Notes, the Trust will not have
sufficient funds to make distributions on the
Preferred Securities, in which event the Preferred
Securities Guarantee will not apply to such
distributions until the Trust has sufficient funds
legally available therefor.
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In such event, the remedy of a holder of Preferred
Securities is to enforce the Junior Subordinated
Notes and the Notes Guarantee. The obligations of
Southern under the Preferred Securities Guarantee
will be subordinate and junior in right of payment
to all other liabilities of Southern and will rank
pari passu with the most senior preferred stock
which may be issued by Southern. See "Risk
Factors -- Ranking of and Rights Under the
Preferred Securities Guarantee."
Pursuant to the Subordinated Note Indenture,
Southern will irrevocably and unconditionally
guarantee the due and punctual payment of
principal, premium, if any, and interest on the
Junior Subordinated Notes when and as the same
shall become due and payable, whether at maturity,
upon redemption or otherwise. The Notes Guarantee
will be junior in right of payment to all present
and future Senior Indebtedness of Southern. See
"Description of the Notes Guarantee."
Southern and Capital have, through the Preferred
Securities Guarantee, the Notes Guarantee, the
Subordinated Note Indenture, the Junior
Subordinated Notes, the Trust Agreement and the
Agreement as to Expenses and Liabilities, fully and
unconditionally guaranteed, subject to certain
subordination provisions, all the Trust's
obligations with respect to the Preferred
Securities.
Interest Deferral.......... Capital has the right to defer payments of interest
on the Junior Subordinated Notes by extending the
interest payment period on the Junior Subordinated
Notes, at any time and from time to time, for up to
20 consecutive quarters (each, an "Extension
Period"). The only restrictions on Capital's
ability to defer payments of interest are that
during the Extension Period neither Southern nor
Capital may, subject to certain exceptions
described herein, (i) pay dividends on or redeem
any of its capital stock or (ii) pay principal or
interest on any debt securities ranking pari passu
with or subordinate to the Junior Subordinated
Notes or the Notes Guarantee. There could be
multiple Extension Periods of varying lengths
throughout the term of the Junior Subordinated
Notes. See "Description of the Preferred
Securities -- Distributions" and "Description of
the Junior Subordinated Notes -- Option to Extend
Interest Payment Period."
If interest payments on the Junior Subordinated
Notes are deferred, distributions on the Preferred
Securities will also be deferred. During an
Extension Period, holders of Preferred Securities
will be required to include income in the form of
OID in their gross income for federal income tax
purposes in advance of the receipt of the cash
payments attributable to such deferred interest.
See "Description of the Junior Subordinated
Notes -- Option to Extend Interest Payment Period"
and "Certain Federal Income Tax
Considerations -- Original Issue Discount" and
"-- Market Discount." Deferred interest will bear
interest, compounded quarterly, at a rate per annum
equal to the Securities Rate from the date of
deferral to the date of payment.
Redemption; Distribution... The Preferred Securities are subject to mandatory
redemption upon repayment of the Junior
Subordinated Notes at maturity or their earlier
redemption. The Junior Subordinated Notes are
redeemable by Capital (in whole or in part), from
time to time on or after , 2003, or at any
time in whole upon the occurrence of a Special
Event. If a partial
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<PAGE>
redemption of the Junior Subordinated Notes would
result in the delisting of the Preferred
Securities, Capital may only redeem the Junior
Subordinated Notes in whole. Any partial redemption
of the Junior Subordinated Notes will be effected
by the redemption of an equivalent amount of Trust
Securities, to be allocated approximately 97% to
the Preferred Securities and 3% to the Common
Securities. See "Description of the Preferred
Securities -- Redemption" and "-- Special Event
Redemption or Distribution."
Capital will have the right at any time to
terminate the Trust and cause the Junior
Subordinated Notes to be distributed to the holders
of the Preferred Securities in liquidation of the
Trust. This right is optional and wholly within the
discretion of Capital. Circumstances under which
Capital may determine to exercise such right could
include the occurrence of an Investment Company Act
Event or a Tax Event, adverse tax consequences to
Southern, Capital or the Trust that are not within
the definition of a Tax Event because they do not
result from an amendment or change described in
such definition, and changes in the accounting
requirements applicable to the Preferred Securities
as described under "Accounting Treatment." See
"Description of the Preferred Securities -- Special
Event Redemption or Distribution."
Special Event.............. A Special Event means a Tax Event or an Investment
Company Act Event. A "Tax Event" means that the
Administrative Trustees, Southern and Capital shall
have received an opinion from independent tax
counsel experienced in such matters (which may be
counsel to Southern or Capital) to the effect that,
as a result of (a) any amendment to, or change
(including any announced prospective change) in,
the laws (or any regulations thereunder) of the
United States or any political subdivision or
taxing authority thereof or therein or (b) any
amendment to, or change in, an interpretation or
application of such laws or regulations, there is
more than an insubstantial risk that (i) the Trust
would be subject to United States federal income
tax with respect to income accrued or received on
the Junior Subordinated Notes, (ii) interest
payable on the Junior Subordinated Notes would not
be deductible by a member of Southern's
consolidated tax group for United States federal
income tax purposes, or (iii) the Trust would be
subject to more than a de minimis amount of other
taxes, duties or other governmental charges, which
change or amendment becomes effective on or after
the Issue Date. An "Investment Company Act Event"
means that the Administrative Trustees, Southern
and Capital shall have received an opinion of
independent counsel (which may be counsel to
Southern or Capital) to the effect that, as a
result of a change in law or regulation or a
written change in interpretation or application of
law or regulation by any legislative body, court,
governmental agency or regulatory authority after
the Issue Date, there is more than an insubstantial
risk that the Trust is or will be considered an
investment company under the Investment Company Act
of 1940, as amended (the "1940 Act").
Redemption Price........... In the event of the redemption of the Trust
Securities or other termination of the Trust
without distribution of the Junior Subordinated
Notes, each Preferred Security shall be entitled to
receive a liquidation amount of $25 plus accrued
and unpaid distributions thereon (including
interest thereon) to the date of payment.
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RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained elsewhere in this Prospectus and should consider
particularly the following matters:
RANKING OF AND RIGHTS UNDER THE JUNIOR SUBORDINATED NOTES AND THE NOTES
GUARANTEE
No amounts will be available to make payments on the Preferred Securities
except from payments made on the Junior Subordinated Notes. The obligations of
Capital under the Junior Subordinated Notes are subordinate and junior in right
of payment to all Senior Indebtedness of Capital whenever incurred. Capital
currently has no Senior Indebtedness outstanding. The obligations of Southern
under the Notes Guarantee will be subordinate and junior to all present and
future Senior Indebtedness of Southern. At December 31, 1997, Senior
Indebtedness of Southern aggregated approximately $769,000,000. There are no
terms in the Preferred Securities, the Junior Subordinated Notes, the Preferred
Securities Guarantee or the Notes Guarantee that limit Southern's or Capital's
ability to incur additional indebtedness, including indebtedness that ranks
senior to the Junior Subordinated Notes or the Notes Guarantee. See "Description
of the Preferred Securities Guarantee," "Description of the Junior Subordinated
Notes -- Subordination" and "Description of the Notes Guarantee."
RANKING OF AND RIGHTS UNDER THE PREFERRED SECURITIES GUARANTEE
Southern's obligations under the Preferred Securities Guarantee are
subordinate and junior in right of payment to all liabilities of Southern and
will be pari passu with the most senior preferred stock issued by Southern. If
Capital were to default in its obligation to pay amounts payable on the Junior
Subordinated Notes, the Trust would lack available funds for the payment of
distributions or amounts payable on redemption of the Preferred Securities or
otherwise, and in such event holders of the Preferred Securities would not be
able to rely upon the Preferred Securities Guarantee for payment of such
amounts.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Capital has the right under the Subordinated Note Indenture, and at any
time, and from time to time, to defer payments of interest on the Junior
Subordinated Notes for a period of up to 20 consecutive quarters (each, an
"Extension Period"), but not beyond the stated maturity of the Junior
Subordinated Notes. Prior to the termination of any Extension Period, Capital
may further defer payments of interest, provided that such Extension Period,
together with all such previous and further extensions thereof, may not exceed
20 consecutive quarters. Upon the termination of any Extension Period and the
payment of all amounts then due, Capital may select a new Extension Period,
subject to the above requirements. There could be multiple Extension Periods of
varying lengths throughout the term of the Junior Subordinated Notes. Deferred
installments of interest on the Junior Subordinated Notes will bear interest,
compounded quarterly, at a rate per annum equal to the Securities Rate to the
extent permitted by applicable law. The payment of such deferred interest,
together with interest thereon, will be passed through to the holders of the
Preferred Securities as received at the end of any Extension Period.
The only restrictions on Capital's ability to defer payments of interest
are that during any Extension Period neither Southern nor Capital may, subject
to certain exceptions described herein, (i) pay dividends on or redeem any of
its capital stock or (ii) pay principal or interest on any debt securities
ranking pari passu with or subordinate to the Junior Subordinated Notes or the
Notes Guarantee. See "Description of the Preferred Securities -- Distributions"
and "Description of the Junior Subordinated Notes -- Option to Extend Interest
Payment Period."
Should Capital exercise its rights to defer payments of interest, each
holder of Preferred Securities will be required to include income in the form of
OID in its gross income for United States federal income tax purposes in respect
of the deferred interest allocable to its Preferred Securities. As a result,
holders of Preferred Securities will recognize income for United States federal
income tax purposes in advance of the receipt of cash and will not receive the
cash from the Trust related to such income if such holders dispose of their
Preferred Securities prior to the record date for the date on which
distributions of such amounts are
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<PAGE>
made. See "Certain Federal Income Tax Considerations -- Original Issue Discount"
and "-- Sale of Preferred Securities." INVESTORS SHOULD CONSULT WITH THEIR OWN
TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF AN INVESTMENT IN THE
PREFERRED SECURITIES.
Capital has no current intention of exercising its right to defer payments
of interest by extending the interest payment period on the Junior Subordinated
Notes. However, should Capital determine to exercise such right in the future,
the market price of the Preferred Securities is likely to be affected. A holder
that disposes of its Preferred Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its Preferred Securities. In addition, as a result of the existence of
Capital's right to defer interest payments, the market price of the Preferred
Securities (which represent an undivided beneficial interest in the Junior
Subordinated Notes) may be more volatile than other similar securities that do
not have such rights.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If a Special Event shall occur and be continuing, Capital will have the
option to redeem the Junior Subordinated Notes in cash (with the result that the
Preferred Securities shall be redeemed). In addition, Capital will have the
right at any time to terminate the Trust and cause the Junior Subordinated Notes
to be distributed to the holders of the Preferred Securities in liquidation of
the Trust. See "Description of the Preferred Securities -- Special Event
Redemption or Distribution."
There can be no assurance as to the market price for the Junior
Subordinated Notes that may be distributed in exchange for Preferred Securities
if a termination or liquidation of the Trust were to occur. Accordingly, the
Junior Subordinated Notes that the investor may receive on termination and
liquidation of the Trust may trade at a discount to the price that the investor
paid to purchase the Preferred Securities offered hereby. See "Description of
the Junior Subordinated Notes."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and, except
for the rights of holders of Preferred Securities to appoint a Substitute
Property Trustee upon the occurrence of certain events described herein, will
not be entitled to vote to appoint, remove or replace the Securities Trustees,
which voting rights are vested exclusively in the holder of the Common
Securities.
TRADING CHARACTERISTICS OF PREFERRED SECURITIES
The Preferred Securities are expected to be listed on the NYSE, subject to
official notice of issuance. The Preferred Securities are expected to trade at a
price that takes into account the value, if any, of accrued but unpaid
distributions; thus, purchasers will not pay and sellers will not receive
accrued and unpaid interest with respect to the Preferred Securities that is not
included in the trading price thereof. If a Preferred Security is disposed of
prior to the occurrence of an Extension Period, any portion of the amount
received that is attributable to accrued interest will be treated as interest
income to a U.S. holder for tax purposes and will not be treated as part of the
amount realized for purposes of determining gain or loss on the disposition of
the Preferred Security. If an Extension Period occurs, interest on the Junior
Subordinated Notes will be included in the gross income of U.S. holders of
Preferred Securities as it accrues rather than when it is paid. Should an
Extension Period occur, a holder who disposes of his Preferred Securities
between record dates for payments of distributions thereon would be required to
include accrued but unpaid interest on the Junior Subordinated Notes through the
date of disposition in income as OID, and to add such amount to his adjusted tax
basis in his pro rata share of the related Junior Subordinated Notes deemed
disposed of. To the extent the selling price is less than the holder's adjusted
tax basis, a holder generally will recognize a capital loss. Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes. See "Certain Federal Income Tax
Considerations -- Original Issue Discount" and "-- Sale of Preferred
Securities."
The trading price of the Preferred Securities is likely to be sensitive to
the level of interest rates generally. If interest rates rise in general, the
trading price of the Preferred Securities may decline to reflect the
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<PAGE>
additional yield requirements of the purchasers. Conversely, a decline in
interest rates may increase the trading price of the Preferred Securities,
although any increase will be moderated by Capital's ability to call the Junior
Subordinated Notes at any time on or after , 2003 at a redemption price
equal to 100% of the principal amount to be redeemed plus accrued but unpaid
interest. In addition, because holders of Preferred Securities will be paid only
from payments on the Junior Subordinated Notes and may receive Junior
Subordinated Notes upon the termination of the Trust, prospective purchasers of
Preferred Securities are making an investment decision with regard to the Junior
Subordinated Notes and should carefully review all the information regarding the
Junior Subordinated Notes contained herein. See "Description of the Preferred
Securities -- Special Event Redemption or Distribution," "Description of the
Junior Subordinated Notes" and "Description of the Notes Guarantee."
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<PAGE>
THE SOUTHERN COMPANY
Southern was incorporated under the laws of Delaware on November 9, 1945.
Southern is domesticated under the laws of Georgia and is qualified to do
business as a foreign corporation under the laws of Alabama. The principal
executive offices of Southern are located at 270 Peachtree Street, N.W.,
Atlanta, Georgia 30303, and the telephone number is (770) 393-0650.
Southern owns all the outstanding common stock of Alabama Power Company
("ALABAMA"), Georgia Power Company ("GEORGIA"), Gulf Power Company ("GULF"),
Mississippi Power Company ("MISSISSIPPI") and Savannah Electric and Power
Company ("SAVANNAH") (ALABAMA, GEORGIA, GULF, MISSISSIPPI and SAVANNAH being
collectively referred to herein as the "operating affiliates"), each of which is
an operating public utility company, and of Southern Company Services, Inc. (the
system service company). ALABAMA and GEORGIA each owns 50% of the outstanding
common stock of Southern Electric Generating Company ("SEGCO"). The operating
affiliates supply electric service in the states of Alabama, Georgia, Florida,
Mississippi and Georgia, respectively, and SEGCO owns generating units at a
large electric generating station which supplies power to ALABAMA and GEORGIA.
Southern also owns all the outstanding common stock of Southern Energy, Inc.
("Southern Energy"), Southern Company Energy Solutions, Inc. ("Energy
Solutions"), Southern Nuclear Operating Company, Inc. ("Southern Nuclear") and
Southern Communications Services, Inc. ("Southern Communications"). Southern
Energy designs, builds, owns and operates power production and delivery
facilities and provides a broad range of technical services to industrial
companies and utilities in the United States and a number of international
markets. Energy Solutions explores, develops and markets energy management
services and other business lines relating to Southern's core business of
generating and distributing energy. Southern Nuclear provides services to the
Southern electric system's nuclear plants. Southern Communications provides
digital wireless communications services to the operating affiliates and
regional non-affiliates.
SOUTHERN COMPANY CAPITAL FUNDING, INC.
Capital was established to obtain financing for Southern and direct and
indirect subsidiaries of Southern other than the operating affiliates. Capital
does not and will not engage in business activities other than such financing.
Capital was incorporated under the laws of Delaware on January 24, 1997 and
is a wholly-owned subsidiary of Southern Energy, Inc., which itself is a
wholly-owned subsidiary of Southern. The principal executive offices of Capital
are located at 270 Peachtree Street, N.W., Atlanta, Georgia 30303, and the
telephone number is (770) 393-0650.
SOUTHERN COMPANY CAPITAL TRUST IV
The Trust is a statutory business trust created under Delaware law pursuant
to the filing of a certificate of trust with the Delaware Secretary of State on
March 17, 1998. The Trust's business is defined in a trust agreement, executed
by Capital, as Depositor, and Bankers Trust (Delaware), as the Delaware Trustee
thereunder. This trust agreement will be amended and restated in its entirety on
the Issue Date (the "Trust Agreement"). The Trust exists for the exclusive
purposes of (i) issuing the Trust Securities representing undivided beneficial
interests in the assets of the Trust, (ii) investing the gross proceeds of the
Trust Securities in the Junior Subordinated Notes, and (iii) engaging in only
those other activities necessary, appropriate, convenient or incidental thereto.
The Trust has a term of approximately 45 years, but may terminate earlier as
provided in the Trust Agreement.
Upon issuance of the Preferred Securities, the purchasers thereof will own
all of the Preferred Securities. Capital will acquire all of the Common
Securities, which will have an aggregate liquidation amount equal to
approximately 3% of the total capital of the Trust. The Common Securities will
rank pari passu, and payments will be made thereon pro rata, with the Preferred
Securities, except that upon the occurrence and continuance of a Subordinated
Note Indenture Event of Default, the rights of the holders of Common Securities
to
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<PAGE>
payment in respect of distributions and payments upon liquidation, redemption
and otherwise will be subordinated to the rights of the holders of the Preferred
Securities.
The Trust's business and affairs will be conducted by the Securities
Trustees, which shall be appointed by Capital as the holder of the Common
Securities. Two employees of a subsidiary of Southern initially will serve as
Administrative Trustees. Bankers Trust Company will serve as Property Trustee
and will hold legal title to the Junior Subordinated Notes issued by Capital on
behalf of the Trust and the holders of the Trust Securities. Bankers Trust
(Delaware) will serve as Delaware Trustee. In certain circumstances, the holders
of a majority in liquidation amount of the Preferred Securities will be entitled
to appoint a Substitute Property Trustee. See "Description of the Preferred
Securities -- Voting Rights."
The Property Trustee will hold legal title to the Junior Subordinated Notes
for the benefit of the Trust and the holders of the Trust Securities and will
have the power to exercise all rights, powers and privileges under the
Subordinated Note Indenture as the holder of the Junior Subordinated Notes. The
Property Trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the Trust Securities.
Subject to the right of the holders of the Preferred Securities to appoint a
Substitute Property Trustee in certain instances, Capital, as the holder of all
the Common Securities, will have the right to appoint, remove or replace all the
Securities Trustees.
The Junior Subordinated Notes will constitute substantially all of the
assets of the Trust. Other assets that may constitute "Trust Property" (as that
term is defined in the Trust Agreement) include any cash on deposit in, or owing
to, the payment account as established under the Trust Agreement, as well as any
other property or assets held by the Property Trustee pursuant to the Trust
Agreement. In addition, the Trust may, from time to time, receive cash pursuant
to the Agreement as to Expenses and Liabilities.
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are as set forth in the Trust
Agreement, the Delaware Business Trust Act, and the Trust Indenture Act of 1939,
as amended (the "1939 Act"). See "Description of the Preferred Securities."
The Trust's office in the State of Delaware is c/o Bankers Trust
(Delaware), E.A. Delle Donne Corporate Center, Montgomery Building, 1011 Centre
Road, Suite 200, Wilmington, Delaware 19805-1266. The principal place of
business of the Trust shall be c/o Southern, 270 Peachtree Street, N.W.,
Atlanta, Georgia 30303, telephone (770) 393-0650, Attn: Secretary.
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust will be treated as a subsidiary
of Southern and, accordingly, the accounts of the Trust will be included in the
consolidated financial statements of Southern. The Preferred Securities will be
presented as a separate line item in the consolidated balance sheet of Southern,
and appropriate disclosures concerning the Preferred Securities, the Preferred
Securities Guarantee, the Junior Subordinated Notes and the Notes Guarantee will
be included in the notes to the consolidated financial statements. For financial
reporting purposes, Southern will record distributions payable on the Preferred
Securities as an expense.
USE OF PROCEEDS
The Trust will invest all of the proceeds from the sale of the Preferred
Securities in the Junior Subordinated Notes. The proceeds from such investment
will be remitted to Southern and used by it to repay a portion of its
outstanding short-term debt which aggregated approximately $ million as of
April , 1998.
RECENT RESULTS OF OPERATIONS
For the twelve months ended March 31, 1998, the amounts of "Operating
Revenues," "Income Before Interest Charges," "Consolidated Net Income,"
"Earnings per Share of Common Stock" and "Dividends Paid per Share of Common
Stock" were $12,540,000,000, $2,123,000,000, $1,026,000,000, $1.49 and $1.31,
respectively. In the opinion of the management of Southern, the above amounts
for the twelve months ended
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March 31, 1998 reflect all adjustments (which were only normal recurring
adjustments, except as indicated in Note (1) to the Selected Consolidated
Financial Information under "Summary" above) necessary to present fairly the
results of operations for such period. The "Ratio of Earnings to Fixed Charges"
and the "Ratio of Earnings to Fixed Charges Plus Preferred Dividend Requirements
(Pre-Income Tax Basis)" for the twelve months ended March 31, 1998 were 2.83 and
2.69, respectively.
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the Trust
Agreement. The Trust Agreement will be qualified as an indenture under the 1939
Act. The Property Trustee will act as the indenture trustee with respect to the
Trust, as well as the Preferred Securities Guarantee, for purposes of compliance
with the provisions of the 1939 Act. The terms of the Preferred Securities will
include those stated in the Trust Agreement, the Delaware Business Trust Act,
and those made part of the Trust Agreement by the 1939 Act. The following
summary of the principal terms and provisions of the Preferred Securities does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, the Trust Agreement, the form of which is filed as an exhibit to
the Registration Statement of which this Prospectus is a part, as well as the
Delaware Business Trust Act and the 1939 Act.
GENERAL
The Trust Agreement authorizes the Administrative Trustees, on behalf of
the Trust, to issue the Preferred Securities, which represent preferred
undivided beneficial interests in the assets of the Trust, and the Common
Securities, which represent common undivided beneficial interests in the assets
of the Trust. All of the Common Securities will be owned by Capital. The Common
Securities rank pari passu, and payments will be made thereon on a pro rata
basis, with the Preferred Securities, except that upon the occurrence of a
Subordinated Note Indenture Event of Default, the rights of the holders of the
Common Securities to receive payment of periodic distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the Preferred Securities. The Trust Agreement does not permit the
issuance by the Trust of any securities other than the Trust Securities or the
incurrence of any indebtedness by the Trust. Pursuant to the Trust Agreement,
the Property Trustee will own and hold the Junior Subordinated Notes for the
benefit of the Trust and the holders of the Trust Securities. The payment of
distributions out of money held by the Trust, and payments upon redemption of
the Preferred Securities or liquidation of the Trust, are guaranteed by Southern
on a subordinated basis as and to the extent described under "Description of the
Preferred Securities Guarantee." The Preferred Securities Guarantee does not
cover payment of distributions on the Preferred Securities when the Trust does
not have legally and immediately available funds sufficient to make such
distributions. In such event, the remedy of a holder of Preferred Securities is
to direct the Property Trustee to enforce its rights under the Junior
Subordinated Notes. In addition, a holder of Preferred Securities may institute
a legal proceeding directly against Capital, without first instituting a legal
proceeding against the Property Trustee or any other person or entity, for
enforcement of payment to such holder of principal of or interest on the Junior
Subordinated Notes having a principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities of such holder on or after the
due dates specified in the Junior Subordinated Notes. The above mechanisms and
obligations, together with Southern's obligations under the Notes Guarantee and
the Agreement as to Expenses and Liabilities, constitute a full and
unconditional guarantee by Southern and Capital of payments due on the Preferred
Securities. See "-- Voting Rights" below.
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at the Securities
Rate and will accrue from the Issue Date and, except in the event of an
Extension Period, will be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year. In the event that any date on which
distributions are to be made on the Preferred Securities is not a Business Day,
then payment of the distributions payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar
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year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. A "Business
Day" shall mean any day other than a Saturday or Sunday, a day on which banks in
New York City are authorized or obligated by law or executive order to remain
closed or a day on which the principal corporate trust office of the Property
Trustee or the Indenture Trustee is closed for business.
Distributions payable on any Distribution Date will be payable to the
holders of record on the Record Date for such Distribution Date, which is the
close of business on the fifteenth calendar day preceding such Distribution
Date. Subject to any applicable laws and regulations and the provisions of the
Trust Agreement, each such payment will be made as described under
"-- Book-Entry Only Issuance -- The Depositary Trust Company" below. The amount
of distributions payable for any period will be computed on the basis of a 360-
day year of twelve 30-day months.
Capital has the right under the Subordinated Note Indenture to defer
payments of interest on the Junior Subordinated Notes by extending the interest
payment period from time to time on the Junior Subordinated Notes (each, an
"Extension Period") which, if exercised, would defer quarterly distributions on
the Preferred Securities during any such extended interest payment period.
Deferred installments of interest on the Junior Subordinated Notes will bear
interest, compounded quarterly, at a rate per annum equal to the Securities Rate
to the extent permitted by applicable law. If distributions are deferred, the
deferred distributions and accrued interest thereon shall be paid, if funds are
legally available therefor, to holders of record of the Preferred Securities as
they appear on the books and records of the Trust on the Record Date next
following the termination of such Extension Period. See "Description of the
Junior Subordinated Notes -- Interest" and "-- Option to Extend Interest Payment
Period."
Distributions on the Preferred Securities must be paid on the Distribution
Dates to the extent that the Trust has funds legally and immediately available
for the payment of such distributions. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received under the Junior Subordinated Notes. See "Description of the
Junior Subordinated Notes."
REDEMPTION
The Preferred Securities are subject to mandatory redemption upon repayment
of the Junior Subordinated Notes at maturity or their earlier redemption. The
Junior Subordinated Notes will mature on March 31, 2038 and may be redeemed, in
whole or in part, at the option of Capital, at any time on or after ,
2003 or at any time in whole upon the occurrence of a Special Event. Upon the
repayment of the Junior Subordinated Notes, whether at maturity or upon
redemption, the proceeds from such repayment or payment shall simultaneously be
applied to redeem a like amount of Trust Securities upon not less than 30 nor
more than 60 days' notice, at the Redemption Price (as defined below). See
"Description of the Junior Subordinated Notes -- Optional Redemption." If a
partial redemption of the Junior Subordinated Notes would result in the
delisting of the Preferred Securities, Capital may only redeem the Junior
Subordinated Notes in whole. In the event that fewer than all of the outstanding
Trust Securities are to be redeemed, the Preferred Securities to be redeemed
will be selected as described under "-- Book-Entry Only Issuance -- The
Depository Trust Company" below. If the Preferred Securities are no longer in
book-entry only form, the Preferred Securities to be redeemed will be selected
by such method as the Property Trustee shall deem fair and appropriate and which
may provide for the selection for redemption of portions (equal to $25 or
integral multiples thereof) of the aggregate liquidation amount of Preferred
Securities of a denomination larger than $25; provided, however, that before
undertaking the redemption of the Preferred Securities on other than a pro rata
basis, the Property Trustee shall have received an opinion of counsel that the
status of the Trust as a grantor trust for federal income tax purposes would not
be adversely affected.
The Redemption Price for each Preferred Security shall equal the stated
liquidation amount of $25 plus accrued and unpaid distributions thereon to the
date of payment.
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SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence of a Special Event at any time, Capital will have the
option to redeem the Junior Subordinated Notes in whole (and thus cause the
redemption of the Preferred Securities in whole). A Special Event is either an
Investment Company Act Event or a Tax Event.
An "Investment Company Act Event" means that the Administrative Trustees,
Southern and Capital shall have received an opinion of independent counsel
(which may be counsel to Southern or Capital) to the effect that, as a result of
a change in law or regulation or a written change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority after the Issue Date, there is more than an
insubstantial risk that the Trust is or will be considered an investment company
under the 1940 Act.
"Tax Event" means that the Administrative Trustees, Southern and Capital
shall have received an opinion from independent tax counsel experienced in such
matters (which may be counsel to Southern or Capital) to the effect that, as a
result of (a) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein or (b) any
amendment to, or change in, an interpretation or application of such laws or
regulations, there is more than an insubstantial risk that (i) the Trust would
be subject to United States federal income tax with respect to income accrued or
received on the Junior Subordinated Notes, (ii) interest payable on the Junior
Subordinated Notes would not be deductible by a member of Southern's
consolidated tax group for United States federal income tax purposes or (iii)
the Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges, which change or amendment becomes
effective on or after the Issue Date. See "Risk Factors -- Possible Tax Law
Changes."
Capital will have the right at any time to terminate the Trust and, after
satisfaction of liabilities to creditors or the Trust, if any, cause the Junior
Subordinated Notes to be distributed to the holders of the Preferred Securities
in liquidation of the Trust. See "-- Liquidation Distribution Upon Dissolution"
below. This right is optional and wholly within the discretion of Capital.
Circumstances under which Capital may determine to exercise such right could
include the occurrence of an Investment Company Act Event or a Tax Event,
adverse tax consequences to Southern, Capital or the Trust that are not within
the definition of a Tax Event because they do not result from an amendment or
change described in such definition, and changes in the accounting requirements
applicable to the Preferred Securities as described under "Accounting
Treatment."
If Junior Subordinated Notes are distributed to the holders of the
Preferred Securities, Southern and Capital will use their best efforts to have
the Junior Subordinated Notes listed on the NYSE or on such other exchange as
the Preferred Securities are then listed. After the date for any distribution of
Junior Subordinated Notes upon termination of the Trust, (i) the Preferred
Securities and the Preferred Securities Guarantee will no longer be deemed to be
outstanding, (ii) the depositary or its nominee, as the record holder of the
Preferred Securities, will receive a registered global certificate or
certificates representing the Junior Subordinated Notes to be delivered upon
such distribution and (iii) any certificates representing Preferred Securities
and the Preferred Securities Guarantee not held by the depositary or its nominee
will be deemed to represent Junior Subordinated Notes having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the Securities Rate of, and accrued and unpaid
interest equal to accrued and unpaid distributions on, such Preferred
Securities, until such certificates are presented to Capital or its agent for
transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Notes that may be distributed in exchange
for the Preferred Securities if a termination and liquidation of the Trust were
to occur. Accordingly, the Preferred Securities that an investor may purchase,
or the Junior Subordinated Notes that the investor may receive on termination
and liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby.
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REDEMPTION PROCEDURES
In the event that fewer than all of the Trust Securities are to be
redeemed, then the aggregate liquidation amount of the Trust Securities to be
redeemed shall be allocated 97% to the Preferred Securities and 3% to the Common
Securities.
The Preferred Securities redeemed on each redemption date shall be redeemed
at the applicable Redemption Price with the proceeds from the contemporaneous
redemption of the Junior Subordinated Notes. The Redemption Price of Preferred
Securities shall be deemed payable on each redemption date only to the extent
that the Trust has funds legally and immediately available for payment of such
Redemption Price.
If the Property Trustee gives a notice of redemption in respect of
Preferred Securities (which notice will be irrevocable), then, by 2:00 P.M., New
York City time, on the redemption date, subject to the immediately preceding
paragraph, the Property Trustee will irrevocably deposit with the securities
depositary, so long as the Preferred Securities are in book-entry only form,
sufficient funds to pay the applicable Redemption Price. See "-- Book-Entry Only
Issuance -- The Depository Trust Company" below. If the Preferred Securities are
not in book-entry only form, the Property Trustee, subject to the immediately
preceding paragraph, shall irrevocably deposit with the Paying Agent funds
sufficient to pay the applicable Redemption Price and will give the Paying Agent
irrevocable instructions to pay the Redemption Price to the holders thereof upon
surrender of their Preferred Securities certificates. If notice of redemption
shall have been given and funds deposited as required, then immediately prior to
the close of business on the date of such deposit, distributions will cease to
accrue and all rights of holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the applicable Redemption Price, but without interest on
such Redemption Price. In the event that any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day. In the event that
payment of the Redemption Price in respect of Preferred Securities is improperly
withheld or refused and not paid either by the Trust or by Southern pursuant to
the Preferred Securities Guarantee or the Notes Guarantee, distributions on such
Preferred Securities will continue to accrue at the then applicable rate, from
such redemption date originally established by the Trust for such Preferred
Securities to the date such Redemption Price is actually paid. See "-- Events of
Default" below, "Relationship Among the Preferred Securities, the Junior
Subordinated Notes, the Preferred Securities Guarantee and the Notes Guarantee"
and "Description of the Preferred Securities Guarantee -- Events of Default."
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), Southern, Capital or any of
their affiliates may, at any time and from time to time, purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as the initial securities
depositary for the Preferred Securities. The Preferred Securities will be issued
only as fully registered securities registered in the name of Cede & Co., DTC's
nominee. One or more fully registered global Preferred Securities certificates
will be issued, representing in the aggregate the total number of Preferred
Securities, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the 1934 Act. DTC holds
securities that its participants ("Participants") deposit with DTC. DTC also
facilitates the settlement among Participants of securities transactions, such
as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
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corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the NYSE, the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Commission.
Purchases of Preferred Securities within the DTC system must be made by or
through Direct Participants, which will receive a credit for the Preferred
Securities on DTC's records. The ownership interest of each actual purchaser of
Preferred Securities ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not receive
written confirmation from DTC of their purchases, but Beneficial Owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Direct or Indirect
Participants through which the Beneficial Owners purchased Preferred Securities.
Transfers of ownership interests in the Preferred Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Preferred Securities, except in the event that use
of the book-entry system for the Preferred Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the Preferred
Securities are being redeemed, DTC will reduce the amount of the interest of
each Direct Participant in the Preferred Securities in accordance with its
procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy.)
Distribution payments on the Preferred Securities will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Trust, any trustee,
Capital or Southern, subject to any statutory or regulatory requirements as may
be in effect from time to time. Payment of distributions to DTC is the
responsibility of the Trust, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Preferred
Security will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Preferred Securities. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of securities in definitive form. Such laws may impair the ability to
transfer beneficial interests in a global Preferred Security.
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DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates will be printed
and delivered to the holders of record. Additionally, Southern, Capital or the
Trust may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor depositary) with respect to the Preferred
Securities. In that event, certificates for the Preferred Securities will be
printed and delivered to the holders of record.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Southern, Capital and the Trust believe to
be reliable, but Southern, Capital and the Trust take no responsibility for the
accuracy thereof. The Trust has no responsibility for the performance by DTC or
its Participants of their respective obligations as described herein or under
the rules and procedures governing their respective operations.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the Trust Agreement, the Trust shall terminate on December 31,
2043, or earlier upon (i) the occurrence of a Bankruptcy Event (as defined in
the Trust Agreement) in respect of Capital, dissolution or liquidation of
Capital, or dissolution of the Trust pursuant to a judicial decree; (ii) the
delivery of written direction to the Property Trustee by Capital, as Depositor,
at any time (which direction is optional and wholly within the discretion of
Capital, as Depositor) to terminate the Trust and distribute the Junior
Subordinated Notes to the holders of the Trust Securities in liquidation of the
Trust (see "-- Special Event Redemption or Distribution" above); or (iii) the
payment at maturity or redemption of all of the Junior Subordinated Notes, and
the consequent payment of the Trust Securities.
If an early termination occurs as described in clause (i) or (ii) above,
the Trust shall be liquidated, and the Property Trustee shall distribute to each
holder of Preferred Securities and Common Securities a like amount of Junior
Subordinated Notes, unless in the case of an event described in clause (i) such
distribution is determined by the Administrative Trustees not to be practical,
in which event such holders will be entitled to receive, out of the assets of
the Trust available for distribution to holders after satisfaction of
liabilities to creditors, an amount equal to the aggregate of the stated
liquidation preference of $25 per Trust Security plus accrued and unpaid
distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then subject to the next succeeding sentence, the
amounts payable directly by the Trust on the Trust Securities shall be paid on a
pro rata basis. The holder of the Common Securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders of the
Preferred Securities, except that if a Subordinated Note Indenture Event of
Default has occurred and is continuing, the holders of Preferred Securities
shall have a preference over the holders of Common Securities.
EVENTS OF DEFAULT
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement ("Trust Agreement Event of Default") with respect to the Trust
Securities issued thereunder (whatever the reason for such Event of Default, and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) the occurrence of an "Event of Default" as defined in Section 501
of the Subordinated Note Indenture ("Subordinated Note Indenture Event of
Default") (see "Description of the Junior Subordinated Notes -- Events of
Default"); or
(ii) default by the Trust in the payment of any distribution when it
becomes due and payable, and the continuation of such default for a period
of 30 days; or
(iii) default by the Trust in the payment of any Redemption Price of
any Preferred Security or Common Security when it becomes due and payable;
or
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(iv) default in the performance, or breach, of any covenant or
warranty of the Securities Trustees in the Trust Agreement (other than a
covenant or warranty a default in the performance of which or the breach of
which is dealt with in clause (ii) or (iii) above), and continuation of
such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to such Securities Trustees by the holders
of at least 10% in liquidation amount of the outstanding Preferred
Securities a written notice specifying such default or breach and requiring
it to be remedied and stating that such notice is a "Notice of Default"
under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Trust.
Within 90 days after the occurrence of any Trust Agreement Event of
Default, the Property Trustee shall transmit notice of any default known to the
Property Trustee to the holders of Trust Securities, Southern and Capital,
unless such Trust Agreement Event of Default shall have been cured or waived.
If a Trust Agreement Event of Default occurs and is continuing, then,
pursuant to the Trust Agreement, holders of a majority in aggregate liquidation
amount of Preferred Securities have the right to direct the exercise of any
trust or power conferred upon the Property Trustee under the Trust Agreement,
including the right to direct the Property Trustee under the Trust Agreement to
exercise the remedies available to it as holder of the Junior Subordinated Notes
and the Notes Guarantee. If the Property Trustee fails to enforce its rights
under the Junior Subordinated Notes and the Notes Guarantee, a holder of
Preferred Securities may, to the fullest extent permitted by applicable law,
institute a legal proceeding directly against Southern and Capital to enforce
its rights under the Trust Agreement without first instituting any legal
proceeding against the Property Trustee or the Trust. Notwithstanding the
foregoing, a holder of Preferred Securities may institute a legal proceeding
directly against Southern and Capital, without first instituting a legal
proceeding against the Property Trustee or any other person or entity, for
enforcement of payment to such holder of principal of or interest on the Junior
Subordinated Notes having a principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities of such holder on or after the
due dates specified in the Junior Subordinated Notes. See "Relationship Among
the Preferred Securities, the Junior Subordinated Notes, the Preferred
Securities Guarantee and the Notes Guarantee" and "Description of the Preferred
Securities Guarantee -- Events of Default."
Unless a Subordinated Note Indenture Event of Default shall have occurred
and be continuing, the Securities Trustees may be removed at any time by act of
the holder of the Common Securities. If a Subordinated Note Indenture Event of
Default has occurred and is continuing, any Securities Trustee may be removed at
such time by act of the holders of a majority in liquidation amount of the
Preferred Securities, delivered to the appropriate Securities Trustee (in its
individual capacity and on behalf of the Trust). No resignation or removal of
any Securities Trustee and no appointment of a successor shall be effective
until the acceptance of appointment by the successor Trustee in accordance with
the requirements of the Trust Agreement.
If a Subordinated Note Indenture Event of Default has occurred and is
continuing, the holders of Preferred Securities shall have a preference over the
holders of Common Securities upon dissolution of the Trust as described above.
See "-- Liquidation Distribution Upon Dissolution."
VOTING RIGHTS
Except as provided below and under "Description of the Preferred Securities
Guarantee -- Amendments and Assignment" and as otherwise required by law and the
Trust Agreement, the holders of the Preferred Securities will have no voting
rights.
If any proposed amendment to the Trust Agreement provides for, or the
Securities Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Preferred
Securities, whether by way of amendment to the Trust Agreement or otherwise, or
(ii) the dissolution, winding-up or termination of the Trust, other than
pursuant to the Trust Agreement, then the holders of outstanding Preferred
Securities will be entitled to vote as a class on such amendment or proposal of
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the Securities Trustees, and such amendment or proposal shall not be effective
except with the approval of the holders of at least 66 2/3% in liquidation
amount of such outstanding Preferred Securities.
So long as any Junior Subordinated Notes are held by the Property Trustee,
the Securities Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee (as
defined herein), or executing any trust or power conferred on the Indenture
Trustee with respect to the Junior Subordinated Notes, (ii) waive any past
default which is waivable under the applicable provisions of the Subordinated
Note Indenture, (iii) exercise any right to rescind or annul a declaration that
the principal of all Junior Subordinated Notes shall be due and payable, or (iv)
consent to any amendment, modification or termination of the Subordinated Note
Indenture or the Junior Subordinated Notes, where such consent shall be
required, or to any other action, as the holder of the Junior Subordinated
Notes, under the Subordinated Note Indenture, without, in each case, obtaining
the prior approval of the holders of at least 66 2/3% in liquidation amount of
the outstanding Preferred Securities; provided, however, that where a consent
under the Subordinated Note Indenture would require the consent of each holder
of Junior Subordinated Notes affected thereby, no such consent shall be given by
the Securities Trustees without the prior consent of each holder of Preferred
Securities. The Securities Trustees shall not revoke any action previously
authorized or approved by a vote of the holders of the Preferred Securities,
except pursuant to a subsequent vote of such holders. The Property Trustee shall
notify all holders of the Preferred Securities of any notice of default received
from the Indenture Trustee with respect to the Junior Subordinated Notes. In
addition to obtaining the foregoing approvals of the holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Securities
Trustees shall obtain an opinion of counsel experienced in such matters to the
effect that the Trust will not be classified as other than a grantor trust for
federal income tax purposes on account of such action.
Any required approval of holders of Preferred Securities may be given at a
separate meeting of holders of Preferred Securities convened for such purpose or
pursuant to written consent. The Administrative Trustees will cause a notice of
any meeting at which holders of Preferred Securities are entitled to vote to be
given to each holder of record of Preferred Securities in the manner set forth
in the Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by Southern, Capital, the Securities Trustees or any
affiliate of Southern, Capital or any Securities Trustee, shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
CO-PROPERTY TRUSTEES AND SEPARATE PROPERTY TRUSTEE
At any time or times, for the purpose of meeting the legal requirements of
the 1939 Act or of any jurisdiction in which any part of the Trust Property (as
defined in the Trust Agreement) may at the time be located, the holder of the
Common Securities and the Property Trustee shall have power to appoint, and upon
the written request of the Property Trustee, Capital, as Depositor, shall for
such purpose join with the Property Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint,
one or more persons approved by the Property Trustee either to act as
co-property trustee, jointly with the Property Trustee, of all or any part of
such Trust Property, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity, any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. If Capital, as Depositor, does not join in
such appointment within 15 days after the receipt by it of a request so to do,
or in case a Subordinated Note Indenture Event of Default has occurred and is
continuing, the Property Trustee alone shall have power to make such
appointment.
AMENDMENT OF THE TRUST AGREEMENT
The Trust Agreement may be amended from time to time by Capital and the
Securities Trustees without the consent of the holders of the Trust Securities
(i) to cure any ambiguity, correct or supplement any provision therein which may
be inconsistent with any other provision therein, or to make any other
provisions with respect to matters or questions arising under the Trust
Agreement, which shall not be inconsistent with the other provisions of the
Trust Agreement, provided that the amendment does not adversely affect in any
material respect the interests of any holder of Trust Securities, or (ii) to
modify, eliminate or add to any
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provisions of the Trust Agreement to such extent as shall be necessary to ensure
that the Trust will not be classified as other than a grantor trust for federal
income tax purposes. Except as provided in the succeeding paragraph, other
amendments to the Trust Agreement may be made (i) upon approval of the holders
of not less than 66 2/3% in aggregate liquidation amount of the Trust Securities
then outstanding and (ii) upon receipt by the Securities Trustees of an opinion
of counsel to the effect that such amendment will not affect the Trust's status
as a grantor trust or the Trust's exemption from the 1940 Act.
Notwithstanding the foregoing, without the consent of each affected holder
of Trust Securities, the Trust Agreement may not be amended to (i) change the
amount or timing of any distribution on the Trust Securities or otherwise
adversely affect the amount of any distribution required to be made in respect
of the Trust Securities as of a specified date, (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date, or (iii) change the consent required to amend the
Trust Agreement.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described below. The Trust may at the request of Capital, with the consent of
the Administrative Trustees and without the consent of the holders of the Trust
Securities, consolidate, amalgamate, merge with or into, or be replaced by a
trust organized as such under the laws of any state; provided, that (i) such
successor entity either (A) expressly assumes all of the obligations of the
Trust with respect to the Trust Securities or (B) substitutes for the Preferred
Securities other securities having substantially the same terms as the Trust
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Trust Securities rank in priority with respect to distributions
and payments upon liquidation, redemption and otherwise, (ii) Capital expressly
appoints a trustee of such successor entity possessing the same powers and
duties as the Property Trustee as the holder of the Junior Subordinated Notes,
(iii) the Preferred Securities or any Successor Securities are listed, or any
Successor Securities will be listed upon notification of issuance, on any
national securities exchange or other organization on which the Preferred
Securities are then listed, (iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose substantially identical to
that of the Trust, (vii) prior to such merger, consolidation, amalgamation or
replacement, Southern has received an opinion of counsel to the effect that (A)
such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect, and (B)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be required to register as an investment
company under the 1940 Act, and (viii) Southern guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee. Notwithstanding the foregoing,
the Trust shall not, except with the consent of holders of 100% in liquidation
amount of the Trust Securities, consolidate, amalgamate, merge with or into, or
be replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger or replacement would cause the Trust or the successor
entity to be classified as other than a grantor trust for federal income tax
purposes.
Any corporation or other body into which any of the Property Trustee, the
Delaware Trustee or any Administrative Trustee that is not a natural person may
be merged or converted or with which it may be consolidated, or any corporation
or other body resulting from any merger, conversion or consolidation to which
any such Securities Trustee shall be a party, or any corporation or other body
succeeding to all or substantially all the corporate trust business of any such
Securities Trustee, shall be the successor of such Securities Trustee under the
Trust Agreement, provided such corporation is otherwise qualified and eligible
under the Trust Agreement.
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PAYMENT AND PAYING AGENT
So long as DTC is acting as securities depositary for the Preferred
Securities, payments in respect of the Preferred Securities in global form shall
be made to DTC, which is to credit the relevant accounts at DTC on the
applicable Distribution Dates. If the Preferred Securities are not held by DTC,
such payments shall be made by check mailed to the address of the holder
entitled thereto as such address shall appear on the Securities Register (as
such term is defined in the Trust Agreement). The Paying Agent shall initially
be the Property Trustee. The Paying Agent shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Administrative Trustees and Capital.
In such event, the Administrative Trustees shall appoint a successor to act as
Paying Agent.
REGISTRAR AND TRANSFER AGENT
It is anticipated that the Property Trustee, or one of its affiliates, will
act as registrar and transfer agent (the "Securities Registrar") for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment in respect of any tax or
other governmental charges which may be imposed in relation to it.
The Securities Registrar will not be required to register or cause to be
registered any transfer of Preferred Securities after they have been called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a Trust Agreement Event of
Default with respect to the Trust Securities, undertakes to perform only such
duties as are specifically set forth in the Trust Agreement and, after default,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provisions, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Preferred Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby.
Bankers Trust Company, the Property Trustee, also serves as Indenture
Trustee and Guarantee Trustee. Southern and certain of its subsidiaries maintain
deposit accounts and banking relationships with Bankers Trust Company. Bankers
Trust Company serves as trustee under other indentures pursuant to which
securities of subsidiaries of Southern are outstanding.
GOVERNING LAW
The Trust Agreement and the Trust Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware;
provided that the immunities and standard of care of the Property Trustee shall
be governed by New York law.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to operate the
Trust so that the Trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or taxed as other than a grantor
trust for federal income tax purposes and so that the Junior Subordinated Notes
will be treated as indebtedness of Capital for federal income tax purposes. In
this connection, the Administrative Trustees and Capital are authorized to take
any action, not inconsistent with applicable law, the Trust's certificate of
trust or the Trust Agreement, that the Administrative Trustees and Capital
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially and adversely affect the interests of
the holders of the Preferred Securities.
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DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
Set forth below is a description of the terms of the Junior Subordinated
Notes. The following description does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, the Subordinated Note
Indenture, dated as of June 1, 1997, among Capital, Southern and Bankers Trust
Company, as trustee (the "Indenture Trustee"), as to be supplemented by a
supplemental indenture thereto (the Subordinated Note Indenture, as so
supplemented, is hereinafter referred to as the "Subordinated Note Indenture"),
the forms if which are filed as exhibits to the Registration Statement of which
this Prospectus is a part. The Subordinated Note Indenture will be qualified as
an indenture under the 1939 Act. The terms of the Junior Subordinated Notes will
include those stated in the Subordinated Note Indenture and those made a part of
the Subordinated Note Indenture by reference to the 1939 Act. Certain
capitalized terms used herein are defined in the Subordinated Note Indenture.
GENERAL
The Junior Subordinated Notes will be issued as a series of junior
subordinated notes under the Subordinated Note Indenture. The Junior
Subordinated Notes will be limited in aggregate principal amount to
$206,186,000, such amount being the approximate aggregate liquidation amount of
the Trust Securities.
The entire principal amount of the Junior Subordinated Notes will mature
and become due and payable, together with any accrued and unpaid interest
thereon, including Additional Interest, if any, on March 31, 2038. The Junior
Subordinated Notes are not subject to any sinking fund provision.
The terms of the Junior Subordinated Notes correspond to those of the
Preferred Securities, as described herein.
The Subordinated Note Indenture does not contain provisions that afford
holders of Junior Subordinated Notes protection in the event of a highly
leveraged transaction involving Southern or Capital.
SUBORDINATION
The Junior Subordinated Notes are subordinated and junior in right of
payment to all Senior Indebtedness (as defined below) of Capital. No payment of
principal of (including redemption payments, if any), or premium, if any, or
interest on (including Additional Interest (as defined herein)) the Junior
Subordinated Notes may be made if (a) any Senior Indebtedness is not paid when
due and any applicable grace period with respect to such default has ended with
such default not being cured or waived or otherwise ceasing to exist, or (b) the
maturity of any Senior Indebtedness has been accelerated because of a default,
or (c) notice has been given of the exercise of an option to require repayment,
mandatory payment or prepayment or otherwise. Upon any payment or distribution
of assets of Capital to creditors upon any liquidation, dissolution, winding-up,
reorganization, assignment for the benefit of creditors, marshalling of assets
or liabilities, or any bankruptcy, insolvency or similar proceedings of Capital,
the holders of Senior Indebtedness shall be entitled to receive payment in full
of all amounts due or to become due on or in respect of all Senior Indebtedness
before the holders of the Junior Subordinated Notes are entitled to receive or
retain any payment or distribution. Subject to the prior payment of all Senior
Indebtedness, the rights of the holders of the Junior Subordinated Notes will be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments and distributions applicable to such Senior Indebtedness until all
amounts owing on the Junior Subordinated Notes are paid in full.
The term "Senior Indebtedness" means, with respect to any person, (i) any
payment due in respect of indebtedness of such person, whether outstanding at
the date of execution of the Subordinated Note Indenture or thereafter incurred,
created or assumed, (a) in respect of money borrowed (including any financial
derivative, hedging or futures contract or similar instrument) and (b) evidenced
by securities, debentures, bonds, notes or other similar instruments issued by
such person that, by their terms, are senior or senior subordinated debt
securities; (ii) all capital lease obligations; (iii) all obligations issued or
assumed as the deferred purchase price of property, all conditional sale
obligations and all obligations of such person under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business
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and long-term purchase obligations); (iv) all obligations for the reimbursement
of any letter of credit, banker's acceptance, security purchase facility or
similar credit transaction; (v) all obligations of the type referred to in
clauses (i) through (iv) above of other persons the payment of which such person
is responsible or liable as obligor, guarantor or otherwise; and (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
persons secured by any lien on any property or asset of such person (whether or
not such obligation is assumed by such person), except for (1) any such
indebtedness that is by its terms subordinated to or pari passu with the Junior
Subordinated Notes and (2) any unsecured indebtedness between or among such
person or its affiliates. Such Senior Indebtedness shall continue to be Senior
Indebtedness and be entitled to the benefits of the subordination provisions
contained in the Subordinated Note Indenture irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
The Subordinated Note Indenture does not limit the aggregate amount of
Senior Indebtedness that may be issued by Capital. Capital currently has no
Senior Indebtedness outstanding.
OPTIONAL REDEMPTION
Capital shall have the right to redeem the Junior Subordinated Notes, in
whole or in part, without premium, from time to time, on or after , 2003,
or at any time in whole upon the occurrence of a Special Event as described
under "Description of the Preferred Securities -- Special Event Redemption or
Distribution" upon not less than 30 nor more than 60 days' notice, at a
Redemption Price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest, including Additional Interest, if any, to the
Redemption Date. If a partial redemption of the Junior Subordinated Notes would
result in the delisting of the Preferred Securities, Capital may only redeem the
Junior Subordinated Notes in whole.
INTEREST
Each Junior Subordinated Note shall bear interest at the Securities Rate
from the Issue Date, payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year to the person in whose name such
Junior Subordinated Note is registered at the close of business on the fifteenth
calendar day prior to such payment date. The amount of interest payable will be
computed on the basis of a 360-day year of twelve 30-day months. In the event
that any date on which interest is payable on the Junior Subordinated Notes is
not a Business Day, then payment of the interest payable on such date will be
made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
Capital shall have the right at any time, and from time to time, to defer
payments of interest on the Junior Subordinated Notes by extending the interest
payment period for up to 20 consecutive quarters, but not beyond the stated
maturity date. At the end of an Extension Period, Capital shall pay all interest
then accrued and unpaid (including any Additional Interest) (together with
interest thereon at the Securities Rate compounded quarterly to the extent
permitted by applicable law); provided, that if Capital shall have given notice
of its election to select an Extension Period, subject to the exceptions
described under "-- Certain Covenants" below, (a) neither Southern nor Capital
shall declare or pay any dividend or distribution on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
or make any guarantee payments with respect to the foregoing, and (b) neither
Southern nor Capital shall make any payment of interest, principal or premium,
if any, on or repay, repurchase or redeem any debt securities issued by it which
rank pari passu with or junior to the Junior Subordinated Notes or the Notes
Guarantee. Prior to the termination of any Extension Period, Capital may further
defer payments of interest by extending the interest payment period, provided
that such Extension Period, together with all such previous and further
extensions thereof, may not exceed 20 consecutive quarters. Upon the termination
of any Extension Period and the payment of all amounts then due, Capital may
select a new Extension Period, subject to the above
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requirements. Capital has no present intention of exercising its rights to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Notes. See "Certain Federal Income Tax Considerations -- Original
Issue Discount."
Capital shall give the holder or holders of the Junior Subordinated Notes
and the Indenture Trustee notice of its selection or extension of an Extension
Period at least one Business Day prior to the earlier of (i) the record date
relating to the interest payment date on which the Extension Period is to
commence or relating to the interest payment date on which an Extension Period
that is being extended would otherwise terminate or (ii) the date Capital or the
Trust is required to give notice to any applicable self-regulatory organization
of the record date or the date such distributions are payable.
ADDITIONAL INTEREST
"Additional Interest" is defined in the Subordinated Note Indenture as (i)
such additional amounts as may be required so that the net amounts received and
retained by a holder of Junior Subordinated Notes (if the holder is a Trust)
after paying taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United States or any other
taxing authority will not be less than the amounts the holder would have
received had no such taxes, duties, assessments, or other governmental charges
been imposed; and (ii) any interest due and not paid on an interest payment
date, together with interest thereon from such interest payment date to the date
of payment, compounded quarterly, on each interest payment date.
NOTES GUARANTEE
Pursuant to the Subordinated Note Indenture, Southern will irrevocably and
unconditionally guarantee the Junior Subordinated Notes as described under
"Description of the Notes Guarantee."
CERTAIN COVENANTS
Southern and Capital each covenants in the Subordinated Note Indenture, for
the benefit of the holders of each series of Junior Subordinated Notes, that,
(i) if at such time Capital shall have given notice of its election to extend an
interest payment period for such series of Junior Subordinated Notes and such
extension shall be continuing, (ii) if at such time Southern shall be in default
with respect to its payment or other obligations under (A) the Preferred
Securities Guarantee with respect to the Trust Securities, if any, related to
such series of Junior Subordinated Notes or (B) the Notes Guarantee, if any,
related to such series of Junior Subordinated Notes, or (iii) if at such time an
Event of Default thereunder with respect to such series of Junior Subordinated
Notes shall have occurred and be continuing, (a) neither Southern nor Capital
shall declare or pay any dividend or make any distributions with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock, and (b) neither Southern nor Capital shall make any payment
of interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by it which rank pari passu with or junior to the Junior
Subordinated Notes or the Notes Guarantee. None of the foregoing, however, shall
restrict (i) any of the actions described in the preceding sentence resulting
from any reclassification of Southern's or Capital's capital stock or the
exchange or conversion of one class or series of Southern's or Capital's capital
stock for another class or series of Southern's or Capital's capital stock, (ii)
the purchase of fractional interests in shares of Southern's or Capital's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iii) dividends, payments or
distributions payable in shares of capital stock, (iv) redemptions, purchases or
other acquisitions of shares of capital stock in connection with any employment
contract, incentive plan, benefit plan or other similar arrangement of Southern
or any of its subsidiaries or in connection with a dividend reinvestment or
stock purchase plan, or (v) any declaration of a dividend in connection with
implementation of any stockholders' rights plan, or the issuance of rights,
stock or other property under any such plan, or the redemption, repurchase or
other acquisition of any such rights pursuant thereto.
The Subordinated Note Indenture further provides that, for so long as the
Trust Securities of any Trust remain outstanding, Capital covenants (i) to
directly or indirectly maintain 100% ownership of the Common
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Securities of such Trust; provided, however, that any permitted successor of
Capital or Southern under the Subordinated Note Indenture may succeed to the
Capital's ownership of such Common Securities, and (ii) to use its reasonable
efforts to cause such Trust (a) to remain a statutory business trust, except in
connection with the distribution of Junior Subordinated Notes to the holders of
Trust Securities in liquidation of such Trust, the redemption of all of the
Trust Securities of such Trust, or certain mergers, consolidations or
amalgamations, each as permitted by the related Trust Agreement, and (b) to
otherwise continue to be classified as a grantor trust for United States federal
income tax purposes.
EVENTS OF DEFAULT
The Subordinated Note Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Notes of any
series, which has occurred and is continuing, constitutes an "Event of Default"
with respect to the Junior Subordinated Notes of such series:
(a) failure for 10 days to pay interest on the Junior Subordinated
Notes of such series, including any Additional Interest (as defined in
clause (ii) of the definition thereof in the Subordinated Note Indenture)
in respect thereof, when due on an Interest Payment Date other than at
maturity or upon earlier redemption; provided, however, that a valid
extension of the interest payment period by Capital shall not constitute a
default in the payment of interest for this purpose; or
(b) failure for 10 days to pay Additional Interest (as defined in
clause (i) of the definition thereof in the Subordinated Note Indenture);
or
(c) failure to pay principal or premium, if any, or interest,
including Additional Interest (as defined in clause (ii) of the definition
thereof in the Subordinated Note Indenture), on the Junior Subordinated
Notes of such series when due at maturity or upon earlier redemption; or
(d) failure for three Business Days to deposit any sinking fund
payment when due by the terms of a Junior Subordinated Note of such series;
or
(e) failure to observe or perform any other covenant or warranty in
the Subordinated Note Indenture (other than a covenant or warranty which
has expressly been included therein solely for the benefit of one or more
series of Junior Subordinated Notes other than such series) for 90 days
after written notice to Southern and Capital from the Indenture Trustee or
the holders of at least 25% in principal amount of the outstanding Junior
Subordinated Notes of such series; or
(f) certain events of bankruptcy, insolvency, or reorganization of
Southern or Capital.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Indenture Trustee with respect to the Junior Subordinated Notes of such
series. If a Subordinated Note Indenture Event of Default occurs and is
continuing with respect to the Junior Subordinated Notes of any series, then the
Indenture Trustee or the holders of not less than 25% in aggregate outstanding
principal amount of the Junior Subordinated Notes of such series may declare the
principal amount thereof due and payable immediately by notice in writing to
Southern and Capital (and to the Indenture Trustee if given by the holders), and
upon any such declaration such principal amount shall become immediately due and
payable. At any time after such a declaration of acceleration with respect to
the Junior Subordinated Notes of any series has been made and before a judgment
or decree for payment of the money due has been obtained as provided in Article
Five of the Subordinated Note Indenture, the holders of not less than a majority
in aggregate outstanding principal amount of the Junior Subordinated Notes of
such series may rescind and annul such declaration and its consequences if the
default has been cured or waived and Southern or Capital has paid or deposited
with the Indenture Trustee a sum sufficient to pay all matured installments of
interest (including any Additional Interest) and principal due otherwise than by
acceleration and all sums paid or advanced by the Indenture Trustee, including
reasonable compensation and expenses of the Indenture Trustee.
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A holder of Preferred Securities may institute a legal proceeding directly
against Southern and Capital, without first instituting a legal proceeding
against the Property Trustee or any other person or entity, for enforcement of
payment to such holder of principal of or interest on the Junior Subordinated
Notes of the related series having a principal amount equal to the aggregate
stated liquidation amount of the Preferred Securities of such holder on or after
the due dates specified in the Junior Subordinated Notes of such series.
The holders of not less than a majority in aggregate outstanding principal
amount of the Junior Subordinated Notes of any series may, on behalf of the
holders of all the Junior Subordinated Notes of such series, waive any past
default with respect to such series, except (i) a default in the payment of
principal or interest or (ii) a default in respect of a covenant or provision
which under Article Nine of the Subordinated Note Indenture cannot be modified
or amended thereunder without the consent of the holder of each outstanding
Junior Subordinated Note of such series affected thereby.
BOOK-ENTRY AND ISSUANCE
If distributed to holders of Trust Securities in connection with the
voluntary or involuntary dissolution, winding-up or liquidation of the Trust,
the Junior Subordinated Notes are expected to be issued in the form of one or
more global certificates registered in the name of the securities depositary or
its nominee. In such event, the procedures applicable to the transfer and
payment of the Junior Subordinated Notes are expected to be substantially
similar to those described with respect to the Preferred Securities in
"Description of the Preferred Securities -- Book-Entry Only Issuance -- The
Depository Trust Company."
REGISTRATION AND TRANSFER
Capital shall not be required to (i) issue, register the transfer of or
exchange Junior Subordinated Notes of any series during a period of 15 days
immediately preceding the date notice is given identifying the Junior
Subordinated Notes of such series called for redemption, or (ii) register the
transfer of or exchange any Junior Subordinated Notes so selected for
redemption, in whole or in part, except the unredeemed portion of any Junior
Subordinated Note being redeemed in part.
PAYMENT AND PAYING AGENT
Payment of principal of any Junior Subordinated Notes will be made only
against surrender to the Paying Agent of such Junior Subordinated Notes.
Principal of and interest on Junior Subordinated Notes will be payable, subject
to any applicable laws and regulations, at the office of such Paying Agent or
Paying Agents as Capital may designate from time to time, except that, at the
option of Capital, payment of any interest may be made by wire transfer or by
check mailed to the address of the person entitled thereto as such address shall
appear in the Security Register with respect to the Junior Subordinated Notes.
Payment of interest on Junior Subordinated Notes on any interest payment date
will be made to the person in whose name the Junior Subordinated Notes (or
predecessor security) are registered at the close of business on the Record Date
for such interest payment (the fifteenth calendar day before such interest
payment date).
The Indenture Trustee will act as Paying Agent with respect to the Junior
Subordinated Notes. Capital may at any time designate additional Paying Agents
or rescind the designation of any Paying Agents or approve a change in the
office through which any Paying Agent acts.
All monies paid by Capital to a Paying Agent for the payment of the
principal of or interest on the Junior Subordinated Notes of any series which
remain unclaimed at the end of two years after such principal or interest shall
have become due and payable will be repaid to Capital, and the holder of such
Junior Subordinated Notes will thereafter look only to Capital for payment
thereof.
MODIFICATION
The Subordinated Note Indenture contains provisions permitting Capital,
Southern and the Indenture Trustee, with the consent of the holders of not less
than a majority in principal amount of the outstanding Junior Subordinated Notes
of each series affected thereby, to modify the Subordinated Note Indenture or
the
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rights of the holders of the Junior Subordinated Notes of such series; provided,
that no such modification may, without the consent of the holder of each
outstanding Junior Subordinated Note affected thereby, (i) change the stated
maturity of the principal of, or any installment of principal of or interest on,
any Junior Subordinated Note, or reduce the principal amount thereof or the rate
of interest (including Additional Interest) thereon or any premium payable upon
the redemption thereof, or change the method of calculating the rate of interest
thereon, or impair the right to institute suit for the enforcement of any such
payment on or after the stated maturity thereof (or, in the case of redemption,
on or after the redemption date), or (ii) reduce the percentage of principal
amount of the outstanding Junior Subordinated Notes of any series, the consent
of whose holders is required for any such supplemental indenture, or the consent
of whose holders is required for any waiver (of compliance with certain
provisions of the Subordinated Note Indenture or certain defaults thereunder and
their consequences) provided for in the Subordinated Note Indenture, or (iii)
modify any of the provisions of the Subordinated Note Indenture relating to
supplemental indentures, waiver of past defaults, or waiver of certain
covenants, except to increase any such percentage or to provide that certain
other provisions of the Subordinated Note Indenture cannot be modified or waived
without the consent of the holder of each outstanding Junior Subordinated Note
affected thereby, or (iv) reduce any amount payable under, delay or defer the
required time of payment under, or impair the right to institute suit to enforce
any payment under the Notes Guarantee, or (v) modify the provisions of the
Subordinated Note Indenture with respect to the subordination of the Junior
Subordinated Notes or the Notes Guarantee in a manner adverse to such holder.
In addition, Capital, Southern and the Indenture Trustee may execute,
without the consent of any holders of Junior Subordinated Notes, any
supplemental indenture for certain other usual purposes, including the creation
of any new series of junior subordinated notes.
CONSOLIDATION, MERGER AND SALE
Neither Southern nor Capital shall consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets substantially
as an entirety to any person, unless (1) such other corporation or person is a
corporation organized and existing under the laws of the United States, any
state thereof or the District of Columbia and such other corporation or person
expressly assumes, by supplemental indenture executed and delivered to the
Indenture Trustee, the payment of the principal of (and premium, if any) and
interest (including Additional Interest) on all the Junior Subordinated Notes
and the performance of every covenant of the Subordinated Note Indenture and the
Notes Guarantee on the part of Southern or Capital, as the case may be, to be
performed or observed; (2) immediately after giving effect to such transactions,
no Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have happened and be continuing; and (3)
Southern or Capital, as the case may be, has delivered to the Indenture Trustee
an officers' certificate and an opinion of counsel, each stating that such
transaction complies with the provisions of the Subordinated Note Indenture
governing consolidation, merger, conveyance, transfer or lease and that all
conditions precedent thereto have been complied with.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee, prior to an Event of Default with respect to Junior
Subordinated Notes of any series, undertakes to perform, with respect to Junior
Subordinated Notes of such series, only such duties as are specifically set
forth in the Subordinated Note Indenture and, in case an Event of Default with
respect to Junior Subordinated Notes of any series has occurred and is
continuing, shall exercise, with respect to Junior Subordinated Notes of such
series, the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Indenture
Trustee is under no obligation to exercise any of the powers vested in it by the
Subordinated Note Indenture at the request of any holder of Junior Subordinated
Notes of any series, unless offered reasonable indemnity by such holder against
the costs, expenses and liabilities which might be incurred thereby. The
Indenture Trustee is not required to expend or risk its own funds or otherwise
incur any financial liability in the performance of its duties if the Indenture
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
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Bankers Trust Company, the Indenture Trustee, also serves as Property
Trustee and as Guarantee Trustee. Southern and certain of its subsidiaries
maintain deposit accounts and banking relationships with Bankers Trust Company.
Bankers Trust Company also serves as trustee under other indentures pursuant to
which securities of subsidiaries of Southern are outstanding.
GOVERNING LAW
The Subordinated Note Indenture and the Junior Subordinated Notes will be
governed by, and construed in accordance with, the internal laws of the State of
New York.
MISCELLANEOUS
Each of Southern and Capital will have the right at all times to assign any
of its rights or obligations under the Subordinated Note Indenture to a direct
or indirect wholly-owned subsidiary of Southern; provided, that, in the event of
any such assignment, Southern or Capital, as the case may be, will remain
primarily liable for all such obligations. Subject to the foregoing, the
Subordinated Note Indenture will be binding upon and inure to the benefit of the
parties thereto and their respective successors and assigns.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Preferred
Securities Guarantee that will be executed and delivered by Southern for the
benefit of the holders of Preferred Securities from time to time. The Preferred
Securities Guarantee will be qualified as an indenture under the 1939 Act.
Bankers Trust Company will act as indenture trustee under the Preferred
Securities Guarantee (the "Guarantee Trustee") for purposes of the 1939 Act. The
terms of the Preferred Securities Guarantee will be those set forth therein and
those made part thereof by the 1939 Act. The following summary does not purport
to be complete and is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the Preferred Securities Guarantee,
the form of which is filed as an exhibit to the Registration Statement of which
this Prospectus forms a part, and the 1939 Act. The Preferred Securities
Guarantee will be held by the Guarantee Trustee for the benefit of holders of
the Preferred Securities.
GENERAL
Pursuant to the Preferred Securities Guarantee, Southern will irrevocably
and unconditionally agree, to the extent set forth therein, to pay in full, to
the holders of the Preferred Securities, the Guarantee Payments (as defined
herein), to the extent not paid by, or on behalf of, the Trust, regardless of
any defense, right of set-off or counterclaim that Southern may have or assert
against any person. The following payments or distributions with respect to the
Preferred Securities to the extent not paid or made by, or on behalf of, the
Trust will be subject to the Preferred Securities Guarantee (without
duplication): (i) any accrued and unpaid distributions required to be paid on
the Preferred Securities but if and only if and to the extent that the Trust has
funds legally and immediately available therefor, (ii) the applicable Redemption
Price with respect to any Preferred Securities called for redemption by the
Trust, but if and only to the extent the Trust has funds legally and immediately
available therefor, and (iii) upon a dissolution, winding-up or termination of
the Trust (other than in connection with the distribution of Junior Subordinated
Notes to the holders of Trust Securities or the redemption of all of the
Preferred Securities), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Preferred Securities to the date
of payment, to the extent the Trust has funds legally and immediately available
therefor, and (b) the amount of assets of the Trust remaining available for
distribution to holders of Preferred Securities in liquidation of the Trust (the
"Guarantee Payments"). Southern's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by Southern to the holders
of the Preferred Securities or by causing the Trust to pay such amounts to such
holders.
The Preferred Securities Guarantee will be a guarantee of the Guarantee
Payments with respect to the Preferred Securities from the time of issuance of
the Preferred Securities, but will not apply to the payment of distributions and
other payments on the Preferred Securities when the Trust does not have
sufficient funds
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legally and immediately available to make such distributions or other payments.
IF CAPITAL DOES NOT MAKE INTEREST PAYMENTS ON THE JUNIOR SUBORDINATED NOTES HELD
BY THE PROPERTY TRUSTEE, THE TRUST WILL NOT MAKE DISTRIBUTIONS ON THE PREFERRED
SECURITIES.
SUBORDINATION
Southern's obligations under the Preferred Securities Guarantee to make the
Guarantee Payments will constitute an unsecured obligation of Southern and will
rank (i) subordinate and junior in right of payment to all other liabilities of
Southern, except those obligations or liabilities made pari passu or subordinate
by their terms, (ii) pari passu with the most senior preferred or preference
stock now or hereafter issued by Southern and with any guarantee now or
hereafter entered into by Southern in respect of any preferred or preference
securities of any affiliate of Southern, and (iii) senior to all common stock of
Southern. The terms of the Preferred Securities will provide that each holder of
Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Preferred Securities Guarantee.
The Preferred Securities Guarantee will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without first instituting a legal proceeding against any other person
or entity).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially and adversely
affect the rights of holders of the Preferred Securities (in which case no
consent will be required), the Preferred Securities Guarantee may be amended
only with the prior approval of the holders of not less than 66 2/3% in
liquidation amount of the outstanding Preferred Securities. The manner of
obtaining any such approval of holders of the Preferred Securities is set forth
under "Description of the Preferred Securities -- Voting Rights." All guarantees
and agreements contained in the Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of Southern and
shall inure to the benefit of the holders of the Preferred Securities then
outstanding.
TERMINATION
The Preferred Securities Guarantee will terminate and be of no further
force and effect as to the Preferred Securities upon full payment of the
applicable Redemption Price of all Preferred Securities, upon distribution of
Junior Subordinated Notes to the holders of such Preferred Securities, or upon
full payment of the amounts payable upon liquidation of the Trust. The Preferred
Securities Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any holder of the Preferred Securities must restore
payment of any sums paid with respect to the Preferred Securities or under the
Preferred Securities Guarantee.
EVENTS OF DEFAULT
An event of default under the Preferred Securities Guarantee will occur
upon the failure by Southern to perform any of its payment obligations
thereunder. The holders of a majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Preferred Securities Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Preferred Securities Guarantee.
Any holder of Preferred Securities may institute a legal proceeding directly
against Southern to enforce its rights under the Preferred Securities Guarantee
without first instituting a legal proceeding against the Guarantee Trustee or
any other person or entity. The holders of a majority in liquidation amount of
Preferred Securities may, by vote, on behalf of the holders of all the Preferred
Securities, waive any past event of default and its consequences.
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INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of any event of default with
respect to the Preferred Securities Guarantee and after the curing or waiving of
all events of default with respect to the Preferred Securities Guarantee,
undertakes to perform only such duties as are specifically set forth in the
Preferred Securities Guarantee and, in case an event of default has occurred,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provisions, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
Preferred Securities Guarantee at the request of any holder of the Preferred
Securities, unless offered reasonable indemnity against the costs, expenses and
liabilities which might be incurred thereby.
Bankers Trust Company, the Guarantee Trustee, also serves as Property
Trustee and as Indenture Trustee. Southern and certain of its subsidiaries
maintain deposit accounts and banking relationships with Bankers Trust Company.
Bankers Trust Company serves as trustee under other indentures pursuant to which
securities of subsidiaries of Southern are outstanding.
GOVERNING LAW
The Preferred Securities Guarantee will be governed by, and construed in
accordance with, the internal laws of the State of New York.
THE AGREEMENT AS TO EXPENSES AND LIABILITIES
Pursuant to an Agreement as to Expenses and Liabilities to be entered into
by Southern under the Trust Agreement, Southern will irrevocably and
unconditionally guarantee to each person or entity to whom the Trust becomes
indebted or liable the full payment of any indebtedness, expenses or liabilities
of the Trust, other than obligations of the Trust to pay to the holders of the
Preferred Securities or other similar interests in the Trust the amounts due
such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be.
DESCRIPTION OF THE NOTES GUARANTEE
Pursuant to the Subordinated Note Indenture, Southern will irrevocably and
unconditionally guarantee the due and punctual payment of principal, premium, if
any, and interest on the Junior Subordinated Notes when and as the same shall
become due and payable, whether at maturity, upon redemption or otherwise. The
Notes Guarantee will constitute an unsecured obligation of Southern and will
rank subordinate and junior to all Senior Indebtedness that may be issued by
Southern. As of December 31, 1997, Senior Indebtedness of Southern aggregated
approximately $769,000,000. Since Southern is a holding company, the right of
Southern and, hence, the right of creditors of Southern (including the holders
of the Junior Subordinated Notes) to participate in any distribution of the
assets of any subsidiary of Southern, whether upon liquidation, reorganization
or otherwise, is subject to prior claims of creditors of each such subsidiary.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE SUBORDINATED NOTES, THE PREFERRED SECURITIES GUARANTEE
AND THE NOTES GUARANTEE
As long as payments of interest and other payments are made when due on the
Junior Subordinated Notes, such payments will be sufficient to cover
distributions and payments due on the Trust Securities primarily because (i) the
aggregate principal amount of Junior Subordinated Notes will be equal to the sum
of the aggregate stated liquidation amount of the Trust Securities; (ii) the
interest rate and interest and other payment dates on the Junior Subordinated
Notes will match the distribution rate and distribution and other payment dates
for the Preferred Securities; (iii) Southern shall pay for all costs and
expenses of the Trust pursuant to the Agreement as to Expenses and Liabilities;
and (iv) the Trust Agreement provides that the Securities Trustees shall not
cause or permit the Trust to, among other things, engage in any activity that is
not consistent with the purposes of the Trust.
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Payments of distributions (to the extent funds therefor are legally and
immediately available) and other payments due on the Preferred Securities (to
the extent funds therefor are legally and immediately available) are guaranteed
by Southern as and to the extent set forth under "Description of the Preferred
Securities Guarantee." If Capital does not make interest payments on the Junior
Subordinated Notes, it is not expected that the Trust will have sufficient funds
to pay distributions on the Preferred Securities. The Preferred Securities
Guarantee is a guarantee from the time of its issuance, but does not apply to
any payment of distributions unless and until the Trust has sufficient funds
legally and immediately available for the payment of such distributions.
If Capital fails to make interest or other payments on the Junior
Subordinated Notes when due (taking into account any Extension Period), the
Trust Agreement provides a mechanism whereby the holders of the Preferred
Securities may appoint a substitute Property Trustee. Such holders may also
direct the Property Trustee to enforce its rights under the Junior Subordinated
Notes and the Notes Guarantee, including proceeding directly against Capital to
enforce the Junior Subordinated Notes and Southern to enforce the Notes
Guarantee. If the Property Trustee fails to enforce its rights under the Junior
Subordinated Notes or the Notes Guarantee, to the fullest extent permitted by
applicable law, any holder of Preferred Securities may institute a legal
proceeding directly against Capital to enforce the Property Trustee's rights
under the Junior Subordinated Notes and against Southern to enforce the holder's
rights under the Notes Guarantee without first instituting any legal proceeding
against the Property Trustee or any other person or entity. Notwithstanding the
foregoing, a holder of Preferred Securities may institute a legal proceeding
directly against Southern and Capital, without first instituting a legal
proceeding against the Property Trustee or any other person or entity, for
enforcement of payment to such holder of principal of or interest on the Junior
Subordinated Notes having a principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities of such holder on or after the
due dates specified in the Junior Subordinated Notes.
If Southern fails to make payments under the Preferred Securities
Guarantee, the Preferred Securities Guarantee provides a mechanism whereby the
holders of the Preferred Securities may direct the Guarantee Trustee to enforce
its rights thereunder. In addition, any holder of Preferred Securities may
institute a legal proceeding directly against Southern to enforce the Guarantee
Trustee's rights under the Preferred Securities Guarantee without first
instituting a legal proceeding against the Guarantee Trustee or any other person
or entity.
The Notes Guarantee, the Preferred Securities Guarantee, the Subordinated
Note Indenture, the Junior Subordinated Notes, the Trust Agreement and the
Agreement as to Expenses and Liabilities, as described above, constitute a full
and unconditional guarantee by Southern and Capital of the payments due on the
Preferred Securities.
Upon any voluntary or involuntary dissolution, winding-up or termination of
the Trust, unless the Junior Subordinated Notes are distributed in connection
therewith, the holders of Preferred Securities will be entitled to receive, out
of assets legally available for distribution to holders, the Liquidation
Distribution in cash. See "Description of the Preferred
Securities -- Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of Capital, the Property Trustee, as
holder of the Junior Subordinated Notes, would be a subordinated creditor of
Capital, subordinated in right of payment to all Senior Indebtedness, but
entitled to receive payment in full of principal and interest, before any
stockholders of Capital receive payments or distributions. Because Southern is
guarantor under the Preferred Securities Guarantee and the Notes Guarantee and
has agreed to pay for all costs, expenses and liabilities of the Trust (other
than the Trust's obligations to holders of the Preferred Securities) pursuant to
the Agreement as to Expenses and Liabilities, the positions of a holder of
Preferred Securities and a holder of Junior Subordinated Notes relative to other
creditors and to stockholders of Southern in the event of liquidation or
bankruptcy of Southern would be substantially the same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Event of Default under the Subordinated Note Indenture.
However, in the event of payment defaults under, or acceleration of, Senior
Indebtedness, the subordination provisions of the Junior Subordinated Notes
provide that no payments may be made in respect of the Junior Subordinated Notes
until such Senior Indebtedness has been paid in full or any payment default
thereunder has been cured or waived. Failure to make required
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payments on the Junior Subordinated Notes would constitute an Event of Default
under the Subordinated Note Indenture except that failure to make interest
payments on the Junior Subordinated Notes will not be an Event of Default during
an Extension Period; provided, however, that any Extension Period may not exceed
20 consecutive quarters or extend beyond the maturity of the Junior Subordinated
Notes.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain material United States federal income
tax consequences of the ownership and disposition of the Preferred Securities
and constitutes the opinion of Troutman Sanders LLP, counsel to Southern,
Capital and the Trust, insofar as it relates to matters of law and legal
conclusions. This summary deals only with Preferred Securities held as capital
assets within the meaning of Section 1221 of the Internal Revenue Code of 1986,
as amended to the date hereof (the "Code"), by Holders (as defined herein).
Moreover, it does not discuss all of the tax consequences that may be relevant
to a Holder in light of his particular circumstances or to Holders subject to
special rules, such as certain financial institutions, insurance companies,
dealers in securities, individual retirement and certain tax deferred accounts,
and persons who engage in a straddle or a hedge relating to a Preferred
Security. Prospective investors should consult their own tax advisors with
regard to the application of the tax considerations discussed below to their
particular situations as well as the application of any state, local or other
tax laws. This summary is based on laws, existing and proposed regulations, and
applicable judicial and administrative determinations, all of which are subject
to change at any time, and any such changes may be retroactively applied in a
manner that could adversely affect Holders. As used herein, the term "Holder"
means a beneficial owner of a Preferred Security that for United States federal
income tax purposes is (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States or of any political subdivision thereof, (iii) an
estate the income of which is subject to United States federal income taxation
regardless of its source or (iv) a trust if (a) a court within the United States
is able to exercise primary supervision over the administration of the trust and
(b) one or more U.S. persons have the authority to control all substantial
decisions of the trust. Thus, the following summary does not address any tax
consequences that apply specifically to nonresident aliens or foreign entities.
TREATMENT OF THE TRUST AND PREFERRED SECURITIES FOR FEDERAL INCOME TAX PURPOSES
The Trust will be treated as a "grantor trust" and not as an association
taxable as a corporation for federal income tax purposes. Thus, for federal
income tax purposes, each Holder will be treated as the beneficial owner of a
pro rata undivided interest in the Junior Subordinated Notes and, consequently,
will be required to include in income the Holder's pro rata share of the entire
income from the Junior Subordinated Notes. Each Holder generally will determine
its net income or loss with respect to the Trust in accordance with its own
method of accounting, although income arising from OID, if any, must be taken
into account under the accrual method of accounting even if the Holder otherwise
would use the cash receipts and disbursements method.
PAYMENTS OF INTEREST
Except as set forth below, stated interest on a Junior Subordinated Note
will generally be taxable to a Holder as ordinary income at the time it is paid
or accrued in accordance with the Holder's own method of accounting.
ORIGINAL ISSUE DISCOUNT
Under applicable income tax regulations, Southern and Capital believe that
the Junior Subordinated Notes will not be treated as issued with OID. It should
be noted that these regulations have not yet been addressed in any rulings or
other interpretations by the Internal Revenue Service (the "IRS"). Accordingly,
it is possible that the IRS could take a position contrary to the
interpretations described herein.
The terms of the Junior Subordinated Notes permit Capital to defer the
payment of interest on the Junior Subordinated Notes at any time and from time
to time by extending the interest payment period for up to 20
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consecutive quarters with respect to each Extension Period; provided, however,
that no Extension Period may extend beyond the stated maturity date of the
Junior Subordinated Notes. Should Capital exercise this option to defer payments
of interest, the Junior Subordinated Notes would at that time be treated as
issued with OID and all the stated interest payments on the Junior Subordinated
Notes would thereafter be treated as OID for as long as they remained
outstanding. As a result, all Holders would, in effect, be required to accrue
interest income even if such Holders are on a cash method of accounting.
Consequently, in the event that the payment of interest is deferred, a Holder
could be required to include OID in income on an economic accrual basis,
notwithstanding that Capital will not make any interest payments during such
period on the Junior Subordinated Notes.
MARKET DISCOUNT
A purchaser of a Preferred Security at a discount from the liquidation
amount at maturity of such purchaser's pro rata share of the Junior Subordinated
Notes acquires such Preferred Security with "market discount." However, market
discount with respect to a Preferred Security will be considered to be zero if
it is de minimis. Market discount will be de minimis with respect to a Preferred
Security if it is less than the product of (i) 0.25% of the adjusted issue price
of the purchaser's pro rata share of the Junior Subordinated Notes multiplied by
(ii) the number of complete years to maturity of such Junior Subordinated Notes
after the date of purchase. The purchaser of a Preferred Security with more than
a de minimis amount of market discount generally will be required to treat any
gain on the sale, exchange, redemption or other disposition of all or part of
the Preferred Securities (or related Junior Subordinated Notes) as ordinary
income to the extent of accrued (but not previously taxed) market discount.
Market discount generally will accrue ratably during the period from the date of
purchase of such Preferred Security to the maturity date of the Junior
Subordinated Notes, unless the Holder irrevocably elects to accrue such market
discount on the basis of a constant interest rate.
A Holder who has acquired a Preferred Security at a market discount
generally will be required to defer any deductions of interest expense
attributable to any indebtedness incurred or continued to purchase or carry the
Preferred Security, to the extent such interest expense exceeds the related
interest income. Any such deferred interest expense generally will be allowable
as a deduction not later than the year in which the related market discount
income is recognized. As an alternative to the inclusion of market discount in
income upon disposition of all or a portion of a Preferred Security or the
related Junior Subordinated Notes (including redemptions thereof), a Holder may
make an election (which may not be revoked without the IRS's consent) to include
market discount in income as it accrues on all market discount instruments
acquired by the Holder during or after the taxable year for which the election
is made. In that case, the preceding deferral rule for interest expense will not
apply.
In lieu of the foregoing treatment of market discount and interest expense,
a Holder may elect to treat any market discount (including a de minimis amount)
as OID and accrue such discount on a constant-yield basis in the same manner as
the Holder accrues OID.
SALE OF PREFERRED SECURITIES
Upon the sale, retirement (including redemption) or other taxable
disposition of all or part of a Preferred Security, a Holder thereof will
recognize gain or loss equal to the difference between the amount realized on
such sale, retirement or other disposition and such Holder's adjusted tax basis
in the Preferred Security or part thereof. If the Holder disposes of a Preferred
Security prior to the occurrence of an Extension Period, any portion of the
amount received that is attributable to accrued interest will be treated as
interest income to the Holder and will not be treated as part of the amount
realized for purposes of determining gain or loss on the disposition of the
Preferred Security. Any recognized gain or loss will be capital gain or loss,
except to the extent of any accrued market discount (see "Market Discount"
above), and such capital gain or loss will be long-term if the holding period
for the Preferred Security is more than one year at the time of sale, retirement
or other disposition. In the case of individuals, "net capital gain," i.e., the
excess of net long-term capital gain over net short-term capital loss, is
generally subject to a reduced rate of federal income tax. Capital gains and
losses from property held for more than 18 months will be taken into account in
determining "adjusted net
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capital gain," which is subject to a further reduction in the rate of tax
pursuant to a recent amendment of the Code. Also, in taxable years beginning
after December 31, 2000, an additional reduction in the rate of tax may be
available in certain circumstances for capital gains from property held by the
taxpayer for more than five years. A Holder's adjusted tax basis in a Preferred
Security acquired by purchase will equal the cost of such Preferred Security to
the Holder, increased by the amount of any related accrued OID and market
discount included in taxable income by the Holder and reduced by any prior
payments on the Junior Subordinated Notes which are not qualified stated
interest. The redemption of only part of a Preferred Security will require an
allocation of the Holder's adjusted tax basis in his pro rata share of the
related Junior Subordinated Notes between the portion of the Junior Subordinated
Notes redeemed and retained by the Holder in order to determine gain or loss.
RECEIPT OF JUNIOR SUBORDINATED NOTES UPON LIQUIDATION OF THE TRUST
As described under "Description of the Preferred Securities -- Special
Event Redemption or Distribution," Junior Subordinated Notes may be distributed
to Holders in exchange for the Preferred Securities and in liquidation of the
Trust. Such a distribution would be treated as a non-taxable event to each
Holder and each Holder would receive an aggregate tax basis in the Holder's
Junior Subordinated Notes equal to the Holder's aggregate tax basis in its
Preferred Securities. A Holder's holding period with respect to the Junior
Subordinated Notes so received in liquidation of the Trust would include the
period for which the Preferred Securities were held by such Holder.
INFORMATION REPORTING TO HOLDERS
Income on the Preferred Securities will be reported to Holders on Form
1099, which form should be mailed to Holders of Preferred Securities by January
31 following each calendar year.
BACKUP WITHHOLDING
A Holder may be subject to "backup withholding" under certain
circumstances. Backup withholding applies to a Holder if the Holder, among other
things, (i) fails to furnish his social security number or other taxpayer
identification number ("TIN") to the payor responsible for backup withholding
(for example, the Holder's securities broker), (ii) furnishes such payor an
incorrect TIN, (iii) fails to provide such payor with a certified statement,
signed under penalties of perjury, that the TIN provided to the payor is correct
and that the Holder is not subject to backup withholding, or (iv) fails to
report properly interest and dividends on his tax return. Backup withholding,
however, does not apply to payments made to certain exempt recipients, such as
corporations and tax-exempt organizations. The backup withholding rate is 31% of
"reportable payments," which generally will include distributions of interest
and principal payments on the Junior Subordinated Notes.
THE FEDERAL INCOME TAX DISCUSSIONS SET FORTH ABOVE MAY NOT BE APPLICABLE TO
A HOLDER, DEPENDING UPON A HOLDER'S PARTICULAR SITUATION, AND THEREFORE EACH
HOLDER SHOULD CONSULT HIS TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF
THE OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAW.
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UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the Trust has agreed to sell to the Underwriters
named below, and the Underwriters, for whom Merrill Lynch, Pierce, Fenner &
Smith Incorporated and are acting as representatives (the
"Representatives"), have severally agreed to purchase the number of Preferred
Securities set forth opposite their respective names below. In the Underwriting
Agreement, the Underwriters have agreed, subject to the terms and conditions set
forth therein, to purchase all of the Preferred Securities offered hereby if any
of the Preferred Securities are purchased.
<TABLE>
<CAPTION>
NUMBER OF
NAME PREFERRED SECURITIES
---- --------------------
<S> <C>
Merrill Lynch Pierce, Fenner & Smith
Incorporated
---------
Total............................................. 8,000,000
=========
</TABLE>
The Underwriters have advised Southern, Capital and the Trust that they
propose to offer the Preferred Securities in part directly to the public at the
initial public offering price, as set forth on the cover page of this
Prospectus, and in part to certain securities dealers at such price less a
concession not in excess of $ per Preferred Security. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
Preferred Security to certain other dealers. After the Preferred Securities are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the Underwriters.
The Preferred Securities are expected to be approved for listing on the
NYSE, subject to official notice of issuance. Trading of the Preferred
Securities on the NYSE is expected to commence within a 30-day period after the
initial delivery of the Preferred Securities. The Representatives have advised
Southern, Capital and the Trust that they intend to make a market in the
Preferred Securities prior to the commencement of trading on the NYSE. The
Representatives will have no obligation to make a market in the Preferred
Securities, however, and may cease market making activities, if commenced, at
any time.
Prior to this offering, there has been no public market for the Preferred
Securities. In order to meet one of the requirements for listing the Preferred
Securities on the NYSE, the Underwriters will undertake to sell lots of 100 or
more Preferred Securities to a minimum of 400 beneficial holders.
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In connection with the offering, the Underwriters may purchase and sell the
Preferred Securities in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the offering. Stabilizing
transactions consist of certain bids or purchases for the purpose of preventing
or retarding a decline in the market price of the Preferred Securities; and
syndicate short positions involve the sale by the Underwriters of a greater
number of Preferred Securities than they are required to purchase from the Trust
in the offering. The Underwriters also may impose a penalty bid, whereby selling
concessions allowed to syndicate members or other broker dealers in respect of
the securities sold in the offering for their account may be reclaimed by the
syndicate if such Preferred Securities are repurchased by the syndicate in
stabilizing or covering transactions. These activities may stabilize, maintain
or otherwise affect the market price of the Preferred Securities, which may be
higher than the price that might otherwise prevail in the open market; and these
activities, if commenced, may be discontinued at any time. These transactions
may be effected on the NYSE, in the over-the-counter market or otherwise.
Southern, Capital and the Trust have agreed, during the period of 15 days
from the date of the Underwriting Agreement, not to sell, offer to sell, grant
any option for the sale of, or otherwise dispose of any Preferred Securities,
any security convertible into or exchangeable into or exercisable for Preferred
Securities or the Junior Subordinated Notes or any debt securities substantially
similar to the Junior Subordinated Notes or equity securities substantially
similar to the Preferred Securities (except for the Junior Subordinated Notes
and the Preferred Securities issued pursuant to the Underwriting Agreement),
without the prior written consent of the Representatives.
Southern, Capital and the Trust have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under the 1933 Act. The
Underwriters have agreed to reimburse Southern for certain expenses.
Certain of the Underwriters engage in transactions with, and, from time to
time, have performed services for, Southern and its affiliates in the ordinary
course of business.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of Capital and the Trust by Richards,
Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel to Capital
and the Trust. The validity of the Junior Subordinated Notes, the Preferred
Securities Guarantee and the Notes Guarantee and certain matters relating
thereto will be passed upon on behalf of Southern and Capital by Troutman
Sanders LLP, Atlanta, Georgia. Troutman Sanders LLP will also pass upon certain
matters relating to United States federal income tax considerations. Certain
legal matters will be passed upon for the Underwriters by Dewey Ballantine LLP,
New York, New York.
EXPERTS
The consolidated financial statements and schedule of Southern included in
Southern's Annual Report on Form 10-K for the year ended December 31, 1997,
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated herein in reliance upon the authority of
said firm as experts in giving said reports.
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GLOSSARY
1933 Act................... The Securities Act of 1933, as amended.
1934 Act................... The Securities Exchange Act of 1934, as amended.
1939 Act................... The Trust Indenture Act of 1939, as amended.
1940 Act................... The Investment Company Act of 1940, as amended.
Additional Interest........ Amounts payable by Capital as defined under
"Description of the Junior Subordinated
Notes -- Additional Interest."
Administrative Trustees.... Wayne Boston and Richard A. Childs.
Agreement as to Expenses
and Liabilities............ The agreement between Southern and the Trust
pursuant to which Southern has agreed to pay all
indebtedness, expenses or liabilities of the Trust,
other than the Trust's obligations to pay to the
holders of the Preferred Securities the amounts due
such holders pursuant to the terms thereof.
Capital.................... Southern Company Capital Funding, Inc.
Code....................... The Internal Revenue Code of 1986, as amended.
Common Securities.......... The Trust Securities being sold to Capital.
Delaware Trustee........... Bankers Trust (Delaware).
DTC........................ The Depository Trust Company, a "clearing
corporation" that initially will hold (through its
agents) a global certificate evidencing the
Preferred Securities.
Distribution Dates......... March 31, June 30, September 30 and December 31 of
each year.
Extension Period........... Any period during which interest is not paid on the
Junior Subordinated Notes (and, consequently, on
the Preferred Securities) at the election of
Capital to the extent permitted under the terms of
the Junior Subordinated Notes.
Guarantee Payments......... Payments required to be made pursuant to the
Preferred Securities Guarantee as described in
"Description of the Preferred Securities
Guarantee -- General."
Guarantee Trustee.......... The trustee under the Preferred Securities
Guarantee; initially, Bankers Trust Company.
Indenture Trustee.......... The trustee under the Subordinated Note Indenture;
initially, Bankers Trust Company.
Issue Date................. The date set forth on the cover page on which the
Junior Subordinated Notes and Preferred Securities
are scheduled to be issued.
Investment Company Act
Event...................... An event of the type described in "Description of
the Preferred Securities -- Special Event
Redemption or Distribution."
Junior Subordinated
Notes...................... The Series D % junior subordinated deferrable
interest notes of Capital due March 31, 2038.
Notes Guarantee............ The guarantee by Southern of the payments by
Capital on the Junior Subordinated Notes.
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NYSE....................... New York Stock Exchange.
Preferred Securities....... The Trust Securities being offered to investors
pursuant to this Prospectus.
Preferred Securities
Guarantee.................. The guarantee by Southern of the payments by the
Trust on the Preferred Securities from time to
time.
Property Trustee........... A trustee under the Trust designated to hold the
trust property; initially Bankers Trust Company.
Record Date................ The close of business on the 15th calendar day
prior to a Distribution Date.
Redemption Price........... The stated liquidation amount of $25 per Preferred
Security, plus accrued and unpaid distributions
thereon (and interest thereon) to the date of
payment.
Securities Rate............ The per annum interest rate expressed as a
percentage of the stated liquidation amount of $25
per Preferred Security, and set forth on the cover
page of this Prospectus.
Securities Trustees........ The Property Trustee, Administrative Trustees and
Delaware Trustee.
Senior Indebtedness........ Indebtedness described under "Description of the
Junior Subordinated Notes -- Subordination."
Southern................... The Southern Company.
Special Event.............. A Tax Event or Investment Company Act Event.
Subordinated Note
Indenture.................. The indenture pursuant to which Capital's Junior
Subordinated Notes will be issued.
Subordinated Note Indenture
Event of Default........... As described under "Description of the Junior
Subordinated Notes -- Events of Default."
Tax Event.................. An event of the type described in "Description of
the Preferred Securities -- Special Event
Redemption or Distribution."
Trust...................... Southern Company Capital Trust IV, a Delaware
business trust that will issue the Trust
Securities.
Trust Agreement............ The agreement pursuant to which the Trust is
organized as it may be amended and restated from
time to time.
Trust Agreement Event of
Default.................... As described under "Description of the Preferred
Securities -- Events of Default."
Trust Securities........... The Preferred Securities and the Common Securities.
42
<PAGE>
======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY SOUTHERN, CAPITAL, THE TRUST OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF SOUTHERN, CAPITAL, OR THE TRUST SINCE THE DATE HEREOF. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 4
Incorporation of Certain Documents by
Reference........................... 4
Summary............................... 5
Risk Factors.......................... 11
The Southern Company.................. 14
Southern Company Capital Funding,
Inc................................. 14
Southern Company Capital Trust IV..... 14
Accounting Treatment.................. 15
Use of Proceeds....................... 15
Description of the Preferred
Securities.......................... 15
Description of the Junior Subordinated
Notes............................... 25
Description of the Preferred
Securities Guarantee................ 32
Description of the Notes Guarantee.... 34
Relationship Among the Preferred
Securities, the Subordinated Notes,
the Preferred Securities Guarantee
and the Notes Guarantee............. 34
Certain Federal Income Tax
Considerations...................... 35
Underwriting.......................... 39
Legal Matters......................... 40
Experts............................... 40
</TABLE>
======================================================
======================================================
8,000,000 PREFERRED SECURITIES
SOUTHERN COMPANY
CAPITAL TRUST IV
% TRUST ORIGINATED PREFERRED
SECURITIES(SM)
("TOPRS(SM)")
(LIQUIDATION AMOUNT $25 PER
PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED,
AS DESCRIBED HEREIN, BY
(SOUTHERN COMPANY LOGO)
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
, 1998
======================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Securities and Exchange Commission Fee...................... $ 59,000
Fees and Expense of Trustees................................ 16,000
Printing Expenses........................................... 75,000
Counsel Fees................................................ 45,000
Rating Agency Fees.......................................... 100,000
Listing Fees................................................ 58,300
Accountant's Fees........................................... 30,000
Miscellaneous............................................... 26,700
--------
Total............................................. $410,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of Title 8 of the Delaware Code gives a corporation power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceedings, had no
reasonable cause to believe his conduct was unlawful. The same Section also
gives a corporation power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper. Also, the Section states that, to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any such action, suit or proceeding, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
The By-Laws of Southern provide in substance that no present or future
director or officer of Southern shall be liable for any act, omission, step or
conduct taken or had in good faith which is required, authorized or approved by
order issued pursuant to the Public Utility Holding Company Act of 1935, the
Federal Power Act, or any state statute regulating Southern or its subsidiaries
by reason of their being public utility companies or public utility holding
companies, or any amendment to any thereof. In the event that such provisions
are found by a court not to constitute a valid defense, each such director and
officer shall be reimbursed for, or indemnified against, all expenses and
liabilities incurred by him or imposed on him in connection with, or arising out
of, any such action, suit or proceeding based on any act, omission, step or
conduct taken or had in good faith as in such By-Laws described.
II-1
<PAGE>
The By-Laws of Southern further provide as follows:
"Each person who is or was a director or officer of the Corporation
and who was or is a party or was or is threatened to be made a party to any
threatened, pending or completed claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee,
agent or trustee of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, shall be indemnified by the
Corporation as a matter of right against any and all expenses (including
attorneys' fees) actually and reasonably incurred by him and against any
and all claims, judgments, fines, penalties, liabilities and amounts paid
in settlement actually incurred by him in defense of such claim, action,
suit or proceeding, including appeals, to the full extent permitted by
applicable law. The indemnification provided by this Section shall inure to
the benefit of the heirs, executors and administrators of such person.
Expenses (including attorneys' fees) incurred by a director or officer
of the Corporation with respect to the defense of any such claim, action,
suit or proceeding may be advanced by the Corporation prior to the final
disposition of such claim, action, suit or proceeding, as authorized by the
Board of Directors in the specific case, upon receipt of an undertaking by
or on behalf of such person to repay such amount unless it shall ultimately
be determined that such person is entitled to be indemnified by the
Corporation under this Section or otherwise; provided, however, that the
advancement of such expenses shall not be deemed to be indemnification
unless and until it shall ultimately be determined that such person is
entitled to be indemnified by the Corporation."
Southern has an insurance policy covering its liabilities and expenses
which might arise in connection with its lawful indemnification of its directors
and officers for certain of their liabilities and expenses and also covering its
officers and directors against certain other liabilities and expenses.
Paragraph 10 of the Certificate of Incorporation of Capital provides as
follows:
No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, or (iii) for any transaction from which the
director received an improper personal benefit.
Article VII of the By-laws of Capital provides in pertinent part:
Section 1. The corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in
the right of the corporation) by reason of the fact that such person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person
acted in good faith in a manner such person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe such
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his or her conduct was unlawful.
Section 2. The corporation shall have power to indemnify any person
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that
such person is or was a
II-2
<PAGE>
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or
settlement of such action or suit if he or she acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of
the corporation and except that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of
his or her duty to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
Section 3. To the extent that a director, officer, employee or agent
of the corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section 1. and 2.,
or in defense of any claim, issue or matter therein, such individual shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
Section 4. Any indemnification under Sections 1. and 2. (unless
ordered by a court) shall be made by the corporation only as authorized in
the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because
he or she has met the applicable standard of conduct set forth in Sections
1. and 2. Such determination shall be made (1) by the board of directors by
a majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (2) if such a quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders.
Section 5. Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding may be paid by the corporation
in advance of the final disposition of such action, suit or proceeding as
authorized by the board of directors in the specific case upon receipt of
an undertaking by or on behalf of such director or officer to repay such
amount unless it shall ultimately be determined that such individual is
entitled to be indemnified by the corporation as authorized in this
Section. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
Section 6. The indemnification provided by this Article VII shall not
be exclusive of any other rights to which those seeking indemnification may
be entitled under any agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such individual's official
capacity and as to action in another capacity while holding such office,
and shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
Section 7. The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against such person and incurred by such in any such
capacity, or arising out of his or her status as such, whether or not the
corporation would have the power to indemnify against such liability under
the provisions of this section.
II-3
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement*
4.1 -- Subordinated Note Indenture of The Southern Company and
Southern Company Capital Funding, Inc. relating to the
Junior Subordinated Notes (Designated in Form 10-K for the
year ended December 31, 1997, File No. 1-3536, as Exhibit
4(a)2)
4.2 -- Form of Second Supplemental Indenture to Subordinated Note
Indenture of Southern Company Capital Funding, Inc. and The
Southern Company relating to the Junior Subordinated Notes
4.3 -- Form of Certificate of Junior Subordinated Notes (included
as Exhibit A to Exhibit 4.2)
4.4 -- Certificate of Trust of Southern Company Capital Trust IV
4.5 -- Trust Agreement of Southern Company Capital Trust IV
4.6 -- Form of Amended and Restated Trust Agreement of Southern
Company Capital Trust IV
4.7 -- Form of Preferred Security Certificate for Southern Company
Capital Trust IV (included as Exhibit E to Exhibit 4.6)
4.8 -- Form of Preferred Securities Guarantee of The Southern
Company relating to the Preferred Securities
4.9 -- Form of Agreement as to Expenses and Liabilities (included
as Exhibit D to Exhibit 4.6)
5.1 -- Opinion of Troutman Sanders LLP to The Southern Company and
Southern Company Capital Funding, Inc., as to legality of the
Preferred Securities Guarantee and the Notes Guarantee to be
issued by The Southern Company and as to legality of the Junior
Subordinated Notes to be issued by Southern Company Capital
Funding, Inc.
5.2 -- Opinion of Richards, Layton & Finger, P.A., special Delaware
counsel, as to legality of the Preferred Securities to be
issued by Southern Company Capital Trust IV
8.1 -- Opinion of Troutman Sanders LLP, special tax counsel, as to
certain United States federal income tax matters
12.1 -- Computation of ratio of earnings to fixed charges
12.2 -- Computation of ratio of earnings to fixed charges plus
preferred dividend requirements
21.1 -- List of Subsidiaries of the The Southern Company (Designated
in Form 10-K for the year ended December 31, 1997, File No.
1-3536, as Exhibit 21.)
23.1 -- Consent of Arthur Andersen LLP
23.2 -- Consent of Troutman Sanders LLP (included in Exhibit 5.1)
23.3 -- Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.2)
23.4 -- Consent of Troutman Sanders LLP (included in Exhibit 8.1)
24.1 -- Power of Attorney of certain officers and directors of The
Southern Company
24.2 -- Resolution of The Southern Company re: Power of Attorney
25.1 -- Form T-1 Statement of Eligibility of Bankers Trust Company
</TABLE>
- ---------------
* To be subsequently filed or incorporated by reference.
ITEM 17. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of a Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934)
II-4
<PAGE>
that is incorporated by reference in this Registration Statement shall be deemed
to be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of each
undersigned Registrant pursuant to the foregoing provisions, or otherwise, each
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by each undersigned Registrant
of expenses incurred or paid by a director, officer or controlling person of
each Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, each Registrant will, unless in the opinion of its
counsel the matter has been settled by the controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and continued in
a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
The Southern Company, a Delaware corporation, 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, State of
Georgia, on the 21st day of April, 1998.
THE SOUTHERN COMPANY
By: A. W. DAHLBERG
Chairman, President and Chief
Executive Officer
By: /s/ WAYNE BOSTON
------------------------------------
Wayne Boston
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following directors and officers
of The Southern Company in the capacities and on the date indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
A. W. DAHLBERG Chairman of the Board,
President, Chief Executive
Officer and Director
(Principal Executive
Officer)
W. L. WESTBROOK Financial Vice President,
Chief Financial Officer
and Treasurer (Principal
Financial and Accounting
Officer)
JOHN C. ADAMS
A. D. CORRELL
PAUL J. DENICOLA
JACK EDWARDS
H. ALLEN FRANKLIN
BRUCE S. GORDON
L. G. HARDMAN III Directors
ELMER B. HARRIS
WILLIAM J. RUSHTON, JR.
GLORIA M. SHATTO
GERALD J. ST. PE
HERBERT STOCKHAM
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ WAYNE BOSTON April 21, 1998
- -----------------------------------------------------
Wayne Boston
Attorney-in-Fact
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
Southern Company Capital Funding, Inc., a Delaware corporation, 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, State of Georgia, on the 21st day of April, 1998.
SOUTHERN COMPANY CAPITAL FUNDING, INC.
By: /s/ W. L. WESTBROOK
------------------------------------
W. L. Westbrook
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following director and officers of
Southern Company Capital Funding, Inc. in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
By: /s/ W. L. WESTBROOK President, Chief Executive April 21, 1998
------------------------------------------------- Officer and Director
W. L. Westbrook (Principal
Executive Officer)
By: /s/ C. O. RAWLINS Vice President and Chief April 21, 1998
------------------------------------------------- Financial Officer
C. O. Rawlins (Principal
Financial and Accounting
Officer)
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, Southern
Company Capital Trust IV certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Atlanta, State of Georgia, on the 21st
day of April, 1998.
SOUTHERN COMPANY CAPITAL TRUST IV
By: SOUTHERN COMPANY
CAPITAL FUNDING, INC.,
Depositor
By: /s/ WAYNE BOSTON
------------------------------------
Wayne Boston
Assistant Secretary
II-7
Exhibit 4.2
SOUTHERN COMPANY CAPITAL FUNDING, INC.
AND
THE SOUTHERN COMPANY
TO
BANKERS TRUST COMPANY,
TRUSTEE.
SECOND SUPPLEMENTAL INDENTURE
DATED AS OF ______________, 1998
$206,186,000
SERIES D _______% JUNIOR SUBORDINATED NOTES
DUE MARCH 31, 2038
<PAGE>
TABLE OF CONTENTS1
ARTICLE 1.................................................................2
SECTION 101. Establishment................................................2
SECTION 102. Definitions..................................................2
SECTION 103. Payment of Principal and Interest............................3
SECTION 104. Deferral of Interest Payments................................4
SECTION 105. Denominations................................................5
SECTION 106. Global Securities............................................5
SECTION 107. Transfer.....................................................6
SECTION 108. Redemption...................................................6
ARTICLE 2.................................................................6
SECTION 201. Recitals by Company..........................................6
SECTION 202. Ratification and Incorporation of Original Indenture.........7
SECTION 203. Executed in Counterparts.....................................7
SECTION 204. Listing of Notes.............................................7
_____________________________
1 This Table of Contents does not constitute part of the Indenture or have any
bearing upon the interpretation of any of its terms and provisions.
<PAGE>
..................THIS SECOND SUPPLEMENTAL INDENTURE is made as of the _____ day
of _________, 1998, by and among SOUTHERN COMPANY CAPITAL FUNDING, INC., a
Delaware corporation, 270 Peachtree Street, N.W., Atlanta, Georgia 30303 (the
"Company"), THE SOUTHERN COMPANY, a Delaware corporation, 270 Peachtree Street,
N.W., Atlanta, Georgia 30303 (the "Guarantor"), and BANKERS TRUST COMPANY, a New
York banking corporation, Four Albany Street, New York, New York 10006 (the
"Trustee").
W I T N E S S E T H:
.........WHEREAS, the Company and the Guarantor have heretofore entered
into a Subordinated Note Indenture, dated as of June 1, 1997 (the "Original
Indenture"), with Bankers Trust Company, as supplemented by a First Supplemental
Indenture dated as of June 6, 1997 (the "First Supplement Indenture"), with
Bankers Trust Company;
.........WHEREAS, the Original Indenture is incorporated herein by this
reference and the Original Indenture, as supplemented by the First Supplemental
Indenture and this Second Supplemental Indenture, is herein called the
"Indenture";
.........WHEREAS, under the Original Indenture, a new series of Junior
Subordinated Notes may at any time be established by the Board of Directors of
the Company in accordance with the provisions of the Original Indenture and the
terms of such series may be described by a supplemental indenture executed by
the Company, the Guarantor and the Trustee;
.........WHEREAS, the Company proposes to create under the Indenture a
new series of Junior Subordinated Notes;
.........WHEREAS, additional Junior Subordinated Notes of other series
hereafter established, except as may be limited in the Original Indenture as at
the time supplemented and modified, may be issued from time to time pursuant to
the Indenture as at the time supplemented and modified; and
.........WHEREAS, all conditions necessary to authorize the execution
and delivery of this Second Supplemental Indenture and to make it a valid and
binding obligation of the Company have been done or performed.
.........NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
Series D Junior Subordinated Notes
SECTION 101. Establishment. There is hereby established a new series of
Junior Subordinated Notes to be issued under the Indenture, to be designated as
the Company's Series D ________% Junior Subordinated Notes due March 31, 2038
(the "Series D Notes").
There are to be authenticated and delivered $206,186,000 principal
amount of Series D Notes, and no further Series D Notes shall be authenticated
and delivered except as provided by Sections 203, 303, 304, 907 or 1107 of the
Original Indenture. The Series D Notes shall be issued in definitive fully
registered form.
The Series D Notes shall be in substantially the form set out in
Exhibit A hereto. The entire principal amount of the Series D Notes shall
initially be evidenced by one certificate issued to the Property Trustee of
Southern Company Capital Trust IV.
The form of the Trustee's Certificate of Authentication for the Series
D Notes shall be in substantially the form set forth in Exhibit B hereto. A
notation of the Notes Guarantee shall be set forth on each Series D Note in
substantially the form set forth in Section 1404 of the Original Indenture.
Each Series D Note shall be dated the date of authentication thereof
and shall bear interest from the date of original issuance thereof or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for.
SECTION 102. Definitions. The following defined terms used herein
shall, unless the context otherwise requires, have the meanings specified below.
Capitalized terms used herein for which no definition is provided herein shall
have the meanings set forth in the Original Indenture.
"Deferred Interest" means each installment of interest not paid during
any Extension Period, and interest thereon. Deferred installments of interest
shall bear interest at the rate of 7.75% per annum from the applicable Interest
Payment Date to the date of payment, compounded quarterly, to the extent
permitted by applicable law.
"Extension Period" means any period during which the Company has
elected to defer payments of interest, which deferral may be for a period of up
to twenty (20) consecutive quarters.
"Interest Payment Dates" means March 31, June 30, September 30 and
December 31 of each year.
"Investment Company Act Event" means that the Company shall have
received an Opinion of Counsel to the effect that, as a result of the occurrence
of a change in law or regulation or a written change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Securities Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940, as amended,
which change becomes effective on or after the Original Issue Date.
"Original Issue Date" means ________, 1998.
"Regular Record Date" means, with respect to each Interest Payment
Date, the close of business on the 15th calendar day preceding such Interest
Payment Date.
"Securities Trust" means Southern Company Capital Trust IV, a statutory
business trust formed by the Company under Delaware law to issue Trust
Securities, the proceeds of which will be used to purchase Series D Notes.
"Special Event" means an Investment Company Act Event or Tax Event.
"Stated Maturity" means March 31, 2038.
"Tax Event" means that the Company shall have received an Opinion of
Counsel experienced in such matters to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to, or
change in, an interpretation or application of such laws or regulations, there
is more than an insubstantial risk that (i) the Securities Trust would be
subject to United States federal income tax with respect to income accrued or
received on the Series D Notes, (ii) interest payable on the Series D Notes
would not be deductible by a member of the Guarantor's consolidated tax group
for United States federal income tax purposes, or (iii) the Securities Trust
would be subject to more than a de minimis amount of other taxes, duties or
other governmental charges, which change or amendment becomes effective on or
after the Original Issue Date.
SECTION 103. Payment of Principal and Interest. The unpaid principal
amount of the Series D Notes shall bear interest at the rate of 7.75% per annum
until paid or duly provided for. Interest shall be paid quarterly in arrears on
each Interest Payment Date to the Person in whose name the Series D Notes are
registered on the Regular Record Date for such Interest Payment Date, provided
that interest payable at the Stated Maturity of principal or on a Redemption
Date as provided herein will be paid to the Person to whom principal is payable.
So long as an Extension Period is not occurring, any such interest that is not
so punctually paid or duly provided for will forthwith cease to be payable to
the Holders on such Regular Record Date and may either be paid to the Person or
Persons in whose name the Series D Notes are registered at the close of business
on a Special Record Date for the payment of such defaulted interest to be fixed
by the Trustee ("Special Record Date"), notice whereof shall be given to Holders
of the Series D Notes not less than ten (10) days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange, if any, on which the Series D Notes
shall be listed, and upon such notice as may be required by any such exchange,
all as more fully provided in the Original Indenture.
Payments of interest on the Series D Notes will include interest
accrued to but excluding the respective Interest Payment Dates. Interest
payments for the Series D Notes shall be computed and paid on the basis of a
360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Series D Notes is not a Business Day, then a payment
of the interest payable on such date will be made on the next succeeding day
that is a Business Day, except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date the payment was originally payable.
Payment of the principal, premium, if any, and interest (including
Additional Interest, if any) due at the Stated Maturity or earlier redemption of
the Series D Notes shall be made upon surrender of the Series D Notes at the
Corporate Trust Office of the Trustee, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts. Payments of interest (including interest on any
Interest Payment Date) will be made, subject to such surrender where applicable,
at the option of the Company, (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register or (ii)
by wire transfer at such place and to such account at a banking institution in
the United States as may be designated in writing to the Trustee at least
sixteen (16) days prior to the date for payment by the Person entitled thereto.
The Company shall pay, as additional interest on the Series D Notes,
when due to the United States or any other taxing authority, the amounts set
forth in clause (i) of the definition of Additional Interest.
SECTION 104. Deferral of Interest Payments. The Company has the right
at any time and from time to time to extend the interest payment period of the
Series D Notes for up to twenty (20) consecutive quarters (each, an "Extension
Period"), but not beyond the Stated Maturity. Notwithstanding the foregoing, the
Company has no right to extend its obligation to pay such amounts as are defined
in clause (i) of the definition of Additional Interest. Prior to the termination
of any such Extension Period, the Company may further extend the interest
payment period, provided that such Extension Period, together with all such
previous and further extensions of that Extension Period, shall not exceed
twenty (20) consecutive quarters. Upon the termination of any such Extension
Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due, the Company may select a new Extension Period,
subject to the above limitations and requirements.
Upon the termination of any Extension Period, which termination shall
be on an Interest Payment Date, the Company shall pay all Deferred Interest on
the next succeeding Interest Payment Date to the Person in whose name the Series
D Notes are registered on the Regular Record Date for such Interest Payment
Date, provided that Deferred Interest payable at Stated Maturity or on any
Redemption Date will be paid to the Person to whom principal is payable.
The Company shall give the Holder or Holders of the Series D Notes and
the Trustee notice, as provided in Sections 105 and 106, respectively, of the
Original Indenture, of its selection or extension of an Extension Period at
least one Business Day prior to the earlier of (i) the Regular Record Date
relating to the Interest Payment Date on which the Extension Period is to
commence or relating to the Interest Payment Date on which an Extension Period
that is being extended would otherwise terminate, or (ii) the date the Company
or Securities Trust is required to give notice to the New York Stock Exchange or
other applicable self-regulatory organization of the record date or the date
such distributions are payable. The Company shall cause the Securities Trust to
give notice of the Company's selection of such Extension Period to Holders of
the Trust Securities. The month in which any notice is given pursuant to the
immediately preceding sentence of this Section shall constitute the first month
of the first quarter of the twenty (20) quarters, which comprise the Maximum
Extension Period.
At any time any of the foregoing notices are given to the Trustee, the
Company shall give to the Paying Agent for the Series D Notes such information
as said Paying Agent shall reasonably require in order to fulfill its tax
reporting obligations with respect to such Series D Notes.
SECTION 105. Denominations. The Series D Notes may be issued in the
denominations of $25, or any integral multiple thereof.
SECTION 106. Global Securities. If the Series D Notes are distributed
to Holders of the Trust Securities of the Securities Trust in liquidation of
such Holders' interests therein, the Series D Notes will be issued in the form
of one or more Global Securities registered in the name of the Depositary (which
shall be The Depository Trust Company) or its nominee. Except under the limited
circumstances described below, Series D Notes represented by the Global Security
will not be exchangeable for, and will not otherwise be issuable as, Series D
Notes in definitive form. The Global Securities described above may not be
transferred except by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or to a successor Depositary or its nominee.
Owners of beneficial interests in such a Global Security will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing a Series D Note shall be exchangeable, except for
another Global Security of like denomination and tenor to be registered in the
name of the Depositary or its nominee or to a successor Depositary or its
nominee. The rights of Holders of such Global Security shall be exercised only
through the Depositary.
A Global Security shall be exchangeable for Series D Notes registered
in the names of persons other than the Depositary or its nominee only if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as a
Depositary for such Global Security and no successor Depositary shall have been
appointed, or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, at a time when
the Depositary is required to be so registered to act as such Depositary and no
successor Depositary shall have been appointed, (ii) the Company in its sole
discretion determines that such Global Security shall be so exchangeable, or
(iii) there shall have occurred an Event of Default with respect to the Series D
Notes. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Series D Notes registered in such names as
the Depositary shall direct.
SECTION 107. Transfer. No service charge will be made for any transfer
or exchange of Series D Notes, but payment will be required of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.
The Company shall not be required (a) to issue, transfer or exchange
any Series D Notes during a period beginning at the opening of business fifteen
(15) days before the day of the mailing of a notice identifying the serial
numbers of the Series D Notes to be called for redemption, and ending at the
close of business on the day of the mailing, or (b) to transfer or exchange any
Series D Notes theretofore selected for redemption in whole or in part, except
the unredeemed portion of any Series D Note redeemed in part.
SECTION 108. Redemption. The Series D Notes shall be subject to
redemption at the option of the Company, in whole or in part, without premium or
penalty, at any time or from time to time on or after _________, 2003, at a
Redemption Price equal to 100% of the principal amount to be redeemed plus
accrued but unpaid interest, including Additional Interest, if any, to the
Redemption Date; provided, however, that if a redemption in part shall result in
the delisting of the Preferred Securities issued by the Securities Trust, the
Company may only redeem the Series D Notes in whole. In addition, upon the
occurrence of a Special Event at any time, the Company may, within ninety (90)
days following the occurrence thereof and subject to the terms and conditions of
the Indenture, elect to redeem the Series D Notes, in whole, at a price equal to
100% of the principal amount to be redeemed plus any accrued but unpaid interest
(including Additional Interest) to the Redemption Date.
In the event of redemption of the Series D Notes in part only, a new
Series D Note or Notes for the unredeemed portion will be issued in the name or
names of the Holders thereof upon the surrender thereof.
The Series D Notes will not have a sinking fund.
Notice of redemption shall be given as provided in Section 1104 of the
Original Indenture.
Any redemption of less than all of the Series D Notes shall, with
respect to the principal thereof, be divisible by $25.
ARTICLE 2
Miscellaneous Provisions
SECTION 201. Recitals by Company. The recitals in this Second
Supplemental Indenture are made by the Company only and not by the Trustee, and
all of the provisions contained in the Original Indenture in respect of the
rights, privileges, immunities, powers and duties of the Trustee shall be
applicable in respect of Series D Notes and of this Second Supplemental
Indenture as fully and with like effect as if set forth herein in full.
SECTION 202. Ratification and Incorporation of Original Indenture. As
supplemented by the First Supplemental Indenture and as supplemented hereby, the
Original Indenture is in all respects ratified and confirmed, and the Original
Indenture, the First Supplemental Indenture and this Second Supplemental
Indenture shall be read, taken and construed as one and the same instrument.
SECTION 203. Executed in Counterparts. This Second Supplemental
Indenture may be simultaneously executed in several counterparts, each of which
shall be deemed to be an original, and such counterparts shall together
constitute but one and the same instrument.
SECTION 204. Listing of Notes. If the Series D Notes are to be issued
as a Global Security in connection with the distribution of the Series D Notes
to the Holders of the Preferred Securities issued by the Securities Trust, the
Company will use its best efforts to list such Series D Notes on the New York
Stock Exchange or any such other exchange on which such Preferred Securities are
then listed and traded.
<PAGE>
IN WITNESS WHEREOF, each party hereto has caused this
instrument to be signed in its name and behalf by its duly authorized officers,
all as of the day and year first above written.
SOUTHERN COMPANY
CAPITAL FUNDING, INC.
ATTEST:
By:____________________________ By:_____________________________
ATTEST: THE SOUTHERN COMPANY
By:____________________________ By:_____________________________
ATTEST: BANKERS TRUST COMPANY,
as Trustee
By:____________________________ By:_____________________________
<PAGE>
EXHIBIT A
FORM OF SERIES D NOTE
NO. 1 CUSIP NO.
THE INDEBTEDNESS EVIDENCED BY THIS SECURITY IS, TO THE EXTENT PROVIDED IN THE
INDENTURE, SUBORDINATE AND SUBJECT IN RIGHT OF PAYMENT TO THE PRIOR PAYMENT IN
FULL OF ALL SENIOR INDEBTEDNESS OF THE COMPANY AND THIS SECURITY IS ISSUED
SUBJECT TO THE PROVISIONS OF THE INDENTURE WITH RESPECT THERETO.
SOUTHERN COMPANY CAPITAL FUNDING, INC.
SERIES D _____% JUNIOR SUBORDINATED NOTE
DUE MARCH 31, 2038
Principal Amount: $____________
Regular Record Date: 15th calendar day prior to Interest Payment Date
Original Issue Date: ________, 1998
Stated Maturity: March 31, 2038
Interest Payment Dates: March 31, June 30, September 30 and December 31
Interest Rate: _______% per annum
Authorized Denomination: $25
Initial Redemption Date: ___________, 2003
Southern Company Capital Funding, Inc., a Delaware corporation (the
"Company", which term includes any successor corporation under the Indenture
referred to on the reverse hereof), for value received, hereby promises to pay
to _____________________________________, or registered assigns, the principal
sum of _________ DOLLARS ($__________) on the Stated Maturity shown above (or
upon earlier redemption), and to pay interest thereon from the Original Issue
Date shown above, or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, quarterly in arrears on each
Interest Payment Date as specified above, commencing on the Interest Payment
Date next succeeding the Original Issue Date shown above and on the Stated
Maturity (or upon earlier redemption) at the rate per annum shown above until
the principal hereof is paid or made available for payment and on any overdue
principal and on any overdue installment of interest. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date (other
than an Interest Payment Date that is the Stated Maturity or on a Redemption
Date) will, as provided in such Indenture, be paid to the Person in whose name
this Note (the "Note") is registered at the close of business on the Regular
Record Date as specified above next preceding such Interest Payment Date,
provided that any interest payable at Stated Maturity or on any Redemption Date
will be paid to the Person to whom principal is payable. Except as otherwise
provided in the Indenture, any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Note is
registered at the close of business on a Special Record Date for the payment of
such defaulted interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Notes of this series not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange, if any, on which
the Notes of this series shall be listed, and upon such notice as may be
required by any such exchange, all as more fully provided in the Indenture.
Payments of interest on this Note will include interest accrued to but
excluding the respective Interest Payment Dates. Interest payments for this Note
shall be computed and paid on the basis of a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on this Note is
not a Business Day, then payment of the interest payable on such date will be
made on the next succeeding day that is a Business Day, except that, if such
Business Day is in the next succeeding calendar year, payment shall be made on
the immediately preceding Business Day, in each case with the same force and
effect as if made on the date the payment was originally payable. A "Business
Day" shall mean any day other than a Saturday or a Sunday or a day on which
banking institutions in New York City are authorized or required by law or
executive order to remain closed or a day on which the Corporate Trust Office of
the Trustee or the principal corporate trust office of the Property Trustee of
the Securities Trust are closed for business.
The Company shall have the right at any time and from time to time
during the term of this Note to extend the interest payment period of such Note
for up to 20 consecutive quarters but not beyond the Stated Maturity of this
Note (each, an "Extension Period"), during which periods unpaid interest
(together with interest thereon) will compound quarterly at the Interest Rate
("Deferred Interest"). Upon the termination of each Extension Period, which
shall be an Interest Payment Date, the Company shall pay all Deferred Interest
on the next succeeding Interest Payment Date to the Person in whose name this
Note is registered at the close of business on the Regular Record Date for such
Interest Payment Date, provided that any Deferred Interest payable at Stated
Maturity or on any Redemption Date will be paid to the Person to whom principal
is payable. Prior to the termination of any such Extension Period, the Company
may extend the interest payment period, provided that such Extension Period
together with all such previous and further extensions thereof shall not exceed
20 consecutive quarters. Upon the termination of any such Extension Period, and
the payment of all accrued and unpaid interest and any Additional Interest then
due, the Company may select a new Extension Period, subject to the above
requirements. If the Company shall have given notice of its election to select
any Extension Period, subject to certain exceptions provided in the Indenture,
neither the Company nor the Guarantor referred to herein shall (i) declare or
pay any dividend or distribution on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock, or make any
guarantee payments with respect to the foregoing or (ii) make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by it that rank pari passu with or junior to this Note or
the Notes Guarantee referred to herein. The Company shall give the Holder of
this Note and the Trustee notice of its selection or extension of an Extension
Period at least one Business Day prior to the earlier of (i) the Regular Record
Date relating to the Interest Payment Date on which the Extension Period is to
commence or relating to the Interest Payment Date on which an Extension Period
that is being extended would otherwise terminate or (ii) the date the Company or
Securities Trust is required to give notice to the New York Stock Exchange or
other applicable self-regulatory organization of the record date or the date
distributions are payable.
The Company also shall be obligated to pay when due and without
extension all additional amounts as may be required so that the net amount
received and retained by the Holder of this Note (if the Holder is a Securities
Trust) after paying taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States or
any other taxing authority will not be less than the amounts such Holder would
have received had no such taxes, duties, assessments, or other governmental
charges been imposed.
Payment of the principal of and interest (including Additional
Interest, if any) due at the Stated Maturity or earlier redemption of the Series
D Notes shall be made upon surrender of the Series D Notes at the Corporate
Trust Office of the Trustee, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts. Payment of interest (including interest on an Interest Payment
Date) will be made, subject to such surrender where applicable, at the option of
the Company, (i) by check mailed to the address of the Person entitled thereto
as such address shall appear in the Security Register or (ii) by wire transfer
at such place and to such account at a banking institution in the United States
as may be designated in writing to the Trustee at least 16 days prior to the
date for payment by the Person entitled thereto.
The indebtedness evidenced by this Note is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior payment
in full of all Senior Indebtedness (as defined in the Indenture) of the Company,
and this Note is issued subject to the provisions of the Indenture with respect
thereto. Each Holder of this Note, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided, and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. Each Holder hereof, by his acceptance hereof, waives
all notice of the acceptance of the subordination provisions contained herein
and in the Indenture by each holder of Senior Indebtedness of the Company,
whether now outstanding or hereafter incurred, and waives reliance by each such
holder upon said provisions.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: ________ __, 19__.
SOUTHERN COMPANY CAPITAL
FUNDING, INC.
By:
Vice President
Attest:
Assistant Secretary
{Seal of SOUTHERN COMPANY CAPITAL FUNDING, INC. appears here}
NOTES GUARANTEE
FOR VALUE RECEIVED, THE SOUTHERN COMPANY, a corporation duly organized
and existing under the laws of the State of Delaware (the "Guarantor", which
term includes any successor Person under the Indenture referred to herein)
hereby irrevocably and unconditionally guarantees to the Holder of this Junior
Subordinated Note issued by Southern Company Capital Funding, Inc. (the
"Company"), pursuant to the terms of the Notes Guarantee contained in Article
XIV of the Indenture, the due and punctual payment of the principal of and
premium, if any, and interest (including Additional Interest) on this Junior
Subordinated Note, when and as the same shall become due and payable, whether at
the Stated Maturity, by declaration of acceleration, call for redemption or
otherwise, in accordance with the terms of this Junior Subordinated Note and the
Indenture.
The obligations of the Guarantor to the Holders of the Junior
Subordinated Notes and to the Trustee pursuant to the Notes Guarantee and the
Indenture are expressly set forth in Article XIV of the Indenture, and reference
is hereby made to such Article and Indenture for the precise terms of the Notes
Guarantee.
Notwithstanding anything to the contrary in this Notes Guarantee, all
payments in respect of the Notes Guarantee are subordinate and subject in right
of payment to the prior payment in full of all Senior Indebtedness (as defined
in the Indenture) of the Guarantor.
This Notes Guarantee shall be governed by and construed in accordance
with the laws of the State of New York.
The Notes Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Junior Subordinated Note upon
which this notation of the Notes Guarantee is endorsed shall have been executed
by the Trustee under the Indenture by the manual signature of one of its
authorized officers.
(SEAL) THE SOUTHERN COMPANY
Attest:
By:
Name:
Title
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By:
Authorized Officer
<PAGE>
(Reverse Side of Note)
This Note is one of a duly authorized issue of Junior Subordinated
Notes of the Company (the "Notes"), issued and issuable in one or more series
under a Subordinated Note Indenture, dated as of June 1, 1997, as supplemented
(the "Indenture"), among the Company, the Guarantor and Bankers Trust Company,
Trustee (the "Trustee," which term includes any successor trustee under the
Indenture), to which Indenture and all indentures incidental thereto reference
is hereby made for a statement of the respective rights, limitation of rights,
duties and immunities thereunder of the Company, the Guarantor, the Trustee and
the Holders of the Notes issued thereunder and of the terms upon which said
Notes are, and are to be, authenticated and delivered. This Note is one of the
series designated on the face hereof as Series D ______% Junior Subordinated
Notes due March 31, 2038 (the "Series D Notes") in the aggregate principal
amount of up to $206,186,000. Capitalized terms used herein for which no
definition is provided herein shall have the meanings set forth in the
Indenture.
The Company shall have the right, subject to the terms and conditions
of the Indenture, to redeem this Note at any time on or after _______, 2003, at
the option of the Company, without premium or penalty, in whole or in part, at a
Redemption Price equal to 100% of the principal amount to be redeemed plus any
accrued and unpaid interest, including Additional Interest, if any, to the
Redemption Date . Upon the occurrence of a Special Event (as defined below) at
any time, the Company may, within 90 days following the occurrence thereof and
subject to the terms and conditions of the Indenture, redeem this Note without
premium or penalty, in whole, at a Redemption Price equal to 100% of the
principal amount thereof plus any accrued and unpaid interest, including
Additional Interest, if any, to the Redemption Date. A Special Event may be a
Tax Event or an Investment Company Act Event. "Tax Event" means that the Company
shall have received an Opinion of Counsel experienced in such matters to the
effect that, as a result of (a) any amendment to, or change (including any
announced prospective change) in, laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein or (b) any amendment to, or change in, an interpretation or application
of such laws or regulations, there is more than an insubstantial risk that (i)
the related Securities Trust would be subject to United States federal income
tax with respect to income accrued or received on the Series D Notes, (ii)
interest payable on the Series D Notes would not be deductible by the Company
for United States federal income tax purposes, or (iii) the related Securities
Trust would be subject to more than a de minimis amount of other taxes, duties
or other governmental charges, which change or amendment becomes effective on or
after the Original Issue Date. "Investment Company Act Event" means that the
Company shall have received an Opinion of Counsel to the effect that, as a
result of the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the related Securities Trust is or will be considered an
"investment company" which is required to be registered under the Investment
Company Act of 1940, as amended, which change becomes effective on or after the
Original Issue Date.
In the event of redemption of this Note in part only, a new Note or
Notes of this series for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the surrender hereof. The Notes will not have a
sinking fund.
If an Event of Default with respect to the Notes of this series shall
occur and be continuing, the principal of the Notes of this series may be
declared 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 Guarantor and the rights of the Holders of the Notes of each
series to be affected under the Indenture at any time by the Company, the
Guarantor and the Trustee with the consent of the Holders of not less than a
majority in principal amount of the Notes of each series at the time Outstanding
of each series to be affected. The Indenture also contains provisions permitting
the Holders of specified percentages in principal amount of the Notes at the
time Outstanding, on behalf of the Holders of all Notes of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. 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 hereof or in lieu hereof, whether
or not notation of such consent or waiver is made upon this Note.
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 times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Security Register,
upon surrender of this Note for registration of transfer at the office or agency
of the Company for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar and duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes of this series, of
authorized denominations and of like tenor and for the same aggregate principal
amount, will be issued to the designated transferee or transferees. No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor
or the Trustee may treat the Person in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Company, the Guarantor, the Trustee nor any such agent shall be affected by
notice to the contrary.
The Notes of this series are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof. As provided
in the Indenture and subject to certain limitations therein set forth, Notes of
this series are exchangeable for a like aggregate principal amount of Notes of
this series of a different authorized denomination, as requested by the Holder
surrendering the same upon surrender of the Note or Notes to be exchanged at the
office or agency of the Company.
This Note shall be governed by, and construed in accordance with, the
internal laws of the State of New York.
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
<PAGE>
TEN COM- as tenants in UNIF GIFT MIN ACT- _______ Custodian ________
common (Cust) (Minor)
TEN ENT- as tenants by the
entireties under Uniform Gifts to
JT TEN- as joint tenants Minors Act
with right of
survivorship and ________________________
not as tenants (State)
in common
Additional abbreviations may also be used
though not on the above list.
FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto
(please insert Social Security or other identifying number of assignee)
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
agent to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated:
NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of the
within instrument in every
particular without alteration or
enlargement, or any change whatever.
<PAGE>
EXHIBIT B
CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
BANKERS TRUST COMPANY,
as Trustee
By:
Authorized Officer
EXHIBIT 4.4
CERTIFICATE OF TRUST
OF
SOUTHERN COMPANY CAPITAL TRUST IV
THIS CERTIFICATE OF TRUST of Southern Company Capital Trust IV (the
"Trust"), dated March 16, 1998, is being duly executed and filed by the
undersigned, as trustee of the Trust, to form a business trust under the
Delaware Business Trust Act (12 Del. C. Section 3801, et seq.).
1. Name. The name of the business trust being formed hereby is
Southern Company Capital Trust IV.
2. Delaware Trustee. The name and business address of the trustee of
the Trust with a principal place of business in the State of Delaware are
Bankers Trust (Delaware), E.A. Delle Donne Corporate Center, Montgomery
Building, 1011 Centre Road, Suite 200, Wilmington, Delaware 19805-1266.
3. Effective Date. This Certificate of Trust shall be effective as
of its filing.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
BANKERS TRUST (DELAWARE), not in its
individual capacity but solely as Delaware Trustee
By:
Name: M. Lisa Wilkins
Title: Assistant Secretary
EXHIBIT 4.5
TRUST AGREEMENT
THIS TRUST AGREEMENT is made as of March 16, 1998, by and between
Southern Company Capital Funding, Inc., a Delaware corporation, as Depositor
(the "Depositor"), and Bankers Trust (Delaware), duly organized and existing in
the State of Delaware, as Trustee (the "Trustee"). The Depositor and the Trustee
hereby agree as follows:
1. The trust created hereby shall be known as "Southern Company Capital
Trust IV", in which name the Trustee, or the Depositor to the extent provided
herein, may conduct the business of the Trust, make and execute contracts, and
sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trustee the sum of $10. The Trustee hereby acknowledges receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustee hereby declares that it will hold the trust estate in
trust for the Depositor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. ss. 3801, et seq. (the "Business Trust Act"), and
that this document constitute the governing instrument of the Trust. The Trustee
is hereby authorized and directed to execute and file a certificate of trust
with the Delaware Secretary of State substantially in the form attached hereto
or in such other form as the Trustee may approve.
3. The Depositor and the Trustee will enter into an amended and
restated Trust Agreement satisfactory to each such party and substantially in
the form included as an exhibit to the Registration Statement on Form S-3 (the
"1933 Act Registration Statement") referred to below, or in such other form as
the Trustee and the Depositor may approve, to provide for the contemplated
operation of the Trust created hereby and the issuance of the Preferred
Securities and Common Securities referred to therein. Prior to the execution and
delivery of such amended and restated Trust Agreement, the Trustee shall not
have any duty or obligation hereunder or with respect to the trust estate,
except as otherwise required by applicable law or as may be necessary to obtain
prior to such execution and delivery any licenses, consents or approvals
required by applicable law or otherwise. However, notwithstanding the foregoing,
the Trustee may take all actions deemed proper as are necessary to effect the
transactions contemplated herein.
4. The Depositor and the Trustee hereby authorize and direct the
Depositor, as the sponsor of the Trust, (i) to file with the Securities and
Exchange Commission (the "Commission") and execute, in the case of the 1933 Act
Registration Statement and 1934 Act Registration Statement (as herein defined),
on behalf of the Trust, (a) the 1933 Act Registration Statement including
pre-effective or post-effective amendments to such Registration Statement,
relating to the registration under the Securities Act of 1933, as amended (the
"1933 Act"), of the Preferred Securities of the Trust, (b) any preliminary
prospectus or prospectus or supplement thereto relating to the Preferred
Securities required to be filed pursuant to Rule 424 under the 1933 Act, and (c)
a Registration Statement on Form 8-A or other appropriate form (the "1934 Act
Registration Statement") (including all pre-effective and post-effective
<PAGE>
amendments thereto) relating to the registration of the Preferred Securities of
the Trust under Section 12(b) of the Securities Exchange Act of 1934, as
amended; (ii) to file with the New York Stock Exchange and execute on behalf of
the Trust a listing application and all other applications, statements,
certificates, agreements and other instruments as shall be necessary or
desirable to cause the Preferred Securities to be listed on the New York Stock
Exchange; (iii) to file and execute on behalf of the Trust such applications,
reports, surety bonds, irrevocable consents, appointments of attorney for
service of process and other papers and documents as shall be necessary or
desirable to register the Preferred Securities under the securities or "Blue
Sky" laws of such jurisdictions as the Depositor, on behalf of the Trust, may
deem necessary or desirable; and (iv) to execute, deliver and perform on behalf
of the Trust an underwriting agreement with the Depositor and the underwriter or
underwriters of the Preferred Securities of the Trust. The Trustee further
hereby ratifies and approves all actions having previously been taken with
respect to the foregoing. In the event that any filing referred to in clauses
(i)-(iii) above is required by the rules and regulations of the Commission, the
New York Stock Exchange or state securities or Blue Sky laws to be executed on
behalf of the Trust by the Trustee, Bankers Trust (Delaware), in its capacity as
Trustee of the Trust, is hereby authorized and directed to join in any such
filing and to execute on behalf of the Trust any and all of the foregoing, it
being understood that Bankers Trust (Delaware) in its capacity as Trustee of the
Trust shall not be required to join in any such filing or execute on behalf of
the Trust any such document unless required by the rules and regulations of the
Commission, the New York Stock Exchange or state securities or Blue Sky laws.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of Trustees initially shall be one (1) and thereafter the
number of Trustees shall be such number as shall be fixed from time to time by a
written instrument signed by the Depositor which may increase or decrease the
number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware. Subject to the
foregoing the Depositor is entitled to appoint or remove without cause any
Trustee at any time. Any Trustee may resign upon thirty days' prior notice to
the Depositor.
7.This Trust Agreement shall be construed in accordance with and
governed by the internal laws of the State of Delaware.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed as of the day and year first above written.
SOUTHERN COMPANY CAPITAL
FUNDING, INC.,
as Depositor
By:
Name: Richard A. Childs
Title: Assistant Secretary
BANKERS TRUST (DELAWARE),
not in its individual capacity
but solely as Trustee
By:
Name: M. Lisa Wilkins
Title: Assistant Secretary
3
Exhibit 4.6
SOUTHERN COMPANY CAPITAL TRUST IV
AMENDED AND RESTATED
TRUST AGREEMENT
among
SOUTHERN COMPANY CAPITAL FUNDING, INC., as Depositor,
BANKERS TRUST COMPANY, as Property Trustee,
BANKERS TRUST (DELAWARE), as Delaware Trustee,
and
WAYNE BOSTON AND RICHARD A. CHILDS,
as Administrative Trustees
Dated as of ___________ 1, 1998
<PAGE>
SOUTHERN COMPANY CAPITAL TRUST IV
Certain Sections of this Trust Agreement relating
to Sections 310 through 318 of the Trust Indenture
Act of 1939:
Trust Indenture Act Section Trust Agreement Section
Section 310(a)(1)...................................................8.07
(a)(2).....................................................8.07
(a)(3).....................................................8.09
(a)(4)...........................................Not Applicable
(b)........................................................8.08
Section 311(a)......................................................8.13
(b)........................................................8.13
Section 312(a)......................................................5.07
(b)........................................................5.07
(c)........................................................5.07
Section 313(a)...................................................8.14(a)
(a)(4)..................................................8.14(b)
(b).....................................................8.14(b)
(c).....................................................8.14(a)
(d)............................................8.14(a), 8.14(b)
Section 314(a)......................................................8.15
(b)..............................................Not Applicable
(c)(1)...............................................8.15, 8.16
(c)(2).....................................................8.16
(c)(3).....................................................8.16
(d)..............................................Not Applicable
(e)........................................................8.16
Section 315(a)......................................................8.01
(b)...............................................8.02, 8.14(b)
(c).....................................................8.01(a)
(d)..................................................8.01, 8.03
(e)..............................................Not Applicable
Section 316(a)............................................Not Applicable
(a)(1)(A)..................................................8.19
(a)(1)(B)..................................................8.19
(a)(2)...........................................Not Applicable
(b)..............................................Not Applicable
(c)..............................................Not Applicable
Section 317(a)(1).........................................Not Applicable
(a)(2)...........................................Not Applicable
(b)........................................................5.09
Section 318(a).....................................................10.10
Note: This Cross-Reference Table does not constitute part of the Trust Agreement
and shall not affect the interpretation of any of its terms and provisions.
<PAGE>
TABLE OF CONTENTS
ARTICLE I.........................................................2
Section 1.01 Definitions..........................................2
ARTICLE II.......................................................10
Section 2.01 Name................................................10
Section 2.02 Offices of the Trustees; Principal Place of
Business................................................10
Section 2.03 Initial Contribution of Trust Property;
Organizational Expenses.................................10
Section 2.04 Issuance of the Preferred Securities................10
Section 2.05 Subscription and Purchase of Junior
Subordinated Notes; Issuance of the Common
Securities..............................................11
Section 2.06 Declaration of Trust................................11
Section 2.07 Authorization to Enter into Certain
Transactions............................................11
Section 2.08 Assets of Trust.....................................15
Section 2.09 Title to Trust Property.............................15
Section 2.10 Mergers and Consolidations of the Trust.............15
ARTICLE III......................................................17
Section 3.01 Payment Account.....................................17
ARTICLE IV.......................................................17
Section 4.01 Distributions.......................................17
Section 4.02 Redemption..........................................18
Section 4.03 Subordination of Common Securities..................20
Section 4.04 Payment Procedures..................................21
Section 4.05 Tax Returns and Reports.............................21
ARTICLE V........................................................21
Section 5.01 Initial Ownership...................................21
Section 5.02 The Trust Securities Certificates...................21
Section 5.03 Authentication of Trust Securities Certificates.....21
Section 5.04 Registration of Transfer and Exchange of
Preferred Securities Certificates.......................22
Section 5.05 Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates.................................22
Section 5.06 Persons Deemed Securityholders......................23
Section 5.07 Access to List of Securityholders' Names and
Addresses...............................................23
Section 5.08 Maintenance of Office or Agency.....................24
Section 5.09 Appointment of Paying Agent.........................24
Section 5.10 Ownership of Common Securities by Depositor.........24
Section 5.11 Book-Entry Preferred Securities Certificates;
Common Securities Certificate...........................25
Section 5.12 Notices to Clearing Agency..........................25
Section 5.13 Definitive Preferred Securities Certificates........26
Section 5.14 Rights of Securityholders...........................26
ARTICLE VI.......................................................26
Section 6.01 Limitations on Voting Rights........................26
Section 6.02 Notice of Meetings..................................28
Section 6.03 Meetings of Preferred Securityholders...............28
Section 6.04 Voting Rights.......................................28
Section 6.05 Proxies, etc........................................28
Section 6.06 Securityholder Action by Written Consent............29
Section 6.07 Record Date for Voting and Other Purposes...........29
Section 6.08 Acts of Securityholders.............................29
Section 6.09 Inspection of Records...............................30
ARTICLE VII......................................................30
Section 7.01 Representations and Warranties of the Trustees......30
ARTICLE VIII.....................................................31
Section 8.01 Certain Duties and Responsibilities.................32
Section 8.02 Notice of Defaults..................................32
Section 8.03 Certain Rights of Property Trustee..................32
Section 8.04 Not Responsible for Recitals or Issuance of
Securities..............................................33
Section 8.05 May Hold Securities.................................34
Section 8.06 Compensation; Fees; Indemnity.......................34
Section 8.07 Trustees Required; Eligibility......................34
Section 8.08 Conflicting Interests...............................35
Section 8.09 Co-Trustees and Separate Trustee....................35
Section 8.10 Resignation and Removal; Appointment of
Successor...............................................36
Section 8.11 Acceptance of Appointment by Successor..............38
Section 8.12 Merger, Conversion, Consolidation or
Succession to Business..................................38
Section 8.13 Preferential Collection of Claims Against
Depositor or Trust......................................38
Section 8.14 Reports by Property Trustee.........................39
Section 8.15 Reports to the Property Trustee.....................39
Section 8.16 Evidence of Compliance with Conditions
Precedent...............................................39
Section 8.17 Number of Trustees..................................39
Section 8.18 Delegation of Power.................................40
Section 8.19 Enforcement of Rights of Property Trustee by
Securityholders.........................................40
ARTICLE IX.......................................................41
Section 9.01 Termination Upon Expiration Date....................41
Section 9.02 Early Termination...................................41
Section 9.03 Termination.........................................41
Section 9.04 Liquidation.........................................42
Section 9.05 Bankruptcy..........................................43
ARTICLE X........................................................43
Section 10.01 Expense Agreement..................................43
Section 10.02 Limitation of Rights of Securityholders............43
Section 10.03 Amendment..........................................43
Section 10.04 Separability.......................................45
Section 10.05 Governing Law......................................45
Section 10.06 Successors.........................................45
Section 10.07 Headings...........................................45
Section 10.08 Notice and Demand..................................45
Section 10.09 Agreement Not to Petition..........................46
Section 10.10 Conflict with Trust Indenture Act..................46
EXHIBIT A [INTENTIONALLY RESERVED]
EXHIBIT B [INTENTIONALLY RESERVED]
EXHIBIT C Form of Common Securities Certificate
EXHIBIT D Form of Expense Agreement
EXHIBIT E Form of Preferred Securities Certificate
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT
THIS AMENDED AND RESTATED TRUST AGREEMENT is made as of ________ 1,
1998, by and among (i) Southern Company Capital Funding, Inc., a Delaware
corporation (the "Depositor" or the "Company"), (ii) Bankers Trust Company, a
banking corporation duly organized and existing under the laws of New York, as
trustee (the "Property Trustee" and, in its separate corporate capacity and not
in its capacity as Property Trustee, the "Bank"), (iii) Bankers Trust
(Delaware), a banking corporation duly organized under the laws of Delaware, as
Delaware trustee (the "Delaware Trustee" and, in its separate corporate capacity
and not in its capacity as Delaware Trustee, the "Delaware Bank"), (iv) Wayne
Boston, an individual, and Richard A. Childs, an individual, as administrative
trustees (each an "Administrative Trustee" and together the "Administrative
Trustees") (the Property Trustee, the Delaware Trustee and the Administrative
Trustees referred to collectively as the "Trustees") and (v) the several
Holders, as hereinafter defined.
WITNESSETH:
WHEREAS, the Depositor and the Delaware Trustee have heretofore duly
declared and established a business trust pursuant to the Delaware Business
Trust Act by the entering into that certain Trust Agreement, dated as of March
16, 1998 (the "Original Trust Agreement"), by the execution by the Delaware
Trustee of the Certificate of Trust, dated March 16, 1998, and by the filing of
such Certificate with the Secretary of State of the State of Delaware on March
17,1998; and
WHEREAS, the parties hereto desire to amend and restate the Original
Trust Agreement in its entirety as set forth herein to provide for, among other
things, (i) the addition of the Bank, Wayne Boston and Richard A. Childs as
trustees of the Trust, (ii) the acquisition by the Trust from the Depositor of
all of the right, title and interest in the Junior Subordinated Notes, (iii) the
issuance of the Common Securities by the Trust to the Depositor, and (iv) the
issuance and sale of the Preferred Securities by the Trust pursuant to the
Underwriting Agreement.
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, each party, for the benefit of the other parties
and for the benefit of the Securityholders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees as follows:
ARTICLE I
Defined Terms
Section 1.01 Definitions. For all purposes of this Trust Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;
(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Trust Agreement; and
(d) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.08.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, an amount equal to the Additional
Interest (as defined in clause (ii) of the definition of "Additional Interest"
in the Subordinated Indenture) paid by the Depositor on a Like Amount of Junior
Subordinated Notes for such period.
"Administrative Trustee" means each of the individuals identified as an
"Administrative Trustee" in the preamble to this Trust Agreement solely in their
capacities as Administrative Trustees of the Trust formed and continued
hereunder and not in their individual capacities, or such trustee's successor(s)
in interest in such capacity, or any successor "Administrative Trustee"
appointed as herein provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Bankruptcy Event" means, with respect to any Person:
(i) the entry of a decree or order by a court having
jurisdiction in the premises judging such Person a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjudication or composition of or in
respect of such Person under federal bankruptcy law or any other
applicable federal or state law, or appointing a receiver, liquidator,
assignee, trustee, sequestrator or other similar official of such
Person or of any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and the continuance of such
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(ii) the institution by such Person of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under federal bankruptcy law or any other applicable federal
or state law, or the consent by it to the filing of such petition or to
the appointment of a receiver, liquidator, assignee, trustee,
sequestrator or similar official of such Person or of any substantial
part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking
of action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.09.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board of Directors or a duly authorized committee thereof and
to be in full force and effect on the date of such certification, and delivered
to the Trustees.
"Book-Entry Preferred Securities Certificates" means certificates
representing Preferred Securities issued in global, fully registered form to the
Clearing Agency as described in Section 5.11.
"Business Day" means a day other than (i) a Saturday or a Sunday, (ii)
a day on which banks in New York, New York are authorized or obligated by law or
executive order to remain closed or (iii) a day on which the Corporate Trust
Office or the Indenture Trustee's principal corporate trust office is closed for
business.
"Certificate Depository Agreement" means the agreement among the Trust,
the Property Trustee and The Depository Trust Company, as the initial Clearing
Agency, dated __________, 1998, relating to the Preferred Securities
Certificates, as the same may be amended and supplemented from time to time.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The Depository Trust Company will be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Securities Exchange Act of 1934, or, if
at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Security" means an undivided beneficial ownership interest in
the assets of the Trust having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
ownership of a Common Security or Securities, substantially in the form attached
as Exhibit C.
"Company" means Southern Company Capital Funding, Inc., a Delaware
corporation, its successors and assigns.
"Corporate Trust Office" means the office of the Property Trustee at
which its corporate trust business shall be principally administered.
"Definitive Preferred Securities Certificates" means either or both (as
the context requires) of (i) Preferred Securities Certificates issued in
certificated, fully registered form as provided in Section 5.11(a) and (ii)
Preferred Securities Certificates issued in certificated, fully registered form
as provided in Section 5.13.
"Delaware Bank" has the meaning specified in the preamble to this Trust
Agreement.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from time
to time.
"Delaware Trustee" means the commercial bank or trust company or any
other Person identified as the "Delaware Trustee" and has the meaning specified
in the preamble to this Trust Agreement solely in its capacity as Delaware
Trustee of the Trust formed and continued hereunder and not in its individual
capacity, or its successor in interest in such capacity, or any successor
Delaware Trustee appointed as herein provided.
"Depositor" means Southern Company Capital Funding, Inc., a Delaware
corporation, in its capacity as "Depositor" under this Trust Agreement, its
successors and assigns.
"Distribution Date" has the meaning specified in Section 4.01(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.01.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of an Indenture Event of Default; or
(ii) default by the Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, of any covenant or
warranty of the Trustees in this Trust Agreement (other than a covenant
or warranty a default in whose performance or breach is dealt with in
clause (ii) or (iii) above) and continuation of such default or breach
for a period of 60 days after there has been given, by registered or
certified mail, to the Trustees by the Holders of at least 10% in
Liquidation Amount of the Outstanding Preferred Securities a written
notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(v) the occurrence of a Bankruptcy Event with respect to the
Trust.
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Guarantor and the Trust, substantially in the form attached as
Exhibit D, as amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Guarantee" means the Preferred Securities Guarantee Agreement executed
and delivered by the Guarantor and Bankers Trust Company, as Guarantee Trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the Holders of the Preferred Securities, as amended from time to
time.
"Guarantor" means The Southern Company, a Delaware corporation, its
successors and assigns.
"Indenture Event of Default" means an "Event of Default" as defined in
the Subordinated Indenture.
"Indenture Redemption Date" means "Redemption Date," as defined in the
Subordinated Indenture.
"Indenture Trustee" means the trustee under the Subordinated Indenture.
"Issue Date" means the date of the delivery of the Trust Securities.
"Junior Subordinated Notes" means the $206,186,000 aggregate principal
amount of the Depositor's Series D _______% Junior Subordinated Notes due March
31, 2038, issued pursuant to the Subordinated Indenture.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (i) Trust Securities having a Liquidation Amount
equal to the principal amount of Junior Subordinated Notes to be
contemporaneously redeemed in accordance with the Subordinated Indenture and the
proceeds of which will be used to pay the Redemption Price of such Trust
Securities and (ii) Junior Subordinated Notes having a principal amount equal to
the Liquidation Amount of the Trust Securities of the Holder to whom such Junior
Subordinated Notes are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Junior Subordinated Notes
are to be distributed to Holders of Trust Securities in connection with a
dissolution and liquidation of the Trust pursuant to Section 9.04.
"Liquidation Distribution" has the meaning specified in Section 9.05.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the President or a Vice President, and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Depositor, and delivered to the appropriate Trustee. One of
the officers signing an Officers' Certificate given pursuant to Section 8.16
shall be the principal executive, financial or accounting officer of the
Depositor. An Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as is necessary, in such officer's
opinion, to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Trust, the Trustees, the Guarantor or the Depositor, but not an
employee of the Trust or the Trustees, and who shall be reasonably acceptable to
the Property Trustee. Any Opinion of Counsel pertaining to federal income tax
matters may rely on published rulings of the Internal Revenue Service.
"Original Trust Agreement" has the meaning specified in the recitals to
this Trust Agreement.
"Outstanding", when used with respect to Preferred Securities, means,
as of the date of determination, all Preferred Securities theretofore
authenticated and delivered under this Trust Agreement, except:
(i) Preferred Securities theretofore canceled by the
Administrative Trustees or delivered to the Administrative Trustees for
cancellation;
(ii) Preferred Securities for whose payment or redemption
money in the necessary amount has been theretofore deposited with the
Property Trustee or any Paying Agent for the Holders of such Preferred
Securities; provided that if such Preferred Securities are to be
redeemed, notice of such redemption has been duly given pursuant to
this Trust Agreement; and
(iii) Preferred Securities in exchange for or in lieu of which
other Preferred Securities have been authenticated and delivered
pursuant to this Trust Agreement;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Preferred Securities owned by the Depositor, the Holder of the Common
Securities, the Guarantor, any Administrative Trustee or any Affiliate of the
Depositor, the Guarantor or any Administrative Trustee shall be disregarded and
deemed not to be Outstanding, except that (a) in determining whether any Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Preferred Securities which such
Trustee knows to be so owned shall be so disregarded and (b) the foregoing shall
not apply at any time when all of the outstanding Preferred Securities are owned
by the Depositor, the Holder of the Common Securities, the Guarantor, one or
more Administrative Trustees and/or any such Affiliate. Preferred Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Administrative Trustees the
pledgee's right so to act with respect to such Preferred Securities and that the
pledgee is not the Depositor, the Guarantor or any Affiliate of the Depositor or
the Guarantor.
"Owner" means each Person who is the beneficial owner of a Book-Entry
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as reflected
in the records of a Person maintaining an account with such Clearing Agency
(directly or indirectly, in accordance with the rules of such Clearing Agency).
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.09 and shall initially be the Property Trustee.
"Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee for the benefit of the
Securityholders in which all amounts paid in respect of the Junior Subordinated
Notes will be held and from which the Property Trustee shall make payments to
the Securityholders in accordance with Section 4.01.
"Person" means an individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial ownership interest
in the assets of the Trust having a Liquidation Amount of $25 and having rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate evidencing
ownership of a Preferred Security or Securities, substantially in the form
attached as Exhibit E.
"Property Trustee" means the commercial bank or trust company
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust formed and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor "Property Trustee" as herein provided.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Indenture Redemption Date shall be a Redemption
Date for a Like Amount of Trust Securities.
"Redemption Price" means, with respect to any date fixed for redemption
of any Trust Security, the Liquidation Amount of such Trust Security, plus
accrued and unpaid Distributions to such date.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Securities Register" and "Securities Registrar" are described in
Section 5.04.
"Securityholder" or "Holder" means a Person in whose name a Trust
Security or Securities is registered in the Securities Register; any such Person
is a beneficial owner within the meaning of the Delaware Business Trust Act.
"Subordinated Indenture" means the Subordinated Note Indenture, dated
as of June 1, 1997, among the Depositor, the Guarantor and the Indenture
Trustee, as heretofore supplemented and as supplemented by the Supplemental
Indenture.
"Supplemental Indenture" means the Second Supplemental Indenture, dated
as of ____________, 1998, by and among the Depositor, the Guarantor and the
Indenture Trustee.
"Trust" means the Delaware business trust continued hereby and
identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for all
purposes of this Amended and Restated Trust Agreement and any modification,
amendment or supplement, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this Amended and Restated Trust Agreement and
any such modification, amendment or supplement, respectively.
"Trustees" means the Persons identified as "Trustees" in the preamble
to this Trust Agreement solely in their capacities as Trustees of the Trust
formed and continued hereunder and not in their individual capacities, or their
successor in interest in such capacity, or any successor trustee appointed as
herein provided.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trust Property" means (i) the Junior Subordinated Notes, (ii) any cash
on deposit in, or owing to, the Payment Account, and (iii) all proceeds and
rights in respect of the foregoing and any other property and assets for the
time being held or deemed to be held by the Property Trustee pursuant to this
Trust Agreement.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Underwriting Agreement" means the Underwriting Agreement, dated
_______, 1998, among the Depositor, the Guarantor, the Trust and the
Underwriters named therein.
ARTICLE II
Establishment of the Trust
Section 2.01 Name. The Trust continued hereby shall be known as
"Southern Company Capital Trust IV", in which name the Trustees may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued. The Administrative Trustees may change
the name of the Trust from time to time following written notice to the Holders.
Section 2.02 Offices of the Trustees; Principal Place of Business. The
address of the Property Trustee is Bankers Trust Company, Four Albany Street,
New York, New York 10006, or at such other address as the Property Trustee may
designate by written notice to the Securityholders, the Depositor and the
Guarantor. The principal place of business of the Delaware Trustee is E.A. Delle
Donne Corporate Center, Montgomery Building, 1011 Centre Road, Suite 200,
Wilmington, Delaware 19805-1266, or at such other address in Delaware as the
Delaware Trustee may designate by notice to the Depositor and the Guarantor. The
address of the Administrative Trustees is c/o The Southern Company, 270
Peachtree Street, N.W., Atlanta, Georgia 30303, Attention: Secretary. The
principal place of business of the Trust is c/o The Southern Company, 270
Peachtree Street, N.W., Atlanta, Georgia 30303. The Depositor may change the
principal place of business of the Trust at any time by giving notice thereof to
the Trustees.
Section 2.03 Initial Contribution of Trust Property; Organizational
Expenses. The Delaware Trustee acknowledges receipt in trust from the Depositor
in connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust Property. The Depositor shall pay organizational
expenses of the Trust as they arise or shall, upon request of the Trustees,
promptly reimburse the Trustees for any such expenses paid by the Trustees. The
Depositor shall make no claim upon the Trust Property for the payment of such
expenses.
Section 2.04 Issuance of the Preferred Securities. Contemporaneously
with the execution and delivery of this Trust Agreement, the Administrative
Trustees, on behalf of the Trust, shall execute and deliver to the underwriters
named in the Underwriting Agreement Preferred Securities Certificates,
registered in the name of the nominee of the initial Clearing Agency, in an
aggregate amount of 8,000,000 Preferred Securities having an aggregate
Liquidation Amount of $200,000,000, against receipt of the aggregate purchase
price of such Preferred Securities of $200,00,000, which amount the
Administrative Trustees shall promptly deliver to the Property Trustee.
Section 2.05 Subscription and Purchase of Junior Subordinated Notes;
Issuance of the Common Securities. Contemporaneously with the execution and
delivery of this Trust Agreement, the Administrative Trustees, on behalf of the
Trust, shall execute and deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount of
227,440 Common Securities having an aggregate Liquidation Amount of $6,186,000,
against payment by the Depositor of such amount. Contemporaneously therewith,
the Administrative Trustees, on behalf of the Trust, shall subscribe to and
purchase from the Depositor Junior Subordinated Notes, registered in the name of
the Property Trustee, on behalf of the Trust and the Holders, and having an
aggregate principal amount equal to $206,186,000, and, in satisfaction of the
purchase price for such Junior Subordinated Notes, the Property Trustee, on
behalf of the Trust, shall deliver to the Depositor the sum of $206,186,000.
Section 2.06 Declaration of Trust. The exclusive purposes and functions
of the Trust are (i) to issue and sell the Trust Securities and use the proceeds
from such sale to acquire the Junior Subordinated Notes, and (ii) to engage in
those activities necessary, incidental, appropriate or convenient thereto. The
Depositor hereby appoints each of the Bank, the Delaware Bank, Wayne Boston and
Richard A. Childs as trustees of the Trust, to have all the rights, powers and
duties to the extent set forth herein. The Property Trustee hereby declares that
it will hold the Trust Property in trust upon and subject to the conditions set
forth herein for the benefit of the Trust and the Securityholders. The Trustees
shall have all rights, powers and duties set forth herein and in accordance with
applicable law with respect to accomplishing the purposes of the Trust. The
Delaware Trustee shall not be entitled to exercise any powers, nor shall the
Delaware Trustee have any of the duties and responsibilities, of the Property
Trustee or the Administrative Trustees set forth herein. The Delaware Trustee
shall be one of the Trustees for the sole and limited purpose of fulfilling the
requirements of the Delaware Business Trust Act.
Section 2.07 Authorization to Enter into Certain Transactions. The
Trustees shall conduct the affairs of the Trust in accordance with the terms of
this Trust Agreement. Subject to the limitations set forth in paragraph C of
this Section, and in accordance with the following paragraphs A and B, the
Trustees shall have the authority to enter into all transactions and agreements
determined by the Trustees to be appropriate in exercising the authority,
express (in the case of the Property Trustee) or implied, otherwise granted to
the Trustees under this Trust Agreement, and to perform all acts in furtherance
thereof, including without limitation, the following:
A. As among the Trustees, the Administrative Trustees, acting singly or
jointly, shall have the exclusive power, duty and authority to act on behalf of
the Trust with respect to the following matters:
(i) to acquire the Junior Subordinated Notes with the proceeds
of the sale of the Trust Securities; provided, however, the
Administrative Trustees shall cause legal title to all of the Junior
Subordinated Notes to be vested in, and the Junior Subordinated Notes
to be held of record in the name of, the Property Trustee for the
benefit of the Trust and Holders of the Trust Securities;
(ii) to give the Depositor and the Property Trustee prompt
written notice of the occurrence of any Special Event (as defined in
the Supplemental Indenture) and to take any ministerial actions in
connection therewith; provided, that the Administrative Trustees shall
consult with the Depositor and the Property Trustee before taking or
refraining to take any ministerial action in relation to a Special
Event;
(iii) to establish a record date with respect to all actions
to be taken hereunder that require a record date be established,
including for the purposes of ss. 316(c) of the Trust Indenture Act and
with respect to Distributions, voting rights, redemptions, and
exchanges, and to issue relevant notices to Holders of the Trust
Securities as to such actions and applicable record dates;
(iv) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or
against the Trust ("Legal Action"), unless pursuant to Section
2.07(B)(v), the Property Trustee has the power to bring such Legal
Action;
(v) to employ or otherwise engage employees and agents (who
may be designated as officers with titles) and managers, contractors,
advisors, and consultants and pay reasonable compensation for such
services;
(vi) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(vii) to give the certificate to the Property Trustee required
by ss. 314(a)(4) of the Trust Indenture Act, which certificate may be
executed by any Administrative Trustee;
(viii) to take all actions and perform such duties as may be
required of the Administrative Trustees pursuant to the terms of this
Trust Agreement;
(ix) to take all action that may be necessary or appropriate
for the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory business
trust under the laws of the State of Delaware and of each other
jurisdiction in which such existence is necessary to protect the
limited liability of the Holders of the Trust Securities or to enable
the Trust to effect the purposes for which the Trust has been created;
(x) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with
respect to the Trust to be duly prepared and filed by the
Administrative Trustees, on behalf of the Trust;
(xi) to issue and sell the Trust Securities;
(xii) to cause the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, the Expense Agreement and
the Certificate Depository Agreement and such other agreements as may
be necessary or desirable in connection with the consummation hereof;
(xiii) to assist in the registration of the Preferred
Securities under the Securities Act of 1933, as amended, and under
state securities or blue sky laws, and the qualification of this Trust
Agreement as a trust indenture under the Trust Indenture Act;
(xiv) to assist in the listing of the Preferred Securities
upon such securities exchange or exchanges, if any, as shall be
determined by the Depositor and, if required, the registration of the
Preferred Securities under the Exchange Act, and the preparation and
filing of all periodic and other reports and other documents pursuant
to the foregoing;
(xv) to send notices (other than notices of default) and other
information regarding the Trust Securities and the Junior Subordinated
Notes to the Securityholders in accordance with this Trust Agreement;
(xvi) to appoint a Paying Agent (subject to Section 5.09),
authenticating agent and Securities Registrar in accordance with this
Trust Agreement;
(xvii) to register transfers of the Trust Securities in
accordance with this Trust Agreement;
(xviii) to assist in, to the extent provided in this Trust
Agreement, the winding up of the affairs of and termination of the
Trust and the preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of Delaware; and
(xix) to take any action incidental to the foregoing as the
Administrative Trustees may from time to time determine is necessary,
appropriate, convenient or advisable to protect and conserve the Trust
Property for the benefit of the Securityholders (without consideration
of the effect of any such action on any particular Securityholder).
B. The Property Trustee shall:
(i) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Trust
Securities to the extent the Junior Subordinated Notes are redeemed or
mature;
(ii) upon notice of distribution issued by the Administrative
Trustees in accordance with the terms of this Trust Agreement, engage
in such ministerial activities as shall be necessary or appropriate to
effect the distribution pursuant to terms of this Trust Agreement of
Junior Subordinated Notes to Holders of Trust Securities;
(iii) subject to the terms hereof, take any Legal Action which
arises out of or in connection with an Event of Default of which a
Responsible Officer of the Property Trustee has actual knowledge or the
Property Trustee's duties and obligations under this Trust Agreement or
the Trust Indenture Act; and
(iv) take all actions and perform such duties as may be
specifically required of the Property Trustee pursuant to the terms of
this Trust Agreement.
C. So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement, (ii) sell,
assign, transfer, exchange, pledge, set-off or otherwise dispose of any of the
Trust Property or interests therein, including to Securityholders, except as
expressly provided herein, (iii) take any action that would cause the Trust to
fail or cease to qualify as a grantor trust for United States federal income tax
purposes, (iv) incur any indebtedness for borrowed money, (v) take or consent to
any action that would result in the placement of a Lien on any of the Trust
Property, (vi) issue any securities other than the Trust Securities, or (vii)
have any power to, or agree to any action by the Depositor that would, vary the
investment (within the meaning of Treasury Regulation Section 301.7701-4(c)) of
the Trust or of the Securityholders. The Trustees shall defend all claims and
demands of all Persons at any time claiming any Lien on any of the Trust
Property adverse to the interest of the Trust or the Securityholders in their
capacity as Securityholders.
D. In connection with the issue and sale of the Preferred Securities,
the Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of this
Trust Agreement are hereby ratified and confirmed in all respects):
(i) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 under the Securities Act in relation
to the Preferred Securities, including any amendments thereto;
(ii) to determine the states in which to take appropriate
action to qualify or register for sale all or part of the Preferred
Securities and to do any and all such acts, other than actions which
must be taken by or on behalf of the Trust, and advise the Trustees of
actions they must take on behalf of the Trust, and prepare for
execution and filing any documents to be executed and filed by the
Trust or on behalf of the Trust, as the Depositor deems necessary or
advisable in order to comply with the applicable laws of any such
States;
(iii) to prepare for filing by the Trust an application to the
New York Stock Exchange or any other national stock exchange or the
NASDAQ National Market for listing upon notice of issuance of any
Preferred Securities;
(iv) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the
Preferred Securities under Section 12(b) of the Exchange Act, including
any amendments thereto;
(v) to negotiate the terms of the Underwriting Agreement
providing for the sale of the Preferred Securities and to execute,
deliver and perform the Underwriting Agreement on behalf of the Trust;
and
(vi) any other actions necessary, incidental, appropriate or
convenient to carry out any of the foregoing activities.
E. Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and to
operate the Trust so that the Trust will not be deemed to be an "investment
company" required to be registered under the Investment Company Act of 1940, as
amended, or taxed as other than a grantor trust for United States federal income
tax purposes and so that the Junior Subordinated Notes will be treated as
indebtedness of the Depositor for United States federal income tax purposes. In
this connection, the Depositor and the Administrative Trustees are authorized to
take any action, not inconsistent with applicable law, the Certificate of Trust
or this Trust Agreement, that each of the Depositor and the Administrative
Trustees determines in its discretion to be necessary or desirable for such
purposes, as long as such action does not materially and adversely affect the
interests of the Holders of the Preferred Securities.
Section 2.08 Assets of Trust. The assets of the Trust shall consist of
the Trust Property.
Section 2.09 Title to Trust Property. Legal title to all Trust Property
shall be vested at all times in the Property Trustee (in its capacity as such)
and shall be held and administered by the Property Trustee for the benefit of
the Securityholders and the Trust in accordance with this Trust Agreement. The
right, title and interest of the Property Trustee to the Junior Subordinated
Notes shall vest automatically in each Person who may thereafter be appointed as
Property Trustee in accordance with the terms hereof. Such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
executed and delivered.
Section 2.10 Mergers and Consolidations of the Trust. The Trust may not
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets substantially as an entirety to any
corporation or other body, except as described below or otherwise provided in
this Trust Agreement. The Trust may at the request of the Company, with the
consent of the Administrative Trustees and without the consent of the Holders of
the Trust Securities, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any state; provided,
that (i) such successor entity either (x) expressly assumes all of the
obligations of the Trust with respect to the Trust Securities or (y) substitutes
for the Preferred Securities other securities having substantially the same
terms as the Trust Securities (herein referred to as the "Successor Securities")
so long as the Successor Securities rank the same as the Trust Securities rank
in priority with respect to Distributions and payments upon liquidation,
redemption and otherwise, (ii) the Company expressly appoints a trustee of such
successor entity possessing the same powers and duties as the Property Trustee
as the holder of legal title to the Junior Subordinated Notes, (iii) the
Preferred Securities or any Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or other organization on which the Preferred Securities are
then listed, (iv) such merger, consolidation, amalgamation or replacement does
not cause the Preferred Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the Holders of the Trust
Securities (including any Successor Securities) in any material respect, (vi)
such successor entity has a purpose substantially identical to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation, or replacement,
the Company and the Property Trustee have received an Opinion of Counsel to the
effect that (A) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the Holders of the
Trust Securities (including any Successor Securities) in any material respect,
and (B) following such merger, consolidation, amalgamation or replacement,
neither the Trust nor such successor entity will be required to register as an
investment company under the Investment Company Act of 1940, and (viii) the
Company guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee. Notwithstanding the
foregoing, the Trust shall not, except with the consent of Holders of 100% in
Liquidation Amount of the Trust Securities, consolidate, amalgamate, merge with
or into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause the Trust or the
successor entity to be classified as other than a grantor trust for federal
income tax purposes.
ARTICLE III
Payment Account
Section 3.01 Payment Account.
(a) On or prior to the Issue Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and an agent of the Property Trustee
shall have exclusive control and sole right of withdrawal with respect to the
Payment Account for the purpose of making deposits in and withdrawals from the
Payment Account in accordance with this Trust Agreement. All monies and other
property deposited or held from time to time in the Payment Account shall be
held by the Property Trustee in the Payment Account for the exclusive benefit of
the Securityholders and for distribution as herein provided, including (and
subject to) any priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal or interest on, and any other payments
or proceeds with respect to, the Junior Subordinated Notes. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV
Distributions; Redemption
Section 4.01 Distributions.
(a) Distributions on the Trust Securities shall be cumulative and
accrue from the Issue Date and, except in the event that the Depositor exercises
its right to extend the interest payment period for the Junior Subordinated
Notes pursuant to Section 104 of the Supplemental Indenture, shall be payable
quarterly in arrears on March 31, June 30, September 30 and December 31 of each
year, commencing on June 30, 1998. If any date on which Distributions are
otherwise payable on the Trust Securities is not a Business Day, then the
payment of such Distribution shall be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next succeeding calendar
year, payment of such Distribution shall be made on the immediately preceding
Business Day, in each case, with the same force and effect as if made on such
date (each such date, a "Distribution Date").
(b) Distributions payable on the Trust Securities shall be fixed at a
rate of ______% per annum of the Liquidation Amount of the Trust Securities. The
amount of Distributions payable for any full quarterly period shall be computed
on the basis of twelve 30-day months and a 360-day year. If the interest payment
period for the Junior Subordinated Notes is extended pursuant to Section 104 of
the Supplemental Indenture (an "Extension Period"), then the rate per annum at
which Distributions on the Trust Securities accumulate shall be increased by an
amount such that the aggregate amount of Distributions that accumulate on all
Trust Securities during any such Extension Period is equal to the aggregate
amount of interest (including interest payable on unpaid interest at the
percentage rate per annum set forth above, compounded quarterly, to the extent
permitted by applicable law) that accrues during any such Extension Period on
the Junior Subordinated Notes. The payment of such deferred interest, together
with interest thereon, will be distributed to the Holders of the Trust
Securities as received at the end of any Extension Period. The amount of
Distributions payable for any period shall include the Additional Amounts, if
any.
(c) Distributions on the Trust Securities shall be made and shall be
deemed payable on each Distribution Date only to the extent that the Trust has
legally and immediately available funds in the Payment Account for the payment
of such Distributions.
(d) Distributions, including Additional Amounts, if any, on the Trust
Securities on each Distribution Date shall be payable to the Holders thereof as
they appear on the Securities Register for the Trust Securities on the relevant
record date, which shall be the close of business on the fifteenth calendar day
prior to the relevant Distribution Date.
Each Trust Security upon registration of transfer of or in exchange for
or in lieu of any other Trust Security shall carry the rights of Distributions
accrued (including Additional Amounts, if any) and unpaid, and to accrue
(including Additional Amounts, if any), which were carried by such other Trust
Security.
Section 4.02 Redemption.
(a) On each Redemption Date with respect to the Junior Subordinated
Notes, the Trust will be required to redeem a Like Amount of Trust Securities at
the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date to each Holder of Trust Securities to be redeemed,
at such Holder's address appearing in the Securities Register. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are to
be redeemed, the total Liquidation Amount of the Trust Securities to be
redeemed; and
(v) that on the Redemption Date the Redemption Price will
become due and payable upon each such Trust Security to be redeemed and
that Distributions thereon will cease to accrue on and after such date.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Junior Subordinated Notes. Redemptions of the Trust Securities
shall be made and the Redemption Price shall be deemed payable on each
Redemption Date only to the extent that the Trust has funds legally and
immediately available in the Payment Account for the payment of such Redemption
Price.
(d) If the Property Trustee gives a notice of redemption in respect of
any Preferred Securities, then, by 2:00 p.m. New York time, on the Redemption
Date, subject to Section 4.02(c), the Property Trustee will, so long as the
Preferred Securities are in book-entry only form, irrevocably deposit with the
Clearing Agency for the Preferred Securities funds sufficient to pay the
applicable Redemption Price. If the Preferred Securities are not in book-entry
only form, the Property Trustee, subject to Section 4.02(c), shall irrevocably
deposit with the Paying Agent funds sufficient to pay the applicable Redemption
Price and will give the Paying Agent irrevocable instructions to pay the
Redemption Price to the Holders thereof upon surrender of their Preferred
Securities Certificates. Notwithstanding the foregoing, Distributions payable on
or prior to the Redemption Date for any Trust Securities called for redemption
shall be payable to the Holders of such Trust Securities as they appear on the
Securities Register for the Trust Securities on the relevant record dates for
the related Distribution Dates. If notice of redemption shall have been given
and funds deposited as required, then upon the date of such deposit, all rights
of Securityholders holding Trust Securities so called for redemption will cease,
except the right of such Securityholders to receive the Redemption Price, but
without interest, and such Securities will cease to be outstanding. In the event
that any date on which any Redemption Price is payable is not a Business Day,
then payment of the Redemption Price payable on such date shall be made on the
next succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, payment of such Redemption Price shall be
made on the immediately preceding Business Day, in each case, with the same
force and effect as if made on such date. In the event that payment of the
Redemption Price in respect of Trust Securities is improperly withheld or
refused and not paid either by the Trust or by the Guarantor pursuant to the
Guarantee, Distributions on such Trust Securities will continue to accrue at the
then applicable rate, from such Redemption Date originally established by the
Trust for such Preferred Securities to the date such Redemption Price is
actually paid.
(e) If less than all the Outstanding Trust Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust
Securities to be redeemed shall be allocated 3% to the Common Securities and 97%
to the Preferred Securities, with such adjustments that each amount so allocated
shall be divisible by $25. The particular Preferred Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Property Trustee from the Outstanding Preferred Securities not previously called
for redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for a redemption of portions
(equal to $25 or integral multiple thereof) of the Liquidation Amount of
Preferred Securities of a denomination larger than $25; provided, however, that
before undertaking redemption of the Preferred Securities on other than a pro
rata basis, the Property Trustee shall have received an Opinion of Counsel that
the status of the Trust as a grantor trust for federal income tax purposes would
not be adversely affected. The Property Trustee shall promptly notify the
Securities Registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
this Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Preferred Securities shall relate, in the case of
any Preferred Securities redeemed or to be redeemed only in part, to the portion
of the Liquidation Amount of Preferred Securities which has been or is to be
redeemed.
(f) Subject to the foregoing provisions of Section 4.02 and to
applicable law (including, without limitation, United States federal securities
laws), the Company, the Guarantor or their Affiliates may, at any time and from
time to time, purchase outstanding Preferred Securities by tender, in the open
market or by private agreement.
Section 4.03 Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, and the Redemption Price of, the Trust Securities, as
applicable, shall be made pro rata based on the Liquidation Amount of the Trust
Securities; provided, however, that if on any Distribution Date or Redemption
Date an Indenture Event of Default shall have occurred and be continuing, no
payment of any Distribution (including Additional Amounts, if applicable) on, or
Redemption Price of, any Common Security, and no other payment on account of the
redemption, liquidation or other acquisition of Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid Distributions
(including Additional Amounts, if applicable) on all Outstanding Preferred
Securities for all distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all Outstanding Preferred Securities, shall have been made or provided
for, and all funds immediately available to the Property Trustee shall first be
applied to the payment in full in cash of all Distributions (including
Additional Amounts, if applicable) on, or Redemption Price of, Preferred
Securities then due and payable.
(b) In the case of the occurrence of any Indenture Event of Default,
the Holder of Common Securities will be deemed to have waived any such Event of
Default under this Trust Agreement until the effect of all such Events of
Default with respect to the Preferred Securities have been cured, waived or
otherwise eliminated. Until any such Events of Default under this Trust
Agreement with respect to the Preferred Securities have been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
Holders of the Preferred Securities and not the Holder of the Common Securities,
and only the Holders of the Preferred Securities will have the right to direct
the Property Trustee to act on their behalf.
Section 4.04 Payment Procedures. Payments in respect of the Preferred
Securities shall be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Securities Register or, if the
Preferred Securities are held by a Clearing Agency, such Distributions shall be
made to the Clearing Agency, which shall credit the relevant Persons' accounts
at such Clearing Agency on the applicable distribution dates. Payments in
respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Property Trustee and the Holder of the Common
Securities.
Section 4.05 Tax Returns and Reports. The Administrative Trustee(s)
shall prepare (or cause to be prepared), at the Depositor's expense, and file
all United States federal, state and local tax and information returns and
reports required to be filed by or in respect of the Trust. The Administrative
Trustee(s) shall provide or cause to be provided on a timely basis to each
Holder any Internal Revenue Service form required to be so provided in respect
of the Trust Securities.
ARTICLE V
Trust Securities Certificates
Section 5.01 Initial Ownership. Upon the creation of the Trust by the
contribution by the Depositor pursuant to Section 2.03 and until the issuance of
the Trust Securities, and at any time during which no Trust Securities are
outstanding, the Depositor shall be the sole beneficial owner of the Trust.
Section 5.02 The Trust Securities Certificates. Each of the Preferred
and Common Securities Certificates shall be issued in minimum denominations of
$25 and integral multiples in excess thereof. The Trust Securities Certificates
shall be executed on behalf of the Trust by manual or facsimile signature of at
least one Administrative Trustee. Trust Securities Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Trust,
shall be validly issued and entitled to the benefits of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Trust Securities
Certificates or did not hold such offices at the date of authentication and
delivery of such Trust Securities Certificates. A transferee of a Trust
Securities Certificate shall become a Securityholder, and shall be entitled to
the rights and subject to the obligations of a Securityholder hereunder, upon
due registration of such Trust Securities Certificate in such transferee's name
pursuant to Section 5.04.
Section 5.03 Authentication of Trust Securities Certificates. On the
Issue Date, the Administrative Trustees shall cause Trust Securities
Certificates, in an aggregate Liquidation Amount as provided in Sections 2.04
and 2.05, to be executed on behalf of the Trust, authenticated and delivered to
or upon the written order of the Depositor signed by its Chairman of the Board,
its President or any Vice President, without further corporate action by the
Depositor, in authorized denominations. No Trust Securities Certificate shall
entitle its holder to any benefit under this Trust Agreement, or shall be valid
for any purpose, unless there shall appear on such Trust Securities Certificate
a certificate of authentication substantially in the form set forth in Exhibit E
or Exhibit C, as applicable, executed by at least one Administrative Trustee by
manual signature; such authentication shall constitute conclusive evidence that
such Trust Securities Certificate shall have been duly authenticated and
delivered hereunder. All Trust Securities Certificates shall be dated the date
of their authentication.
Section 5.04 Registration of Transfer and Exchange of Preferred
Securities Certificates. The Securities Registrar shall keep or cause to be
kept, at the office or agency maintained pursuant to Section 5.08, a Securities
Register in which, subject to such reasonable regulations as it may prescribe,
the Securities Registrar shall provide for the registration of Preferred
Securities Certificates and the Common Securities Certificates (subject to
Section 5.10 in the case of the Common Securities Certificates) and registration
of transfers and exchanges of Preferred Securities Certificates as herein
provided. The Property Trustee shall be the initial Securities Registrar.
Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 5.08, the
Administrative Trustees shall execute, authenticate and deliver in the name of
the designated transferee or transferees one or more new Preferred Securities
Certificates in authorized denominations of a like aggregate Liquidation Amount
dated the date of authentication by the Administrative Trustee or Trustees. The
Securities Registrar shall not be required to register the transfer of any
Preferred Securities that have been called for redemption. At the option of a
Holder, Preferred Securities Certificates may be exchanged for other Preferred
Securities Certificates in authorized denominations of the same class and of a
like aggregate Liquidation Amount upon surrender of the Preferred Securities
Certificates to be exchanged at the office or agency maintained pursuant to
Section 5.08.
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Administrative Trustees and
the Securities Registrar duly executed by the Holder or his attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be canceled and subsequently disposed
of by the Securities Registrar in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar or
the Administrative Trustees may require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer
or exchange of Preferred Securities Certificates.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates. If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar shall
receive evidence to its satisfaction of the destruction, loss or theft of any
Trust Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees or any one of them on behalf of the Trust
shall execute and authenticate and make available for delivery, in exchange for
or in lieu of any such mutilated, destroyed, lost or stolen Trust Securities
Certificate, a new Trust Securities Certificate of like class, tenor and
denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section, the Administrative Trustees or the Securities
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Trust Securities Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Securities
Certificate shall be found at any time.
Section 5.06 Persons Deemed Securityholders. Prior to due presentation
of a Trust Securities Certificate for registration of transfer, the Trustees or
the Securities Registrar shall treat the Person in whose name any Trust
Securities Certificate shall be registered in the Securities Register as the
owner of such Trust Securities Certificate for the purpose of receiving
Distributions (subject to Section 4.01(d)) and for all other purposes
whatsoever, and neither the Trustees nor the Securities Registrar shall be bound
by any notice to the contrary.
Section 5.07 Access to List of Securityholders' Names and Addresses.
The Administrative Trustees shall furnish or cause to be furnished to (i) the
Depositor and the Property Trustee semi-annually, not later than June 1 and
December 1 in each year, and (ii) the Depositor or the Property Trustee, as the
case may be, within 30 days after receipt by any Administrative Trustee of a
request therefor from the Depositor or the Property Trustee, as the case may be,
in writing, a list, in such form as the Depositor or the Property Trustee, as
the case may be, may reasonably require, of the names and addresses of the
Securityholders as of a date not more than 15 days prior to the time such list
is furnished; provided, that the Administrative Trustees shall not be obligated
to provide such list at any time such list does not differ from the most recent
list given to the Depositor and the Property Trustee by the Administrative
Trustees or at any time the Property Trustee is the Securities Registrar. If
three or more Securityholders or one or more Holders of Trust Securities
Certificates evidencing not less than 25% of the outstanding Liquidation Amount
apply in writing to the Administrative Trustees, and such application states
that the applicants desire to communicate with other Securityholders with
respect to their rights under this Trust Agreement or under the Trust Securities
Certificates and such application is accompanied by a copy of the communication
that such applicants propose to transmit, then the Administrative Trustees
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Securityholders. Each Holder, by receiving and holding a Trust Securities
Certificate, shall be deemed to have agreed not to hold either the Depositor or
the Administrative Trustees accountable by reason of the disclosure of its name
and address, regardless of the source from which such information was derived.
Section 5.08 Maintenance of Office or Agency. The Administrative
Trustees shall maintain in the Borough of Manhattan, New York, an office or
offices or agency or agencies where Preferred Securities Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trustees in respect of the Trust Securities Certificates
may be served. The Administrative Trustees initially designate Bankers Trust
Company, Four Albany Street, New York, New York 10006, as its principal agency
for such purposes. The Administrative Trustees shall give prompt written notice
to the Depositor and to the Securityholders of any change in the location of the
Securities Register or any such office or agency.
Section 5.09 Appointment of Paying Agent. The Paying Agent shall make
Distributions and other payments provided hereby to Securityholders from the
Payment Account and shall report the amounts of such Distributions and payments
to the Property Trustee and the Administrative Trustees. Any Paying Agent shall
have the revocable power to withdraw funds from the Payment Account for the
purpose of making the Distributions and payments provided hereby. The
Administrative Trustees may revoke such power and remove the Paying Agent if
such Trustees determine in their sole discretion that the Paying Agent shall
have failed to perform its obligations under this Agreement in any material
respect. The Paying Agent shall initially be the Property Trustee, and it may
choose any co-paying agent that is acceptable to the Administrative Trustees and
the Depositor. Any Person acting as Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustees and the
Depositor. In the event that a Paying Agent shall resign or be removed, the
Administrative Trustees shall appoint a successor that is acceptable to the
Depositor to act as Paying Agent (which shall be a bank or trust company). The
Administrative Trustees shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Administrative Trustees to execute and
deliver to the Trustees an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Trustees that as Paying Agent, such
successor Paying Agent or additional Paying Agent will hold all sums, if any,
held by it for payment to the Securityholders in trust for the benefit of the
Securityholders entitled thereto until such sums shall be paid to such
Securityholders. The Paying Agent shall return all unclaimed funds to the
Property Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Property Trustee. The provisions of
Sections 8.01, 8.03 and 8.06 shall apply to the Property Trustee also in its
role as Paying Agent, for so long as the Property Trustee shall act as Paying
Agent and, to the extent applicable, to any other paying agent appointed
hereunder. Any reference in this Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise.
Section 5.10 Ownership of Common Securities by Depositor. On the Issue
Date, the Depositor shall acquire, and thereafter retain, beneficial and record
ownership of the Common Securities. Any attempted transfer of the Common
Securities, except for transfers by operation of law or to an Affiliate of the
Guarantor or the Depositor or a permitted successor under Section 801 of the
Subordinated Indenture, shall be void. The Administrative Trustees shall cause
each Common Securities Certificate issued to the Depositor to contain a legend
stating "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT AS PROVIDED IN THE TRUST
AGREEMENT REFERRED TO HEREIN".
Section 5.11 Book-Entry Preferred Securities Certificates; Common
Securities Certificate.
(a) The Preferred Securities Certificates, upon original issuance, will
be issued in the form of a typewritten Preferred Securities Certificate or
Certificates representing Book-Entry Preferred Securities Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Trust. Such Preferred Securities Certificate or Certificates
shall initially be registered on the Securities Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Owner will receive a
definitive Preferred Securities Certificate representing such beneficial owner's
interest in such Preferred Securities, except as provided in Section 5.13.
Unless and until Definitive Preferred Securities Certificates have been issued
to Owners pursuant to Section 5.13:
(i) the provisions of this Section 5.11(a) shall be in full
force and effect;
(ii) the Securities Registrar and the Trustees shall be
entitled to deal with the Clearing Agency for all purposes of this
Trust Agreement relating to the Book-Entry Preferred Securities
Certificates (including the payment of principal of and interest on the
Book-Entry Preferred Securities and the giving of instructions or
directions to Owners of Book-Entry Preferred Securities) as the sole
Holder of Book-Entry Preferred Securities and shall have no obligations
to the Owners thereof;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Trust Agreement, the
provisions of this Section shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred
Securities Certificates shall be exercised only through the Clearing
Agency and shall be limited to those established by law and agreements
between such Owners and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to the Certificate Depository Agreement, unless
and until Definitive Preferred Securities Certificates are issued
pursuant to Section 5.13, the Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit payments on the Preferred Securities to such Clearing Agency
Participants.
(b) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
Section 5.12 Notices to Clearing Agency. To the extent a notice or
other communication to the Owners is required under this Trust Agreement, unless
and until Definitive Preferred Securities Certificates shall have been issued to
Owners pursuant to Section 5.13, the Trustees shall give all such notices and
communications specified herein to be given to Owners to the Clearing Agency,
and shall have no obligations to the Owners.
Section 5.13 Definitive Preferred Securities Certificates. If (i) the
Depositor advises the Trustees in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities with respect to the
Preferred Securities Certificates, and the Depositor is unable to locate a
qualified successor, or (ii) the Depositor at its option advises the Trustees in
writing that it elects to terminate the book-entry system through the Clearing
Agency, then the Administrative Trustees shall notify the Clearing Agency and
Holders of the Preferred Securities. Upon surrender to the Administrative
Trustees of the typewritten Preferred Securities Certificate or Certificates
representing the Book-Entry Preferred Securities Certificates by the Clearing
Agency, accompanied by registration instructions, the Administrative Trustees or
any one of them shall execute and authenticate the Definitive Preferred
Securities Certificates in accordance with the instructions of the Clearing
Agency. Neither the Securities Registrar nor the Trustees shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Preferred Securities Certificates, the Trustees shall recognize the
Holders of the Definitive Preferred Securities Certificates as Securityholders.
The Definitive Preferred Securities Certificates shall be printed, lithographed
or engraved or may be produced in any other manner as is reasonably acceptable
to the Administrative Trustees, as evidenced by the execution thereof by the
Administrative Trustees or any one of them.
Section 5.14 Rights of Securityholders. The legal title to the Trust
Property is vested exclusively in the Property Trustee (in its capacity as such)
in accordance with Section 2.09, and the Securityholders shall not have any
right or title therein other than the beneficial ownership interest in the
assets of the Trust conferred by their Trust Securities, and they shall have no
right to call for any partition or division of property, profits or rights of
the Trust except as described below. The Trust Securities shall be personal
property giving only the rights specifically set forth therein and in this Trust
Agreement. The Trust Securities shall have no preemptive or other similar rights
and when issued and delivered to Securityholders against payment of the purchase
price therefor, except as otherwise provided in the Expense Agreement and
Section 10.01 hereof, will be fully paid and nonassessable by the Trust. Except
as otherwise provided in the Expense Agreement and Section 10.01 hereof, the
Holders of the Trust Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
ARTICLE VI
Acts of Securityholders; Meetings; Voting
Section 6.01 Limitations on Voting Rights.
(a) Except as provided in this Section, in Section 8.10 or Section
10.03 of this Trust Agreement, in the Subordinated Indenture, and as otherwise
required by law, no Holder of Preferred Securities shall have any right to vote
or in any manner otherwise control the administration, operation and management
of the Trust or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association.
(b) So long as any Junior Subordinated Notes are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee, or
executing any trust or power conferred on the Indenture Trustee with respect to
such Junior Subordinated Notes, (ii) waive any past default which is waivable
under Section 513 of the Subordinated Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Notes shall be due and payable or (iv) consent to any amendment, modification or
termination of the Subordinated Indenture or the Junior Subordinated Notes,
where such consent shall be required, or to any other action, as holder of the
Junior Subordinated Notes, under the Subordinated Indenture, without, in each
case, obtaining the prior approval of the Holders of at least 66-2/3% in
Liquidation Amount of the Preferred Securities; provided, however, that where a
consent under the Subordinated Indenture would require the consent of each
holder of Junior Subordinated Notes affected thereby, no such consent shall be
given by the Trustees without the prior written consent of each Holder of
Preferred Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of Preferred Securities, except
pursuant to a subsequent vote of the Holders of Preferred Securities. The
Property Trustee shall notify all Holders of the Preferred Securities of any
notice of default received from the Indenture Trustee with respect to the Junior
Subordinated Notes. In addition to obtaining the foregoing approvals of the
Holders of the Preferred Securities, prior to taking any of the foregoing
actions, the Trustees shall, at the expense of the Depositor, obtain an Opinion
of Counsel experienced in such matters to the effect that the Trust will not be
classified as other than a grantor trust for United States federal income tax
purposes on account of such action.
(c) If any proposed amendment to this Trust Agreement provides for, or
the Trustees otherwise propose to effect, (i) any action that would adversely
affect the powers, preferences or special rights of the Preferred Securities,
whether by way of amendment to this Trust Agreement or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than pursuant to the
terms of this Trust Agreement, then the Holders of Outstanding Preferred
Securities as a class will be entitled to vote on such amendment or proposal and
such amendment or proposal shall not be effective except with the approval of
the Holders of at least 66-2/3% in Liquidation Amount of the Outstanding
Preferred Securities. In addition to obtaining the foregoing approvals of the
Holders of the Preferred Securities, prior to taking any of the foregoing
actions, the Trustees shall, at the expense of the Depositor, obtain an Opinion
of Counsel experienced in such matters to the effect that the Trust will not be
classified as other than a grantor trust for United States federal income tax
purposes on account of such action.
Section 6.02 Notice of Meetings. Notice of all meetings of the
Preferred Securityholders, stating the time, place and purpose of the meeting,
shall be given by the Administrative Trustees pursuant to Section 10.08 to each
Preferred Securityholder of record, at his registered address, at least 15 days
and not more than 90 days before the meeting. At any such meeting, any business
properly before the meeting may be so considered whether or not stated in the
notice of the meeting. Any adjourned meeting may be held as adjourned without
further notice.
Section 6.03 Meetings of Preferred Securityholders. No annual meeting
of Securityholders is required to be held. The Administrative Trustees, however,
shall call a meeting of Securityholders to vote on any matter upon the written
request of the Preferred Securityholders of record of 25% of the Preferred
Securities (based upon their Liquidation Amount) and the Administrative Trustees
or the Property Trustee may, at any time in their discretion, call a meeting of
Preferred Securityholders to vote on any matters as to which Preferred
Securityholders are entitled to vote.
Preferred Securityholders of record of 50% of the Preferred Securities
(based upon their Liquidation Amount), present in person or by proxy, shall
constitute a quorum at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the
Preferred Securityholders of record present, in person or by proxy, holding more
than 66-2/3% of the Preferred Securities (based upon their Liquidation Amount)
held by the Preferred Securityholders of record present, either in person or by
proxy, at such meeting shall constitute the action of the Securityholders,
unless this Trust Agreement requires a greater number of affirmative votes.
Section 6.04 Voting Rights. Securityholders shall be entitled to one
vote for each $25 of Liquidation Amount represented by their Trust Securities in
respect of any matter as to which such Securityholders are entitled to vote.
Section 6.05 Proxies, etc. At any meeting of Securityholders, any
Securityholder entitled to vote may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the
Administrative Trustees, or with such other officer or agent of the Trust as the
Administrative Trustees may direct, for verification prior to the time at which
such vote shall be taken. Pursuant to a resolution of the Property Trustee,
proxies may be solicited in the name of the Property Trustee or one or more
officers of the Property Trustee. Only Securityholders of record shall be
entitled to vote. When Trust Securities are held jointly by several Persons, any
one of them may vote at any meeting in person or by proxy in respect of such
Trust Securities, but if more than one of them shall be present at such meeting
in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in respect
of such Trust Securities. A proxy purporting to be executed by or on behalf of a
Securityholder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the challenger. No
proxy shall be valid more than three years after its date of execution.
Section 6.06 Securityholder Action by Written Consent. Any action which
may be taken by Securityholders at a meeting may be taken without a meeting if
Securityholders holding at least 66-2/3% of all outstanding Trust Securities
entitled to vote in respect of such action (or such other proportion thereof as
shall be required by any express provision of this Trust Agreement) shall
consent to the action in writing (based upon their Liquidation Amount).
Section 6.07 Record Date for Voting and Other Purposes. For the
purposes of determining the Securityholders who are entitled to notice of and to
vote at any meeting or by written consent, or to participate in any Distribution
on the Trust Securities in respect of which a record date is not otherwise
provided for in this Trust Agreement, or for the purpose of any other action,
the Administrative Trustees may from time to time fix a date, not more than 90
days prior to the date of any meeting of Securityholders or the payment of
Distribution or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes.
Section 6.08 Acts of Securityholders. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Trust Agreement to be given, made or taken by Securityholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Securityholders in person or by an agent appointed
in writing; and, except as otherwise expressly provided herein, such action
shall become effective when such instrument or instruments are delivered to the
Administrative Trustees. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Securityholders signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent shall be
sufficient for any purpose of this Trust Agreement and (subject to Section 8.01)
conclusive in favor of the Trustees, if made in the manner provided in this
Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustees deem sufficient.
The ownership of Preferred Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise between the Securityholders of Trust
Securities and the Administrative Trustees or among such Securityholders or
Trustees with respect to the authenticity, validity or binding nature of any
request, demand, authorization, direction, consent, waiver or other Act of such
Securityholder or Trustee under this Article VI, then the determination of such
matter by the Property Trustee shall be conclusive with respect to such matter.
Section 6.09 Inspection of Records. Upon reasonable notice to the
Trustees, the records of the Trust shall be open to inspection by
Securityholders during normal business hours for any purpose reasonably related
to such Securityholder's interest as a Securityholder.
ARTICLE VII
Representations and Warranties of the
Property Trustee and Delaware Trustee
Section 7.01 Representations and Warranties of Property Trustee. The
Trustee that acts as initial Property Trustee represents and warrants to the
Trust and to the Depositor at the date of this Trust Agreement, and each
Successor Property Trustee represents and warrants to the Trust and the
Depositor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) the Property Trustee is a New York banking corporation with trust
powers and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Trust Agreement;
(b) The execution, delivery and performance by the Property Trustee of
this Trust Agreement has been duly authorized by all necessary corporate action
on the part of the Property Trustee. This Trust Agreement has been duly executed
and delivered by the Property Trustee and constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) The execution, delivery and performance of this Trust Agreement by
the Property Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration with or
notice to, any New York State or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this Trust
Agreement.
Section 7.02 Representations and Warranties of Delaware Trustee
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Depositor at the date of this Trust Agreement,
and each Successor Delaware Trustee represents and warrants to the Trust and the
Depositor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, this Trust Agreement;
(b) The execution, delivery and performance by the Delaware Trustee of
this Trust Agreement has been duly authorized by all necessary corporate action
on the part of the Delaware Trustee. This Trust Agreement has been duly executed
and delivered by the Delaware Trustee and constitutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) No consent, approval or authorization of, or registration with or
notice to, any federal banking authority is required for the execution, delivery
or performance by the Delaware Trustee of this Trust Agreement; and
(d) The Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware.
ARTICLE VIII
The Trustees
Section 8.01 Certain Duties and Responsibilities.
(a) The rights, duties and responsibilities of the Trustees shall be as
provided by this Trust Agreement and, in the case of the Property Trustee, the
Trust Indenture Act. Notwithstanding the foregoing, no provision of this Trust
Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
them. Whether or not therein expressly so provided, every provision of this
Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustees shall be subject to the provisions of this
Section.
(b) All payments made by the Property Trustee in respect of the Trust
Securities shall be made only from the income and proceeds from the Trust
Property and only to the extent that there shall be sufficient income or
proceeds from the Trust Property to enable the Property Trustee to make payments
in accordance with the terms hereof. Each Securityholder, by its acceptance of a
Trust Security, agrees that it will look solely to the income and proceeds from
the Trust Property to the extent available for distribution to it as herein
provided and that the Trustees are not personally liable to it for any amount
distributable in respect of any Trust Security or for any other liability in
respect of any Trust Security. This Section 8.01(b) does not limit the liability
of the Trustees expressly set forth elsewhere in this Trust Agreement or, in the
case of the Property Trustee, in the Trust Indenture Act.
Section 8.02 Notice of Defaults. Within 90 days after the occurrence of
any Event of Default, the Property Trustee shall transmit, in the manner and to
the extent provided in Section 10.08, notice of any Event of Default known to
the Property Trustee to the Securityholders, the Administrative Trustees, the
Guarantor and the Depositor, unless such Event of Default shall have been cured
or waived.
Section 8.03 Certain Rights of Property Trustee. Subject to the
provisions of Section 8.01 and except as provided by law:
(i) the Property Trustee may conclusively rely and shall be
protected in acting or refraining from acting in good faith
upon any resolution, Opinion of Counsel, certificate, written
representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or
parties;
(ii) if (A) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative
courses of action, or (B) in construing any of the provisions
in this Trust Agreement the Property Trustee finds the same
ambiguous or inconsistent with any other provisions contained
herein, or (C) the Property Trustee is unsure of the
application of any provision of this Trust Agreement, then,
except as to any matter as to which the Preferred
Securityholders are entitled to vote under the terms of this
Trust Agreement, the Property Trustee shall deliver a notice
to the Depositor requesting written instructions of the
Depositor as to the course of action to be taken. The Property
Trustee shall take such action, or refrain from taking such
action, as the Property Trustee shall be instructed in writing
to take, or to refrain from taking, by the Depositor;
provided, however, that if the Property Trustee does not
receive such instructions of the Depositor within ten Business
Days after it has delivered such notice, or such reasonably
shorter period of time set forth in such notice (which to the
extent practicable shall not be less than two Business Days),
it may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Trust Agreement
as it shall deem advisable and in the best interests of the
Securityholders, in which event the Property Trustee shall
have no liability except for its own bad faith, negligence or
willful misconduct;
(iii) the Property Trustee may consult with counsel of its selection
and the advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon;
(iv) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Trust
Agreement at the request or direction of any of the
Securityholders pursuant to this Trust Agreement, unless such
Securityholders shall have offered to the Property Trustee
reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in compliance
with such request or direction;
(v) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or
other document, unless requested in writing to do so by one or
more Securityholders; and
(vi) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or
by or through its agents or attorneys, provided that the
Property Trustee shall be responsible for its own negligence
or recklessness with respect to selection of any agent or
attorney appointed by it hereunder.
Section 8.04 Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates shall be
taken as the statements of the Trust, and the Trustees do not assume any
responsibility for their correctness. The Trustees shall not be accountable for
the use or application by the Trust of the proceeds of the Trust Securities in
accordance with Section 2.05.
The Property Trustee may conclusively assume that any funds held by it
hereunder are legally available unless a Responsible Officer shall have received
written notice from the Company, any Holder or any other Trustee that such funds
are not legally available.
Section 8.05 May Hold Securities. Except as provided in the definition
of the term "Outstanding" in Article I, any Trustee or any other agent of the
Trustees or the Trust, in its individual or any other capacity, may become the
owner or pledgee of Trust Securities and may otherwise deal with the Trust with
the same rights it would have if it were not a Trustee or such other agent.
Section 8.06 Compensation; Fees; Indemnity.
The Depositor agrees:
(1) to pay to the Trustees from time to time reasonable compensation
for all services rendered by the Trustees hereunder (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of their agents and counsel), except any such expense,
disbursement or advance as may be attributable to their willful misconduct,
negligence or bad faith; and
(3) to indemnify the Trustees for, and to hold the Trustees harmless
against, any and all loss, damage, claims, liability or expense incurred without
willful misconduct, negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of this Trust Agreement,
including the costs and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any of their powers
or duties hereunder.
The provisions of this Section 8.06 shall survive the termination of
this Trust Agreement.
Section 8.07 Trustees Required; Eligibility.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that has
a combined capital and surplus of at least $50,000,000. If any such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of its supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such Person shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Property Trustee with respect to the
Trust Securities shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind such
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware or (ii) a
legal entity authorized to conduct a trust business and with its principal place
of business in the State of Delaware that shall act through one or more persons
authorized to bind such entity.
Section 8.08 Conflicting Interests.
If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement. To the extent permitted by the Trust Indenture Act, the Property
Trustee shall not be deemed to have a conflicting interest by virtue of being
trustee under the Guarantee.
Section 8.09 Co-Trustees and Separate Trustee.
At any time or times, for the purpose of meeting the legal requirements
of the Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Holder of the Common Securities and the
Property Trustee shall have power to appoint, and upon the written request of
the Property Trustee, the Depositor shall for such purpose join with the
Property Trustee in the execution, delivery and performance of all instruments
and agreements necessary or proper to appoint, one or more Persons approved by
the Property Trustee either to act as co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to act as separate
trustee of any such Trust Property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such Person or Persons
in the capacity aforesaid, any property, title, right or power deemed necessary
or desirable, subject to the other provisions of this Section. If the Depositor
does not join in such appointment within 15 days after the receipt by it of a
request so to do, or in case an Indenture Event of Default has occurred and is
continuing, the Property Trustee alone shall have power to make such
appointment. Any co-trustee or separate trustee appointed pursuant to this
Section shall satisfy the requirements of Section 8.07.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged, and delivered
by the Depositor.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(i) The Trust Securities shall be executed, authenticated and
delivered and all rights, powers, duties, and obligations hereunder in
respect of the custody of securities, cash and other personal property
held by, or required to be deposited or pledged with, the Trustees
hereunder, shall be exercised, solely by the Trustees.
(ii) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Property Trustee in respect of any
property covered by such appointment shall be conferred or imposed upon
and exercised or performed by the Property Trustee or by the Property
Trustee and such co-trustee or separate trustee jointly, as shall be
provided in the instrument appointing such co-trustee or separate
trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Property Trustee shall
be incompetent or unqualified to perform such act, in which event such
rights, powers, duties, and obligations shall be exercised and
performed by such co-trustee or separate trustee.
(iii) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the Depositor,
may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section, and, in case an Indenture Event
of Default has occurred and is continuing, the Property Trustee shall
have power to accept the resignation of, or remove, any such co-trustee
or separate trustee without the concurrence of the Depositor. Upon the
written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the execution, delivery, and performance of all
instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate
trustee so resigned or removed may be appointed in the manner provided
in this Section.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property
Trustee, or any other such trustee hereunder.
(v) The Trustees shall not be liable by reason of any act of a
co-trustee or separate trustee.
(vi) Any Act of Holders delivered to the Property Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
Section 8.10 Resignation and Removal; Appointment of Successor. No
resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Relevant Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Relevant
Trustee in accordance with the applicable requirements of Section 8.11.
The Relevant Trustee may resign at any time by giving written notice
thereof to the Securityholders. If the instrument of acceptance by a successor
Relevant Trustee required by Section 8.11 shall not have been delivered to the
Relevant Trustee within 30 days after the giving of such notice of resignation,
the resigning Relevant Trustee may petition any court of competent jurisdiction
for the appointment of a successor Relevant Trustee.
Unless an Indenture Event of Default shall have occurred and be
continuing, the Relevant Trustee may be removed at any time by Act of the Holder
of the Common Securities. If an Indenture Event of Default shall have occurred
and be continuing, the Relevant Trustee may be removed at such time by Act of
the Securityholders of a majority in Liquidation Amount of the Preferred
Securities Certificates, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Trust).
If the Relevant Trustee shall resign, be removed or become incapable of
continuing to act as Trustee at a time when no Indenture Event of Default shall
have occurred and be continuing, the Holder of the Common Securities, by Act of
the Holder of the Common Securities delivered to the retiring Relevant Trustee,
shall promptly appoint a successor Relevant Trustee or Trustees, and the
retiring Relevant Trustee shall comply with the applicable requirements of
Section 8.11. If the Relevant Trustee shall resign, be removed or become
incapable of continuing to act as the Relevant Trustee at a time when an
Indenture Event of Default shall have occurred and be continuing, the Holders of
Preferred Securities, by Act of the Securityholders of a majority in Liquidation
Amount of the Preferred Securities then outstanding delivered to the retiring
Relevant Trustee, shall promptly appoint a successor Relevant Trustee or
Trustees, and the Relevant Trustee shall comply with the applicable requirements
of Section 8.11. If no successor Relevant Trustee shall have been so appointed
in accordance with this Section 8.10 and accepted appointment in the manner
required by Section 8.11, any Securityholder who has been a Securityholder of
Trust Securities for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Relevant Trustee.
The retiring Relevant Trustee shall give notice of each resignation and
each removal of the Relevant Trustee, and each appointment of a successor
Trustee to all Securityholders in the manner provided in Section 10.08 and shall
give notice to the Depositor. Each notice shall include the name of the
successor Relevant Trustee and the address of its Corporate Trust Office if it
is the Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes incompetent or incapacitated or resigns, the
vacancy created by such death, incompetence or incapacity or resignation may be
filled by (i) the act of the remaining Administrative Trustee or (ii) otherwise
by the Depositor (with the successor in each case being an individual who
satisfies the eligibility requirement for Administrative Trustees set forth in
Section 8.07). Additionally, notwithstanding the foregoing or any other
provision of this Trust Agreement, in the event the Depositor believes that any
Administrative Trustee has become incompetent or incapacitated, the Depositor,
by notice to the remaining Trustees, may terminate the status of such Person as
an Administrative Trustee (in which case the vacancy so created will be filled
in accordance with the preceding sentence).
Section 8.11 Acceptance of Appointment by Successor. In case of the
appointment hereunder of a successor Relevant Trustee, every such successor
Relevant Trustee so appointed shall execute, acknowledge and deliver to the
Trust and to the retiring Relevant Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Relevant
Trustee shall become effective and such successor Relevant Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Relevant Trustee; but, on the request
of the Depositor or the successor Relevant Trustee, such retiring Relevant
Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Relevant Trustee all the rights, powers and
trusts of the retiring Relevant Trustee and shall duly assign, transfer and
deliver to such successor Relevant Trustee all property and money held by such
retiring Relevant Trustee hereunder.
Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the preceding paragraph.
No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
Section 8.12 Merger, Conversion, Consolidation or Succession to
Business. Any Person into which the Property Trustee, Delaware Trustee or any
Administrative Trustee which is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Relevant Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Relevant Trustee, shall be the successor of such Relevant Trustee
hereunder, provided such Person shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
Section 8.13 Preferential Collection of Claims Against Depositor or
Trust. If and when the Property Trustee shall be or become a creditor of the
Depositor or the Trust (or any other obligor upon the Junior Subordinated Notes
or the Trust Securities), the Property Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Depositor or Trust (or any such other obligor). For purposes of Section
311(b)(4) and (6) of the Trust Indenture Act:
(a) "cash transaction" means any transaction in which full payment for
goods or securities sold is made within seven days after delivery of the goods
or securities in currency or in checks or other orders drawn upon banks or
bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of exchange,
acceptance or obligation which is made, drawn, negotiated or incurred by the
Depositor or the Trust (or any such obligor) for the purpose of financing the
purchase, processing, manufacturing, shipment, storage or sale of goods, wares
or merchandise and which is secured by documents evidencing title to, possession
of, or a lien upon, the goods, wares or merchandise or the receivables or
proceeds arising from the sale of the goods, wares or merchandise previously
constituting the security, provided the security is received by the Property
Trustee simultaneously with the creation of the creditor relationship with the
Depositor or the Trust (or any such obligor) arising from the making, drawing,
negotiating or incurring of the draft, bill of exchange, acceptance or
obligation.
Section 8.14 Reports by Property Trustee.
(a) Within 60 days after May 15 of each year commencing with May 15,
1998, if required by Section 313(a) of the Trust Indenture Act, the Property
Trustee shall transmit a brief report dated as of such May 15 with respect to
any of the events specified in such Section 313(a) that may have occurred since
the later of the date of this Trust Agreement or the preceding May 15.
(b) The Property Trustee shall transmit to Securityholders the reports
required by Section 313(b) of the Trust Indenture Act at the times specified
therein.
(c) Reports pursuant to this Section shall be transmitted in the manner
and to the Persons required by Sections 313(c) and (d) of the Trust Indenture
Act.
Section 8.15 Reports to the Property Trustee. The Depositor and the
Administrative Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as required by Section 314 of
the Trust Indenture Act (if any) and, within 120 days after the end of each
fiscal year of the Depositor, the compliance certificate required by Section
314(a)(4) of the Trust Indenture Act in the form and in the manner required by
Section 314 of the Trust Indenture Act.
Section 8.16 Evidence of Compliance with Conditions Precedent. Each of
the Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Trust Agreement that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given pursuant to Section 314(c)(1) of the
Trust Indenture Act shall comply with Section 314(e) of the Trust Indenture Act.
Section 8.17 Number of Trustees.
(a) The number of Trustees shall initially be four, provided that the
Depositor by written instrument may increase or decrease the number of
Administrative Trustees.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the
number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to annul the Trust. Whenever a vacancy in the number of Administrative Trustees
shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 8.10, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Trust Agreement), shall have all powers granted to the
Administrative Trustees and shall discharge the duties imposed upon the
Administrative Trustees by this Trust Agreement.
Section 8.18 Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in Section
2.07(A), including any registration statement or amendment thereto filed with
the Commission, or making any other governmental filing; and
(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number the doing of such things and the execution of
such instruments either in the name of the Trust or the names of the
Administrative Trustees or otherwise as the Administrative Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
Section 8.19 Enforcement of Rights of Property Trustee by
Securityholders. If (i) the Trust fails to pay Distributions in full on the
Preferred Securities for more than 20 consecutive quarterly distribution
periods, or (ii) an Event of Default occurs and is continuing, then the Holders
of Preferred Securities will rely on the enforcement by the Property Trustee of
its rights against the Company and the Guarantor as the holder of the Junior
Subordinated Notes. In addition, the Holders of a majority in aggregate
Liquidation Amount of the Preferred Securities will have the right to direct the
time, method, and place of conducting any proceeding for any remedy available to
the Property Trustee or to direct the exercise of any trust or power conferred
upon the Property Trustee under this Trust Agreement, including the right to
direct the Property Trustee to exercise the remedies available to it as a holder
of the Junior Subordinated Notes, provided that such direction shall not be in
conflict with any rule of law or with this Trust Agreement, and could not
involve the Property Trustee in personal liability in circumstances where
reasonable indemnity would not be adequate. If the Property Trustee fails to
enforce its rights under the Junior Subordinated Notes, a Holder of Preferred
Securities may, to the fullest extent permitted by applicable law, institute a
legal proceeding against the Company or the Guarantor or both to enforce its
rights under this Trust Agreement without first instituting any legal proceeding
against the Property Trustee or any other Person, including the Trust; it being
understood and intended that no one or more of such Holders shall have any right
in any manner whatsoever by virtue of, or by availing of, any provision of this
Trust Agreement to affect, disturb or prejudice the rights of any other of such
Holders or to obtain or to seek to obtain priority or preference over any other
of such Holders or to enforce any right under this Trust Agreement, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders. Notwithstanding the foregoing, a Holder of Preferred Securities may
institute a legal proceeding directly against the Company or the Guarantor or
both, without first instituting a legal proceeding against or requesting or
directing that action be taken by the Property Trustee or any other Person, for
enforcement of payment to such Holder of principal of or interest on the Junior
Subordinated Notes having a principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities of such Holder on or after the
due dates therefor specified or provided for in the Junior Subordinated Notes.
The Company or the Guarantor shall be subrogated to all rights of the Holders of
Preferred Securities in respect of any amounts paid to such Holders by the
Company or the Guarantor pursuant to this Section.
ARTICLE IX
Termination and Liquidation
Section 9.01 Termination Upon Expiration Date. The Trust shall
automatically terminate on December 31, 2043 (the "Expiration Date") or earlier
pursuant to Section 9.02.
Section 9.02 Early Termination. Upon the first to occur of any of the
following events (such first occurrence, an "Early Termination Event"), the
Trust shall be dissolved and terminated in accordance with the terms hereof:
(i) the occurrence of a Bankruptcy Event in respect of the
Depositor, dissolution or liquidation of the Depositor, or the
dissolution of the Trust pursuant to judicial decree;
(ii) the delivery of written direction to the Property Trustee
by the Depositor at any time (which direction is optional and wholly
within the discretion of the Depositor) to terminate the Trust and
distribute the Junior Subordinated Notes to Securityholders as provided
in Section 9.04; and
(iii) the payment at maturity or redemption of all of the
Junior Subordinated Notes, and the consequent payment of the Preferred
Securities.
Section 9.03 Termination. The respective obligations and
responsibilities of the Trust and the Trustees created hereby shall terminate
upon the latest to occur of the following: (a) the distribution by the Property
Trustee to Securityholders upon the liquidation of the Trust pursuant to Section
9.04, or upon the redemption of all of the Trust Securities pursuant to Section
4.02, of all amounts or instruments required to be distributed hereunder upon
the final payment of the Trust Securities; (b) the payment of any expenses owed
by the Trust; and (c) the discharge of all administrative duties of the
Administrative Trustees, including the performance of any tax reporting
obligations with respect to the Trust or the Securityholders.
Section 9.04 Liquidation.
(a) If any Early Termination Event specified in clause (ii) of Section
9.02 occurs, the Trust shall be liquidated and the Property Trustee shall
distribute the Junior Subordinated Notes to the Securityholders as provided in
this Section 9.04.
(b) In connection with a distribution of the Junior Subordinated Notes,
each Holder of Trust Securities shall be entitled to receive, after the
satisfaction of liabilities to creditors of the Trust (as evidenced by a
certificate of the Administrative Trustees), a Like Amount of Junior
Subordinated Notes. Notice of liquidation shall be given by the Trustees by
first-class mail, postage prepaid, mailed not later than 30 nor more than 60
days prior to the Liquidation Date to each Holder of Trust Securities at such
Holder's address appearing in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent a Like Amount of Junior Subordinated Notes; and
(iii) provide such information with respect to the mechanics
by which Holders may exchange Trust Securities Certificates for Junior
Subordinated Notes as the Administrative Trustees or the Property
Trustee shall deem appropriate.
(c) In order to effect the liquidation of the Trust and distribution of
the Junior Subordinated Notes to Securityholders, the Property Trustee shall
establish a record date for such distribution (which shall be not more than 45
days prior to the Liquidation Date) and, either itself acting as exchange agent
or through the appointment of a separate exchange agent, shall establish such
procedures as it shall deem appropriate to effect the distribution of Junior
Subordinated Notes in exchange for the Outstanding Trust Securities
Certificates.
(d) After the Liquidation Date, (i) the Trust Securities will no longer
be deemed to be Outstanding, (ii) certificates representing a Like Amount of
Junior Subordinated Notes will be issued to Holders of Trust Securities
Certificates, upon surrender of such certificates to the Administrative Trustees
or their agent for exchange, (iii) any Trust Securities Certificates not so
surrendered for exchange will be deemed to represent a Like Amount of Junior
Subordinated Notes, accruing interest at the rate provided for in the Junior
Subordinated Notes from the last Distribution Date on which a Distribution was
made on such Trust Certificates until such certificates are so surrendered (and
until such certificates are so surrendered, no payments of interest or principal
will be made to Holders of Trust Securities Certificates with respect to such
Junior Subordinated Notes) and (iv) all rights of Securityholders holding Trust
Securities will cease, except the right of such Securityholders to receive
Junior Subordinated Notes upon surrender of Trust Securities Certificates.
(e) The Depositor will use its best efforts to have the Junior
Subordinated Notes that are distributed in exchange for the Preferred Securities
to be listed on such securities exchange as the Preferred Securities are then
listed. The Depositor may elect to have the Junior Subordinated Notes issued in
book-entry form to the Clearing Agency or its nominee.
Section 9.05 Bankruptcy. If an Early Termination Event specified in
clause (i) of Section 9.02 has occurred, the Trust shall be liquidated. The
Property Trustee shall distribute the Junior Subordinated Notes to the
Securityholders as provided in Section 9.04, unless such distribution is
determined by the Administrative Trustees not to be practical, in which event
the Holders will be entitled to receive out of the assets of the Trust available
for distribution to Securityholders, after satisfaction of liabilities to
creditors, an amount equal to the Liquidation Amount per Trust Security plus
accrued and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"). If such Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then, subject to the next
succeeding sentence, the amounts payable by the Trust on the Trust Securities
shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder
of the Common Securities will be entitled to receive Liquidation Distributions
upon any such dissolution, winding-up or termination pro rata (determined as
aforesaid) with Holders of Preferred Securities, except that, if an Indenture
Event of Default has occurred and is continuing, the Preferred Securities shall
have a priority over the Common Securities.
ARTICLE X
Miscellaneous Provisions
Section 10.01 Expense Agreement. The Depositor shall cause the
Guarantor, contemporaneously with the execution and delivery of this Trust
Agreement, to execute and deliver the Expense Agreement.
Section 10.02 Limitation of Rights of Securityholders. The death or
incapacity of any Person having an interest, beneficial or otherwise, in a Trust
Security shall not operate to terminate this Trust Agreement, nor entitle the
legal representatives or heirs of such Person or any Securityholder for such
Person, to claim an accounting, take any action or bring any proceeding in and
for a partition or winding up of the arrangements contemplated hereby, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Section 10.03 Amendment.
(a) This Trust Agreement may be amended from time to time by the
Trustees and the Depositor, without the consent of any Securityholders, (i) to
cure any ambiguity, correct or supplement any provision herein which may be
inconsistent with any other provision herein, or to make any other provisions
with respect to matters or questions arising under this Trust Agreement, which
shall not be inconsistent with the other provisions of this Trust Agreement,
provided, however, that any such amendment shall not adversely affect in any
material respect the interests of any Securityholder or (ii) to modify,
eliminate or add to any provisions of this Trust Agreement to such extent as
shall be necessary to ensure that the Trust will not be classified as other than
a grantor trust for United States federal income tax purposes at any time that
any Trust Securities are outstanding; provided, however, that, except in the
case of clause (ii), such action shall not adversely affect in any material
respect the interests of any Securityholder and, in the case of clause (i), any
amendments of this Trust Agreement shall become effective when notice thereof is
given to the Securityholders.
(b) Except as provided in Section 10.03(c) hereof, any provision in
this Trust Agreement may be amended by the Trust or the Trustees with (i) the
consent of Trust Securityholders representing not less than 66-2/3% (based upon
Liquidation Amounts) of the Trust Securities then Outstanding and (ii) receipt
by the Trustees of an Opinion of Counsel to the effect that such amendment or
the exercise of any power granted to the Trustees in accordance with such
amendment will not affect the Trust's status as a grantor trust for United
States federal income tax purposes or the Trust's exemption from status of an
"investment company" under the Investment Company Act of 1940, as amended.
(c) In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Securityholder (such
consent being obtained in accordance with Section 6.03 or 6.06 hereof), this
Trust Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date, (ii) restrict the right of a Securityholder to institute suit
for the enforcement of any such payment on or after such date, or (iii) change
the consent required pursuant to Section 10.03.
(d) Notwithstanding any other provisions of this Trust Agreement, the
Trustees shall not enter into or consent to any amendment to this Trust
Agreement which would cause the Trust to fail or cease to qualify for the
exemption from status of an "investment company" under the Investment Company
Act of 1940, as amended, afforded by Rule 3a-5 thereunder.
(e) Without the consent of the Depositor, this Trust Agreement may not
be amended in a manner which imposes any additional obligation on the Depositor.
In executing any amendment permitted by this Trust Agreement, the Trustees shall
be entitled to receive, and (subject to Section 8.01) shall be fully protected
in relying upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Trust Agreement. Any Trustee may,
but shall not be obligated to, enter into any such amendment which affects such
Trustee's own rights, duties, immunities or liabilities under this Trust
Agreement or otherwise.
(f) In the event that any amendment to this Trust Agreement is made,
the Administrative Trustees shall promptly provide to the Depositor a copy of
such amendment.
Section 10.04 Separability. In case any provision in this Trust
Agreement or in the Trust Securities Certificates shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
Section 10.05 Governing Law. THIS TRUST AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH
RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF DELAWARE;
PROVIDED THAT THE IMMUNITIES AND STANDARD OF CARE OF THE PROPERTY TRUSTEE SHALL
BE GOVERNED BY NEW YORK LAW.
Section 10.06 Successors. This Trust Agreement shall be binding upon
and shall inure to the benefit of any successor to both the Trust and the
Trustees, including any successor by operation of law.
Section 10.07 Headings. The Article and Section headings are for
convenience only and shall not affect the construction of this Trust Agreement.
Section 10.08 Notice and Demand. Any notice, demand or other
communication which by any provision of this Trust Agreement is required or
permitted to be given or served to or upon any Securityholder or the Depositor
may be given or served in writing by deposit thereof, first-class postage
prepaid, in the United States mail, hand delivery or facsimile transmission, in
each case, addressed, (i) in the case of a Preferred Securityholder, to such
Preferred Securityholder as such Securityholder's name and address appear on the
Securities Register and (ii) in the case of the Common Securityholder or the
Depositor, to Southern Company Capital Funding, Inc., c/o The Southern Company,
270 Peachtree Street, N.W., Atlanta, Georgia 30303, Attention: Secretary,
Facsimile No. (404) 506-0808, with a copy to Southern Company Services, Inc.,
270 Peachtree Street, N.W., Suite 2000, Atlanta, Georgia 30303, Attention:
Corporate Finance Department, Facsimile No. (404) 506-0674. Such notice, demand
or other communication to or upon a Securityholder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust or the Trustees shall be given in writing addressed (until another
address is published by the Trust) as follows: (i) with respect to the Property
Trustee and the Delaware Trustee, Bankers Trust Company, Four Albany Street, New
York, New York, 10006, Attention: Corporate Trust and Agency Group, Manager
Public Utilities Group; Bankers Trust (Delaware), E.A. Delle Donne Corporate
Center, Montgomery Building, 1011 Centre Road, Suite 200, Wilmington, Delaware
19805-1266, Attention: Lisa Wilkins, as the case may be; and (ii) with respect
to the Administrative Trustees, to them at the address above for notices to the
Depositor, marked Attention: Administrative Trustees of Southern Company Capital
Trust IV c/o Secretary. Such notice, demand or other communication to or upon
the Trust or the Trustees shall be deemed to have been sufficiently given or
made only upon actual receipt of the writing by the applicable Trustee.
Section 10.09 Agreement Not to Petition. Each of the Trustees and the
Depositor agrees for the benefit of the Securityholders that, until at least one
year and one day after the Trust has been terminated in accordance with Article
IX, it shall not file, or join in the filing of, a petition against the Trust
under any bankruptcy, reorganization, arrangement, insolvency, liquidation or
other similar law (including, without limitation, the United States Bankruptcy
Code) (collectively, "Bankruptcy Laws") or otherwise join in the commencement of
any proceeding against the Trust under any Bankruptcy Law. In the event the
Depositor takes action in violation of this Section 10.09, the Property Trustee
agrees, for the benefit of Securityholders, that it shall file an answer with
the bankruptcy court or otherwise properly contest the filing of such petition
by the Depositor against the Trust or the commencement of such action and raise
the defense that the Depositor has agreed in writing not to take such action and
should be stopped and precluded therefrom and such other defenses, if any, as
counsel for the Trustees or the Trust may assert. The provisions of this Section
10.09 shall survive the termination of this Trust Agreement.
Section 10.10 Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trustee Agreement and shall,
to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a Trustee
for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON
BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST
SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT
TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE
SUBORDINATED INDENTURE AND THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND
SUCH OTHERS THAT THOSE TERMS AND PROVISIONS SHALL BE BINDING, OPERATIVE AND
EFFECTIVE AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Trust
Agreement or have caused this Trust Agreement to be executed on their behalf,
all as of the day and year first above written.
SOUTHERN COMPANY CAPITAL
FUNDING, INC.,
as Depositor
By:
Title:
BANKERS TRUST COMPANY,
as Property Trustee
By:
Title:
BANKERS TRUST (DELAWARE),
as Delaware Trustee
By:
Title:
Wayne Boston,
as Administrative Trustee
Richard A. Childs,
as Administrative Trustee
<PAGE>
[EXHIBITS A AND B ARE INTENTIONALLY RESERVED]
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT AS PROVIDED IN THE TRUST AGREEMENT
REFERRED TO HEREIN
Certificate Number Number of Common Securities
C-1 ________
Certificate Evidencing Common Securities
of
Southern Company Capital Trust IV
Common Securities
(liquidation amount $25 per Common Security)
Southern Company Capital Trust IV, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Southern Company Capital Funding, Inc. (the "Holder") is the registered owner of
_____________ (_______) common securities of the Trust representing undivided
beneficial interests in the assets of the Trust and designated the Common
Securities (liquidation amount $25 per Common Security) (the "Common
Securities"). In accordance with Section 5.10 of the Trust Agreement (as defined
below) the Common Securities are not transferable, except by operation of law,
and any attempted transfer hereof shall be void. The designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust dated as of _________ 1, 1998, as the same may be amended from time to
time (the "Trust Agreement"), including the designation of the terms of the
Common Securities as set forth therein. The Trust will furnish a copy of the
Trust Agreement to the Holder without charge upon written request to the Trust
at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
<PAGE>
IN WITNESS WHEREOF, the Administrative Trustees of the Trust have
executed this certificate this ____ day of ________, 19__.
Southern Company Capital Trust IV
By:
Wayne Boston,
as Administrative Trustee
By:
Richard A. Childs,
as Administrative Trustee
CERTIFICATE OF AUTHENTICATION
This is one of the Common Securities referred to in the
within-mentioned Trust Agreement.
as Administrative Trustee
<PAGE>
EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES
THIS AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") is
made as of _______ 1, 1998, between The Southern Company, a Delaware corporation
(the "Company"), and Southern Company Capital Trust IV, a Delaware business
trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities") to and receive Junior Subordinated Notes from Southern Company
Capital Funding, Inc., a Delaware corporation and an indirect, wholly-owned
subsidiary of the Company, and to issue and sell Southern Company Capital Trust
IV _____% Trust Originated Preferred Securities (the "Preferred Securities")
with such powers, preferences and special rights and restrictions as are set
forth in the Amended and Restated Trust Agreement of the Trust dated as of
_________ 1, 1998 as the same may be amended from time to time (the "Trust
Agreement"); and
WHEREAS, the Company is the guarantor of the Junior Subordinated Notes.
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase the Company hereby agrees shall benefit the
Company and which purchase the Company acknowledges will be made in reliance
upon the execution and delivery of this Agreement, the Company and the Trust
hereby agree as follows:
ARTICLE I
Section 1.01. Guarantee by the Company. Subject to the terms and
conditions hereof, the Company hereby irrevocably and unconditionally guarantees
to each person or entity to whom the Trust is now or hereafter becomes indebted
or liable (the "Beneficiaries") the full payment, when and as due, of any and
all Obligations (as hereinafter defined) to such Beneficiaries. As used herein,
"Obligations" means any indebtedness, expenses or liabilities of the Trust,
other than obligations of the Trust to pay to holders of any Preferred
Securities or other similar interests in the Trust the amounts due such holders
pursuant to the terms of the Preferred Securities or such other similar
interests, as the case may be. This Agreement is intended to be for the benefit
of, and to be enforceable by, all such Beneficiaries, whether or not such
Beneficiaries have received notice hereof.
Section 1.02. Term of Agreement. This Agreement shall terminate and be
of no further force and effect upon the date on which there are no Beneficiaries
remaining; provided, however, that this Agreement shall continue to be effective
or shall be reinstated, as the case may be, if at any time any holder of
Preferred Securities or any Beneficiary must restore payment of any sums paid
under the Preferred Securities, under any Obligation, under the Preferred
Securities Guarantee Agreement dated the date hereof by the Company and Bankers
Trust Company, as guarantee trustee, or under this Agreement for any reason
whatsoever. This Agreement is continuing, irrevocable, unconditional and
absolute.
Section 1.03. Waiver of Notice. The Company hereby waives notice of
acceptance of this Agreement and of any Obligation to which it applies or may
apply, and the Company hereby waives presentment, demand for payment, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
Section 1.04. No Impairment. The obligations, covenants, agreements and
duties of the Company under this Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all
or any portion of the Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the
Obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Beneficiaries with respect
to the Obligations or any action on the part of the Trust granting
indulgence or extension of any kind; or
(c) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Trust or any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, the Company with respect to the happening of any of the
foregoing.
Section 1.05. Enforcement. A Beneficiary may enforce this Agreement
directly against the Company and the Company waives any right or remedy to
require that any action be brought against the Trust or any other person or
entity before proceeding against the Company.
ARTICLE II
Section 2.01. Binding Effect. All guarantees and agreements contained
in this Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the
Beneficiaries.
Section 2.02. Amendment. So long as there remains any Beneficiary or
any Preferred Securities of any series are outstanding, this Agreement shall not
be modified or amended in any manner adverse to such Beneficiary or to the
holders of the Preferred Securities.
Section 2.03. Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be given in writing by
delivering the same against receipt therefor by facsimile transmission
(confirmed by mail), telex or by registered or certified mail, addressed as
follows (and if so given, shall be deemed given when mailed or upon receipt of
an answer-back, if sent by telex), to-wit:
Southern Company Capital Trust IV
c/o Bankers Trust Company
Four Albany Street
New York, New York 10006
Facsimile No.: (212) 250-6725
Attention: Corporate Trust and Agency Group
Manager Public Utilities Group
The Southern Company
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
Facsimile No.: (404) 506-0808
Attention: Secretary
Section 2.04. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.
<PAGE>
THIS AGREEMENT is executed as of the date and year first above written.
THE SOUTHERN COMPANY
By:
SOUTHERN COMPANY CAPITAL TRUST IV
By:
Wayne Boston, as
Administrative Trustee
<PAGE>
EXHIBIT E
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to Southern
Company Capital Trust IV or its agent for registration of transfer, exchange, or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), any transfer, pledge, or other use hereof for
value or otherwise by or to any person is wrongful inasmuch as the registered
owner thereof, Cede & Co., has an interest herein.
Certificate Number Number of Preferred Securities
---------
P-1 CUSIP NO. _____ _______
Certificate Evidencing Preferred Securities
of
Southern Company Capital Trust IV
_____% Trust Originated Preferred Securities
(Liquidation amount $25 per Preferred Security)
Southern Company Capital Trust IV, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Cede & Co. (the "Holder") is the registered owner of _______ MILLION (_______)
Preferred Securities of the Trust representing undivided beneficial interests in
the assets of the Trust and designated the Southern Company Capital Trust IV
______% Trust Originated Preferred Securities (liquidation amount $25 per
Preferred Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in Section 5.04 of the Trust Agreement (as
defined below). The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities are set forth in, and
this certificate and the Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Trust, dated as of _______ 1, 1998, as the same
may be amended from time to time (the "Trust Agreement"), including the
designation of the terms of Preferred Securities as set forth therein. The
holder of this certificate is entitled to the benefits of a guarantee by The
Southern Company, a Delaware corporation (the "Company"), pursuant to a
Preferred Securities Guarantee Agreement between the Company and Bankers Trust
Company, as guarantee trustee, dated as of ______ 1, 1998, as the same may be
amended from time to time (the "Guarantee"), to the extent provided therein. The
Trust will furnish a copy of the Trust Agreement and the Guarantee to the holder
of this certificate without charge upon written request to the Trust at its
principal place of business or registered office.
Upon receipt of this certificate, the holder of this certificate is
bound by the Trust Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Administrative Trustees of the Trust have
executed this certificate this ____ day of ________, 19__.
SOUTHERN COMPANY CAPITAL TRUST IV
By:
Wayne Boston,
as Administrative Trustee
By:
Richard A. Childs,
as Administrative Trustee
CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Trust Agreement.
as Administrative Trustee
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Preferred Securities Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this Preferred
Securities Certificate)
Exhibit 4.8
PREFERRED SECURITIES GUARANTEE AGREEMENT
Between
The Southern Company
(as Guarantor)
and
Bankers Trust Company
(as Trustee)
dated as of
__________ 1, 1998
<PAGE>
CROSS-REFERENCE TABLE1
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
310(a)..............................................................4.01(a)
310(b)........................................................4.01(c), 2.08
310(c).........................................................Inapplicable
311(a)..............................................................2.02(b)
311(b)..............................................................2.02(b)
311(c).........................................................Inapplicable
312(a)..............................................................2.02(a)
312(b)..............................................................2.02(b)
313....................................................................2.03
314(a).................................................................2.04
314(b).........................................................Inapplicable
314(c).................................................................2.05
314(d).........................................................Inapplicable
314(e).....................................................1.01, 2.05, 3.02
314(f)...........................................................2.01, 3.02
315(a)..............................................................3.01(d)
315(b).................................................................2.07
315(c).................................................................3.01
315(d)..............................................................3.01(d)
315(e).........................................................Inapplicable
316(a)........................................................5.04(i), 2.06
316(b).................................................................5.03
316(c).................................................................2.02
317(a).........................................................Inapplicable
317(b).........................................................Inapplicable
318(a)..............................................................2.01(b)
318(b).................................................................2.01
318(c)..............................................................2.01(a)
1This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
i
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I..................................................................1
SECTION 1.01. Definitions..................................................1
ARTICLE II.................................................................4
SECTION 2.01. Trust Indenture Act; Application.............................4
SECTION 2.02. Lists of Holders of Securities...............................4
SECTION 2.03. Reports by the Trustee.......................................4
SECTION 2.04. Periodic Reports to Trustee..................................4
SECTION 2.05. Evidence of Compliance with Conditions Precedent.............5
SECTION 2.06. Events of Default; Waiver....................................5
SECTION 2.07. Event of Default; Notice.....................................5
SECTION 2.08. Conflicting Interests........................................5
ARTICLE III................................................................5
SECTION 3.01. Powers and Duties of the Trustee.............................5
SECTION 3.02. Certain Rights of Trustee....................................7
ii
<PAGE>
SECTION 3.03. Compensation; Fees; Indemnity...............................8
ARTICLE IV................................................................9
SECTION 4.01. Trustee; Eligibility........................................9
SECTION 4.02. Appointment, Removal and Resignation of Trustee............10
ARTICLE V................................................................10
SECTION 5.01. Guarantee..................................................10
SECTION 5.02. Waiver of Notice and Demand................................10
SECTION 5.03. Obligations Not Affected...................................11
SECTION 5.04. Rights of Holders..........................................11
SECTION 5.05. Guarantee of Payment.......................................12
SECTION 5.06. Subrogation................................................12
SECTION 5.07. Independent Obligations....................................12
ARTICLE VI...............................................................12
SECTION 6.01. Subordination..............................................12
ARTICLE VII..............................................................13
SECTION 7.01. Termination................................................13
ARTICLE VIII.............................................................13
iii
<PAGE>
SECTION 8.01. Successors and Assigns.....................................13
SECTION 8.02. Amendments.................................................13
SECTION 8.03. Notices....................................................13
SECTION 8.04. Benefit....................................................14
SECTION 8.05. Interpretation.............................................15
SECTION 8.06. Governing Law..............................................15
iv
<PAGE>
PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT ("Guarantee Agreement"),
dated as of _______ 1, 1998, between THE SOUTHERN COMPANY, a Delaware
corporation (the "Guarantor"), and BANKERS TRUST COMPANY, a New York banking
corporation, as trustee (the "Trustee"), for the benefit of the Holders (as
defined herein) from time to time of the Preferred Securities (as defined
herein) of SOUTHERN COMPANY CAPITAL TRUST IV, a Delaware statutory business
trust (the "Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of _________ 1, 1998, among the Trustee, the other
Trustees named therein, Southern Company Capital Funding, Inc., a Delaware
corporation (the "Company"), as Depositor, and the holders of undivided
beneficial interests in the assets of the Trust, the Trust is issuing as of
____________, 1998 $200,000,000 aggregate liquidation amount of its ______%
Trust Originated Preferred Securities (the "Preferred Securities") representing
preferred undivided beneficial interests in the assets of the Trust and having
the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Trust and the
proceeds thereof will be used to purchase the Junior Subordinated Notes (as
defined in the Trust Agreement) of the Company, which will be held by the Trust
as trust assets; and
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the payment for Preferred
Securities by each Holder (as defined herein) thereof, which payment the
Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and
delivers this Guarantee Agreement for the benefit of the Holders from time to
time of the Preferred Securities.
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Guarantee Agreement, the
terms set forth below shall, unless the context otherwise requires, have the
following meanings. Capitalized or otherwise defined terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Trust Agreement as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
<PAGE>
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Trust.
"Event of Default" means a failure by the Guarantor to perform any of
its payment obligations under this Guarantee Agreement.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by or on behalf of the Trust: (i) any accrued and
unpaid distributions that are required to be paid on such Preferred Securities
but if and only if and to the extent the Trust has funds legally and immediately
available therefor to make such payment; (ii) the redemption price, including
all accrued and unpaid distributions to the date of redemption (the "Redemption
Price"), with respect to the Preferred Securities called for redemption by the
Trust but if and only if and to the extent that the Trust has funds legally and
immediately available therefor sufficient to make such payment; and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of Junior Subordinated Notes to
the holders of Trust Securities or the redemption of all of the Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment, to the extent the Trust has funds legally and immediately available
therefor, and (b) the amount of assets of the Trust remaining available for
distribution to Holders in liquidation of the Trust (in either case, the
"Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records
of the Trust, of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor, the Company or any Affiliate of the Guarantor
or the Company.
"Indenture" means the Subordinated Note Indenture dated as of June 1,
1997, among the Company, as Subordinated Note Issuer, the Guarantor, as
guarantor, and Bankers Trust Company, as trustee, as heretofore supplemented and
as supplemented by the Second Supplemental Indenture dated as of ______________,
1998, by and among the Company, the Guarantor and Bankers Trust Company, as
trustee.
"Majority in liquidation amount of Preferred Securities" means a vote
by Holder(s) of Preferred Securities, voting separately as a class, of more than
50% of the liquidation amount of all Preferred Securities outstanding at the
time of determination.
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"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Guarantor, and
delivered to the Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee Agreement
shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Responsible Officer" means, with respect to the Trustee, any managing
director, any vice president, any assistant vice president, any assistant
secretary, any assistant treasurer, or any other officer of the Corporate Trust
and Agency Group of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Trustee" means a successor Trustee possessing the
qualifications to act as Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trustee" means Bankers Trust Company until a Successor Trustee has
been appointed and has accepted such appointment pursuant to the terms of this
Guarantee Agreement and thereafter means each such Successor Trustee.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions; and
(b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 2.02. Lists of Holders of Securities.
(a) The Guarantor shall furnish or cause to be furnished to the Trustee
(a) semiannually, not later than June 1 and December 1 in each year, a list, in
such form as the Trustee may reasonably require, of the names and addresses of
the Holders ("List of Holders") as of a date not more than 15 days prior to the
time such list is furnished, and (b) at such other times as the Trustee may
request in writing, within 30 days after the receipt by the Guarantor of any
such request, a List of Holders as of a date not more than 15 days prior to the
time such list is furnished; provided that, the Guarantor shall not be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Trustee by the Guarantor or at
any time the Trustee is the Securities Registrar under the Trust Agreement. The
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Trustee shall comply with its obligations under Sections
311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Trustee. Within 60 days after May 15 of
each year commencing May 15, 199_, the Trustee shall provide to the Holders of
the Preferred Securities such reports as are required by Section 313(a) of the
Trust Indenture Act, if any, in the form and in the manner provided by Section
313 of the Trust Indenture Act. The Trustee shall also comply with the other
requirements of Section 313 of the Trust Indenture Act.
SECTION 2.04. Periodic Reports to Trustee. The Guarantor shall provide
to the Trustee such documents, reports and information as required by Section
314 of the Trust Indenture Act (if any) in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act, and shall provide,
within 120 days after the end of each of its fiscal years, the compliance
certificate required by Section 314(a)(4) of the Trust Indenture Act in the form
and in the manner required by such Section.
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SECTION 2.05. Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Guarantee Agreement that
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act. Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.06. Events of Default; Waiver. The Holders of a Majority in
liquidation amount of Preferred Securities may, by vote, on behalf of all of the
Holders, waive any past Event of Default and its consequences. Upon such waiver,
any such Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.07. Event of Default; Notice.
(a) The Trustee shall, within 90 days after the occurrence of an Event
of Default, transmit by mail, first class postage prepaid, to the Holders,
notices of all Events of Default known to the Trustee, unless such defaults have
been cured before the giving of such notice, provided that the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders.
(b) The Trustee shall not be deemed to have knowledge of any Event of
Default unless the Trustee shall have received written notice, or a Responsible
Officer charged with the administration of the Trust Agreement shall have
obtained written notice, of such Event of Default.
SECTION 2.08. Conflicting Interests. The Trust Agreement shall be
deemed to be specifically described in this Guarantee Agreement for the purposes
of clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF TRUSTEE
SECTION 3.01. Powers and Duties of the Trustee.
(a) This Guarantee Agreement shall be held by the Trustee for the
benefit of the Holders, and the Trustee shall not transfer this Guarantee
Agreement to any Person except the Trustee shall assign rights hereunder to a
Holder to the extent such assignment is necessary to exercise such Holder's
rights pursuant to Section 5.04 or to a Successor Trustee upon acceptance by
such Successor Trustee of its appointment to act as Successor Trustee. The
right, title and interest of the Trustee shall automatically vest in any
Successor Trustee, and such vesting and cessation of title shall be effective
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whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Trustee.
(b) If an Event of Default has occurred and is continuing, the Trustee
shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Trustee, before the occurrence of any Event of Default and
after the curing or waiving of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.06), the
Trustee shall exercise such of the rights and powers vested in it by this
Guarantee Agreement, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Trustee shall
be determined solely by the express provisions of this
Guarantee Agreement, and the Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Guarantee
Agreement; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not
they conform to the requirements of this Guarantee Agreement;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of a Majority in liquidation amount
of the Preferred Securities relating to the time, method and place of
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conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this
Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or
liability is not reasonably assured to it.
SECTION 3.02. Certain Rights of Trustee.
(a) Subject to the provisions of Section 3.01:
(i) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine
and to have been signed, sent or presented by the proper party or
parties;
(ii) any direction or act of the Guarantor contemplated
by this Guarantee Agreement shall be sufficiently evidenced by an
Officers' Certificate;
(iii) whenever, in the administration of this Guarantee
Agreement, the Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
rely upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Guarantor;
(iv) the Trustee may consult with counsel of its choice, and
the advice or opinion of such counsel with respect to legal matters
shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion; such counsel may be counsel
to the Guarantor or any of its Affiliates and may include any of its
employees; the Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement
from any court of competent jurisdiction;
(v) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder shall have
provided to the Trustee reasonable security and indemnity satisfactory
to the Trustee against the costs, expenses (including attorneys' fees
and expenses) and liabilities that might be incurred by it in complying
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with such request or direction, including such reasonable advances as
may be requested by the Trustee; provided that nothing contained in
this Section 3.02(a)(v) shall be taken to relieve the Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Guarantee Agreement;
(vi) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(viii) whenever in the administration of this Guarantee
Agreement the Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Trustee (i) may request instructions from the
Holders, (ii) may refrain from enforcing such remedy or right or taking
such other action until such instructions are received, and (iii) shall
be protected in acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it in any jurisdiction
in which it shall be illegal, or in which the Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power or
authority available to the Trustee shall be construed to be a duty.
SECTION 3.03. Compensation; Fees; Indemnity.
The Guarantor agrees:
(a) to pay to the Trustee from time to time reasonable compensation for
all services rendered by the Trustee hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Guarantee Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
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(c) to indemnify the Trustee for, and to hold the Trustee harmless
against, any and all loss, damage, claims, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of this Guarantee Agreement, including the costs
and expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
The provisions of this Section 3.03 shall survive the termination of this
Guarantee Agreement.
ARTICLE IV
TRUSTEE
SECTION 4.01. Trustee; Eligibility.
(a) There shall at all times be a Trustee which shall:
(i) not be an Affiliate of the Guarantor or the Company; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then, for the
purposes of this Section 4.01(a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Trustee shall cease to be eligible to so act
under Section 4.01(a), the Trustee shall immediately resign in the manner and
with the effect set out in Section 4.02(c).
(c) If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and
Guarantor shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act, subject to the rights of the Trustee under the
penultimate paragraph thereof.
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SECTION 4.02. Appointment, Removal and Resignation of Trustee.
(a) Subject to Section 4.02(b), the Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Trustee shall not be removed until a Successor Trustee has been
appointed and has accepted such appointment by written instrument executed by
such Successor Trustee and delivered to the Guarantor.
(c) The Trustee appointed to office shall hold office until a Successor
Trustee shall have been appointed or until its removal or resignation. The
Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing executed by the Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Trustee has
been appointed and has accepted such appointment by instrument in writing
executed by such Successor Trustee and delivered to the Guarantor and the
resigning Trustee.
(d) If no Successor Trustee shall have been appointed and accepted
appointment as provided in this Section 4.02 within 60 days after delivery to
the Guarantor of an instrument of resignation, the resigning Trustee may
petition any court of competent jurisdiction for appointment of a Successor
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Trustee.
ARTICLE V
GUARANTEE
SECTION 5.01. Guarantee. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which the Guarantor
may have or assert against any Person. The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Trust to pay such amounts to the
Holders.
SECTION 5.02. Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of this Guarantee Agreement and of any liability to which
it applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Trust or any other Person before proceeding against
the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
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SECTION 5.03. Obligations Not Affected. The obligation of the
Guarantor to make the Guarantee Payments under this Guarantee Agreement shall
in no way be affected or impaired by reason of the happening from time to time
of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Junior Subordinated Notes permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.03 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04. Rights of Holders. The Guarantor expressly acknowledges
that: (i) this Guarantee Agreement will be deposited with the Trustee to be held
for the benefit of the Holders; (ii) the Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in
liquidation amount of the Preferred Securities have the right to direct the
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time, method and place of conducting any proceeding for any remedy available to
the Trustee in respect of this Guarantee Agreement or exercising any trust or
power conferred upon the Trustee under this Guarantee Agreement, provided that
such direction shall not be in conflict with any rule of law or with this
Guarantee Agreement, and could not involve the Trustee in personal liability in
circumstances where reasonable indemnity would not be adequate; and (iv) any
Holder may institute a legal proceeding directly against the Guarantor to
enforce its rights under this Guarantee Agreement, without first instituting a
legal proceeding against or requesting or directing that action be taken by the
Trustee or any other Person; it being understood and intended that no one or
more of such Holders shall have any right in any manner whatsoever by virtue of,
or by availing of, any provision of this Guarantee Agreement to affect, disturb
or prejudice the rights of any other of such Holders or to obtain or to seek to
obtain priority or preference over any other of such Holders or to enforce any
right under this Guarantee Agreement, except in the manner herein provided and
for the equal and ratable benefit of all of such Holders.
SECTION 5.05. Guarantee of Payment. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will not be
discharged except by payment of the Guarantee Payments in full (without
duplication) or upon the distribution of Junior Subordinated Notes to the
Holders in exchange for all of the Preferred Securities.
SECTION 5.06. Subrogation. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Trust in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts of Guarantee Payments are due
and unpaid under this Guarantee Agreement. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.07. Independent Obligations. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Trust with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof.
ARTICLE VI
SUBORDINATION
SECTION 6.01. Subordination. This Guarantee Agreement will constitute
an unsecured obligation of the Guarantor and will rank (i) subordinate and
junior in right of payment to all other liabilities of the Guarantor, including
the Junior Subordinated Notes, except those obligations or liabilities made pari
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passu or subordinate by their terms, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and with
any guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference securities of any Affiliate of the Guarantor, and (iii)
senior to all common stock of the Guarantor.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Guarantee Agreement shall terminate and
be of no further force and effect upon: (i) full payment of the Redemption Price
of all Preferred Securities, (ii) the distribution of Junior Subordinated Notes
to the Holders in exchange for all of the Preferred Securities, or (iii) full
payment of the amounts payable in accordance with the Trust Agreement upon
liquidation of the Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid with respect
to Preferred Securities or under this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Successors and Assigns. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger, conveyance, transfer, or lease
involving the Guarantor that is permitted under Article Eight of the Indenture,
the Guarantor shall not assign its obligations hereunder.
SECTION 8.02. Amendments. Except with respect to any changes which do
not materially and adversely affect the rights of Holders (in which case no
consent of Holders will be required), this Guarantee Agreement may only be
amended with the prior approval of the Holders of not less than 66-2/3% in
liquidation amount of all the outstanding Preferred Securities. The provisions
of Article Six of the Trust Agreement concerning meetings of Holders shall apply
to the giving of such approval.
SECTION 8.03. Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
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(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Trustee and the
Holders:
The Southern Company
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
Facsimile No.: (404) 506-0808
Attn: Secretary
with copy to:
Southern Company Services, Inc.
270 Peachtree Street, N.W., Suite 2000
Atlanta, Georgia 30303
Facsimile No.: (404) 506-0674
Attention: Corporate Finance Department
(b) if given to the Trust, in care of the Trustee, or to the Trustee at
the Trust's (and the Trustee's) address set forth below or such other address as
the Trustee on behalf of the Trust may give notice to the Holders:
Southern Company Capital Trust IV
c/o Bankers Trust Company
Four Albany Street
New York, New York 10006
Attn: Corporate Trust and Agency Group
Manager Public Utilities Group
with a copy, in the case of a notice to the Trust (other than a notice
from the Guarantor), to the Guarantor;
(c) if given to any Holder, at the address set forth on the books and
records of the Trust.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 8.04. Benefit. This Guarantee Agreement is solely for the
benefit of the Holders and, subject to Section 3.01(a), is not separately
transferable from the Preferred Securities.
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<PAGE>
SECTION 8.05. Interpretation. In this Guarantee Agreement, unless
the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to them in
Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 8.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK. THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK IN
ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN
CONNECTION WITH THIS GUARANTEE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN
ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER, OR THAT THIS GUARANTEE AGREEMENT OR ANY DOCUMENT OR ANY
INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED
IN OR BY SUCH COURTS. THE GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE
UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN
THIS GUARANTEE AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.
15
<PAGE>
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
<PAGE>
17
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
THE SOUTHERN COMPANY
By:
Name: W.L. Westbrook
Title: Financial Vice President
BANKERS TRUST COMPANY,
as Trustee
By:
Name:
Title:
EXHIBIT 5.1
TROUTMAN SANDERS LLP
600 Peachtree Street, N.E., Suite 5200
Atlanta, Georgia 30308-2216
(404) 885-3000
April 21, 1998
The Southern Company
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
Southern Company Capital Funding, Inc.
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We are acting as counsel to The Southern Company ("Southern") and
Southern Company Capital Funding, Inc. ("Capital") in connection with the
preparation of a Registration Statement on Form S-3, including a preliminary
prospectus, filed with the Securities and Exchange Commission (the "Commission")
on April 21, 1998 (the "Registration Statement"), for the registration under the
Securities Act of 1933, as amended (the "Act"), of (1) Junior Subordinated Notes
(the "Junior Subordinated Notes") to be issued by Capital to Southern Company
Capital Trust IV (the "Trust"), (2) Trust Originated Preferred Securities
(liquidation amount $25 per Preferred Security) to be issued by the Trust, (3)
Southern's Preferred Securities Guarantee (as defined in the Registration
Statement) with respect to such Preferred Securities and (4) Southern's Notes
Guarantee (as defined in the Registration Statement) with respect to the Junior
Subordinated Notes. The Junior Subordinated Notes and the Notes Guarantee will
be issued pursuant to a subordinated note indenture, as supplemented, among
Southern, Capital and the trustee named therein (the "Subordinated Note
Indenture") and the Preferred Securities Guarantee will be issued pursuant to a
guarantee agreement between Southern and the trustee named therein (the
"Preferred Securities Guarantee Agreement"), in each case in the respective
forms filed as exhibits to the Registration Statement.
We are of the opinion that, upon compliance with the pertinent
provisions of the Act, the Trust Indenture Act of 1939, as amended, and the
Public Utility Holding Company Act of 1935, as amended, upon compliance with
applicable securities or blue sky laws of various jurisdictions, upon the
adoption
<PAGE>
The Southern Company
Southern Company Capital Funding, Inc.
April 21, 1998
Page 2
of appropriate resolutions by the Board of Directors of Southern or a duly
authorized committee thereof, upon the adoption of appropriate resolutions by
the Board of Directors of Capital or a duly authorized committee thereof , when
the Subordinated Note Indenture has been duly executed and delivered by the
proper officers of Southern, Capital and the trustee named therein, when the
Preferred Securities Guarantee Agreement has been duly executed and delivered by
the proper officers of Southern and the trustee named therein, and when the
Junior Subordinated Notes, the Notes Guarantee and the Preferred Securities
Guarantee have been executed, authenticated and delivered in accordance with the
terms of the Subordinated Note Indenture and the Preferred Securities Guarantee
Agreement, as the case may be, (i) the Notes Guarantee and the Preferred
Securities Guarantee will be valid, binding and legal obligations of Southern
(subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and to
general principles of equity, whether considered in a proceeding at law or in
equity) and (ii) the Junior Subordinated Notes will be valid, binding and legal
obligations of Capital (subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and to general principles of equity, whether
considered in a proceeding at law or in equity). In rendering the foregoing
opinion, with respect to matters of New York law, we have relied on the opinion
of Dewey Ballantine LLP attached hereto as Annex I.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the statements with respect to our firm under the
caption "Legal Matters" in the Registration Statement. In giving the foregoing
consent, we do not hereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Troutman Sanders LLP
TROUTMAN SANDERS LLP
<PAGE>
Annex I
April 21, 1998
Troutman Sanders LLP
600 Peachtree Street, N.E.
Suite 5200
Atlanta, Georgia 30308
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We are acting as counsel to the underwriters in connection with the
preparation of a Registration Statement on Form S-3, including a preliminary
prospectus, filed with the Securities and Exchange Commission (the "Commission")
on April 21, 1998 (the "Registration Statement"), for the registration under the
Securities Act of 1933, as amended (the "Act"), of (1) Junior Subordinated Notes
(the "Junior Subordinated Notes") to be issued by Southern Company Capital
Funding, Inc. ("Capital") to Southern Company Capital Trust IV (the "Trust"),
(2) Trust Originated Preferred Securities (liquidation amount $25 per Preferred
Security) to be issued by the Trust, (3) the Preferred Securities Guarantee (as
defined in the Registration Statement) of The Southern Company ("Southern") with
respect to such Preferred Securities and (4) Southern's Notes Guarantee (as
defined in the Registration Statement) with respect to the Junior Subordinated
Notes. The Junior Subordinated Notes and the Notes Guarantee will be issued
pursuant to a subordinated note indenture, as supplemented, among Southern,
Capital and the trustee named therein (the "Subordinated Note Indenture") and
the Preferred Securities Guarantee will be issued pursuant to a guarantee
agreement between Southern and the trustee named therein (the "Preferred
Securities Guarantee Agreement"), in each case in the respective forms filed as
exhibits to the Registration Statement.
We are of the opinion that, upon compliance with the pertinent
provisions of the Act, the Trust Indenture Act of 1939, as amended, and the
Public Utility Holding Company Act of 1935, as amended, upon compliance with
applicable securities or blue sky laws of various jurisdictions, upon the
adoption of appropriate resolutions by the Board of Directors of Southern or a
duly authorized committee thereof, upon the adoption of appropriate resolutions
by the Board of Directors of Capital or a duly authorized committee thereof,
when the Subordinated Note Indenture has been duly executed and delivered by the
proper officers of Southern, Capital and the trustee named therein, when the
Preferred Securities Guarantee Agreement has been duly executed and delivered by
the proper officers of Southern and the trustee named therein, and when the
Junior Subordinated Notes, the Notes Guarantee and the Preferred Securities
Guarantee have been executed, authenticated and delivered in accordance with the
terms of the Subordinated Note Indenture and the Preferred Securities Guarantee
Agreement, as the case may be, (i) the Notes Guarantee and the Preferred
Securities Guarantee will be valid, binding and legal obligations of Southern
(subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and to
general principles of equity, whether considered in a proceeding at law or in
equity) and (ii) the Junior Subordinated Notes will be valid, binding and legal
obligations of Capital (subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and to general principles of equity, whether
considered in a proceeding at law or in equity).
This opinion is furnished solely for your benefit in connection with
your rendering an opinion to Southern and Capital to be filed as Exhibit 5.1 to
the Registration Statement and we hereby consent to your attaching this opinion
as an annex to such opinion. This opinion may not be relied upon by you for any
other purpose, or quoted to or relied upon by any other person, firm or entity
for any purpose, without our prior written consent.
Very truly yours,
DEWEY BALLANTINE LLP
EXHIBIT 5.2
Richards, Layton & Finger
One Rodney Square
Wilmington, Delaware 19899
302-658-6541
April 21, 1998
Southern Company Capital Trust IV
c/o Southern Company Capital Funding, Inc.
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
Re: Southern Company Capital Trust IV
Ladies and Gentlemen:
We have acted as special Delaware counsel for The Southern Company, a
Delaware corporation ("Southern"), Southern Company Capital Funding, Inc., a
Delaware corporation ("Capital"), and Southern Company Capital Trust IV, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated March 16, 1998 (the
"Certificate"), as filed in the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on March 17, 1998;
(b) The Trust Agreement of the Trust, dated as of March 16, 1998,
between Capital, as Depositor, and the trustee of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on Form
S-3, including a preliminary prospectus (the "Prospectus"), relating to the
Trust Originated Preferred Securities of the Trust representing preferred
undivided beneficial interests in the assets of the Trust (each, a "Preferred
Security" and collectively, the "Preferred Securities"), filed by Southern,
Capital and the Trust with the Securities and Exchange Commission on or about
April 21, 1998;
<PAGE>
Southern Company Capital Trust IV
April 21, 1998
Page 2
(d) A form of Amended and Restated Trust Agreement of the Trust, to be
entered into among Capital, as Depositor, the trustees of the Trust named
therein, and the holders, from time to time, of undivided beneficial interests
in the assets of the Trust (including Exhibits C and E thereto) (the "Trust
Agreement"), attached as an exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated April 21, 1998,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement and the Certificate are in full force and effect and have not been
amended, (ii) except to the extent provided in paragraph 1 below, the due
creation or due organization or due formation, as the case may be, and valid
existence in good standing of each party to the documents examined by us under
the laws of the jurisdiction governing its creation, organization or formation,
(iii) the legal capacity of natural persons who are parties to the documents
examined by us, (iv) that each of the parties to the documents examined by us
has the power and authority to execute and deliver, and to perform its
obligations under, such documents, (v) the due authorization, execution and
delivery by all parties thereto of all documents examined by us, (vi) the
receipt by each Person to whom a Preferred Security is to be issued by the Trust
(collectively, the "Preferred Security Holders") of a Preferred Securities
Certificate for such Preferred Security and the payment for the Preferred
Security acquired by it, in accordance with the Trust Agreement and the
Registration Statement, and (vii) that the Preferred Securities are issued and
sold to the Preferred Security Holders in accordance with the Trust Agreement
and the Registration Statement. We have not participated in the preparation of
the Registration Statement and assume no responsibility for its contents.
<PAGE>
Southern Company Capital Trust IV
April 21, 1998
Page 3
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal laws
and rules and regulations relating thereto. Our opinions are rendered only with
respect to Delaware laws and rules, regulations and orders thereunder which are
currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition, we
hereby consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
/s/Richards, Layton & Finger
EXHIBIT 8.1
TROUTMAN SANDERS LLP
600 Peachtree Street, N.E., Suite 5200
Atlanta, Georgia 30308-2216
(404) 885-3000
April 21, 1998
The Southern Company
270 Peachtree Street, N.W.
Atlanta, Georgia 30303
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We are acting as counsel to The Southern Company in connection with the
preparation of a Registration Statement on Form S-3, including a preliminary
prospectus, filed with the Securities and Exchange Commission (the "Commission")
on April 21, 1998 (the "Registration Statement").
We hereby confirm our opinion that the statements as to matters of law
and legal conclusions set forth under the caption "Certain Federal Income Tax
Considerations" in the preliminary prospectus included in the Registration
Statement are correct in all material respects.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement and to the use of our name under the
heading "Certain Federal Income Tax Considerations" in the preliminary
prospectus forming part of the Registration Statement. In giving the foregoing
consent, we do not hereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/Troutman Sanders LLP
TROUTMAN SANDERS LLP
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Exhibit 12.1
THE SOUTHERN COMPANY 4/21/98
Computation of ratio of earnings to fixed charges for the
the five years ended December 31, 1997
and the twelve months ended March 31, 1998
Twelve
Months
Ended
Year ended December 31, March 31,
=======================================================================================
1993 1994 1995 1996 1997 1998
==== ==== ==== ==== ==== ====
------------------------------Thousands of Dollars-------------------------------------
EARNINGS AS DEFINED IN ITEM 503 OF
REGULATION S-K:
Income Before Interest Charges $1,826,864 $1,756,149 $1,900,288 $1,944,144 $2,037,380 $2,122,974
Currently payable federal & state
income taxes 484,926 685,047 656,519 651,213 650,939 644,890
Deferred federal & state
income taxes, net 209,376 (3,881) 86,938 56,603 23,959 19,037
Other income taxes, net (17,535) 4,145 25,194 49,802 164,177 162,306
AFUDC - Debt funds 13,251 18,123 20,267 19,073 14,053 11,976
---------- ---------- ---------- ---------- ---------- ----------
Earnings as defined $2,516,882 $2,459,583 $2,689,206 $2,720,835 $2,890,508 $2,961,183
========== ========== ========== ========== ========== ==========
FIXED CHARGES AS DEFINED IN ITEM 503 OF
REGULATION S-K:
Interest on long-term debt $ 594,746 $ 567,120 $ 557,199 $ 530,067 $ 679,696 $ 707,774
Interest on interim obligations 29,831 33,401 62,693 107,008 111,694 105,277
Amort of debt discount,
premium & expense, net 26,295 29,911 43,960 33,184 34,233 33,669
Other interest charges 87,086 46,945 52,712 68,099 182,827 199,904
----------- ----------- ---------- ---------- ---------- ----------
Fixed charges as defined $ 737,958 $ 677,377 $ 716,564 $ 738,358 $1,008,450 $1,046,624
=========== =========== ========== ========== ========== ==========
RATIO OF EARNINGS TO FIXED CHARGES 3.41 3.63 3.75 3.68 2.87 2.83
==== ==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Exhibit 12.2
4/21/98
THE SOUTHERN COMPANY
Computation of ratio of earnings to fixed charges plus preferred
dividend requirements for the five years ended December 31, 1997
and the twelve months ended March 31, 1998
<S> <C> <C> <C> <C> <C> <C>
Twelve
Months
Ended
Year ended December 31, March 31,
====================================================================================
1993 1994 1995 1996 1997 1998
==== ==== ==== ==== ==== ====
---------------------------Thousands of Dollars--------------------------------------
EARNINGS AS DEFINED IN ITEM 503 OF
REGULATION S-K:
Income Before Interest Charges $1,826,864 $1,756,149 $1,900,288 $1,944,144 $2,037,380 $2,122,974
Currently payable federal & state
income taxes 484,926 685,047 656,519 651,213 650,939 644,890
Deferred federal & state income
taxes, net 209,376 (3,881) 86,938 56,603 23,959 19,037
Other income taxes, net (17,535) 4,145 25,194 49,802 164,177 162,306
AFUDC - Debt funds 13,251 18,123 20,267 19,073 14,053 11,976
---------- ---------- ---------- ---------- ---------- ----------
Earnings as defined $2,516,882 $2,459,583 $2,689,206 $2,720,835 $2,890,508 $2,961,183
========== ========== ========== ========== ========== ==========
FIXED CHARGES AS DEFINED IN ITEM 503 OF
REGULATION S-K:
Interest on long-term debt $ 594,746 $ 567,120 $ 557,199 $ 530,067 $ 679,696 $ 707,774
Interest on interim obligations 29,831 33,401 62,693 107,008 111,694 105,277
Amort of debt discount, premium &
expense, net 26,295 29,911 43,960 33,184 34,233 33,669
Other interest charges 87,086 46,945 52,712 68,099 182,827 199,904
---------- ---------- ---------- ---------- ---------- ----------
Fixed charges as defined 737,958 677,377 716,564 738,358 1,008,450 1,046,624
Tax deductible preferred dividends 4,069 3,775 3,775 3,775 2,918 2,463
----------- ----------- ---------- ---------- ---------- ---------
742,027 681,152 720,339 742,133 1,011,368 1,049,087
----------- ----------- ---------- ---------- --------- ----------
Non-tax deductible preferred dividends 89,398 83,614 84,482 80,841 39,823 29,865
Ratio of net income before taxes to
net income x 1.614 x 1.625 x 1.638 x 1.619 x 1.804 x 1.759
----------- ----------- ---------- ---------- ---------- ----------
Pref dividend requirements before
income taxes 144,288 135,873 138,382 130,882 71,841 52,533
----------- ----------- ---------- ---------- ---------- ----------
Fixed charges plus pref dividend
requirements $ 886,315 $ 817,025 $ 858,721 $ 873,015 $1,083,209 $1,101,620
=========== =========== =========== =========== ========== ==========
RATIO OF EARNINGS TO FIXED CHARGES PLUS
PREFERRED DIVIDEND REQUIREMENTS 2.84 3.01 3.13 3.12 2.67 2.69
==== ==== ==== ==== ==== ====
</TABLE>
EXHIBIT 23.1
ARTHUR ANDERSEN LLP
Consent of Independent Public Accountants
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 (relating to Southern
Company Capital Trust IV Preferred Securities, Southern Company Capital Funding,
Inc. Series D Junior Subordinated Deferrable Interest Notes, The Southern
Company Preferred Securities Guarantee and The Southern Company Junior
Subordinated Notes Guarantee) of our reports dated February 11, 1998 on the
financial statements of The Southern Company and the related financial statement
schedule included in The Southern Company's Form 10-K for the year ended
December 31, 1997 and to all references to our Firm included in this
registration statement.
/s/Arthur Andersen LLP
Atlanta, Georgia
April 20, 1998
Exhibit 24.1
February 16, 1998
A. W. Dahlberg, W. L. Westbrook, Tommy Chisholm, and Wayne Boston
Dear Sirs:
The Southern Company proposes to file or join in the filing of
statements under the Securities Exchange Act of 1934, as amended, with the
Securities and Exchange Commission with respect to the following: (1) the filing
of this Company's Annual Report on Form 10-K for the year ended December 31,
1997, (2) the filing of Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K during 1998, and (3) the filing of a registration statement for the
Universal Shelf Registration Program.
The Southern Company and the undersigned directors and officers of said
Company, individually as a director and/or as an officer of the Company, hereby
make, constitute and appoint each of you our true and lawful Attorney for each
of us and in each of our names, places and steads to sign and cause to be filed
with the Securities and Exchange Commission in connection with the foregoing
said Annual Report on Form 10-K and any appropriate amendment or amendments
thereto and any necessary exhibits, said Quarterly Reports on Form 10-Q and any
necessary exhibits, any Current Reports on Form 8-K and any necessary exhibits,
and said registration statement and any amendments thereto in connection with
the Universal Shelf Registration Program.
Yours very truly,
THE SOUTHERN COMPANY
By /s/A. W. Dahlberg
A. W. Dahlberg
Chairman, President and
Chief Executive Officer
<PAGE>
- 2 -
/s/John C. Adams ________________________________
John C. Adams William A. Parker, Jr.
/s/A. D. Correll /s/William J. Rushton, III
A. D. Correll William J. Rushton, III
/s/A. W. Dahlberg /s/Gloria M. Shatto
A. W. Dahlberg Gloria M. Shatto
/s/Paul J. DeNicola /s/Gerald J. St. Pe'
Paul J. DeNicola Gerald J. St. Pe'
/s/Jack Edwards /s/Herbert Stockham
Jack Edwards Herbert Stockham
/s/H. Allen Franklin /s/Stephen A. Wakefield
H. Allen Franklin Stephen A. Wakefield
/s/Bruce S. Gordon /s/W. L. Westbrook
Bruce S. Gordon W. L. Westbrook
/s/L. G. Hardman III /s/Tommy Chisholm
L. G. Hardman III Tommy Chisholm
/s/Elmer B. Harris /s/W. Dean Hudson
Elmer B. Harris W. Dean Hudson
Exhibit 24.2
Extract from minutes of meeting of the board of directors of The Southern
Company.
- - - - - - - - - -
RESOLVED: That for the purpose of signing the Company's Annual Report
on Form 10-K for the year ended December 31, 1997, and 1998 Form 10-Q's and Form
8-K's and of remedying any deficiencies with respect thereto by appropriate
amendment or amendments, this Company, the members of its board of directors,
and its officers, are authorized to give their several powers of attorney to A.
W. Dahlberg, W. L. Westbrook, Tommy Chisholm, and Wayne Boston.
- - - - - - - - - -
The undersigned officer of The Southern Company does hereby
certify that the foregoing is a true and correct copy of a resolution duly and
regularly adopted at a meeting of the board of directors of The Southern
Company, duly held on February 16, 1998, at which a quorum was in attendance and
voting throughout, and that said resolution has not since been rescinded but is
still in full force and effect.
Dated March 25, 1998 THE SOUTHERN COMPANY
By /s/Tommy Chisholm
Tommy Chisholm
Secretary
Exhibit 25.1
-----------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
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) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
THE SOUTHERN COMPANY
SOUTHERN COMPANY CAPITAL FUNDING, INC.
SOUTHERN COMPANY CAPITAL TRUST IV
(Exact name of obligor as specified in its charter)
Delaware 58-0690070
Delaware 58-2318047
Delaware Applied for
(State or other jurisdiction of (I.R.S. employer
Incorporation or organization) Identification no.)
270 Peachtree Street NW
Atlanta, GA 30303
(Address of principal executive offices)
Preferred Securities of Southern Company Capital Trust IV
(Title of the indenture securities)
<PAGE>
Item 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.
Name Address
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
Item 3. -15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of Bankers Trust Company
dated August 7, 1990, Certificate of Amendment of the
Organization Certificate of Bankers Trust Company dated June
21, 1995 - Incorporated herein by reference to Exhibit 1 filed
with Form T-1 Statement, Registration No. 33-65171,
Certificate of Amendment of the Organization Certificate of
Bankers Trust Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1 Statement,
Registration No. 333-25843 and Certificate of Amendment of the
Organization Certificate of Bankers Trust Company dated June
19, 1997, copy attached.
Exhibit 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed with Form
T-1 Statement, Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise corporate trust
powers Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust Company, as amended on
November 18, 1997. Copy attached.
-2-
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company required by Section
321(b) of the Act. Incorporated herein by reference to Exhibit
4 filed with Form T-1 Statement, Registration No. 22-18864.
Exhibit 7 - The latest report of condition of Bankers Trust Company
dated as of December 31, 1997. Copy attached.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, 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 20th day
of April, 1998.
BANKERS TRUST COMPANY
By: William T. Jenkins
William T. Jenkins
Assistant Treasurer
-5-
<PAGE>
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated June 19, 1997, providing for an increase in
authorized capital stock from $1,601,666,670 consisting of 100,166,667 shares
with a par value of $10 each designated as Common Stock and 600 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$2,001,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 1,000 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York, this 27th day of June in the Year of our Lord one thousand nine hundred
and ninety-seven.
Manuel Kursky
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Six Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,601,666,670), divided into
One Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 600 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
<PAGE>
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
19th day of June, 1997.
James T. Byrne, Jr.
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
Lea Lahtinen
Lea Lahtinen
Sworn to before me this 19th day of June, 1997.
Sandra L. West
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 1998
<PAGE>
BY-LAWS
NOVEMBER 18, 1997
Bankers Trust Company
New York
<PAGE>
BY-LAWS
of
Bankers Trust Company
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, on
the third Tuesday in January of each year, for the election of directors and
such other business as may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall direct
the proceedings and the order of business. The Secretary shall act as secretary
of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than ten nor more than twenty-five, as may from time to time be fixed
by resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law, by a majority of
directors then in office. One-third of the number of directors, as fixed from
time to time, shall constitute a quorum. Any one or more members of the Board of
Directors or any Committee thereof may participate in a meeting of the Board of
Directors or Committee thereof by means of a conference telephone or similar
communications equipment which allows all persons participating in the meeting
to hear each other at the same time. Participation by such means shall
constitute presence in person at such a meeting.
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No person who shall have attained age 72 shall be eligible to be elected or
re-elected a director. Such director may, however, remain a director of the
Company until the next annual meeting of the stockholders of Bankers Trust New
York Corporation (the Company's parent) so that such director's retirement will
coincide with the retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, and the directors so elected shall hold office for the balance
of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence, such
other director as the Board of Directors from time to time may designate shall
preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time to
time on the third Tuesday of the month. If the day appointed for holding such
regular meetings shall be a legal holiday, the regular meeting to be held on
such day shall be held on the next business day thereafter. Special meetings of
the Board of Directors may be called upon at least two day's notice whenever it
may be deemed proper by the Chairman of the Board or, the Chief Executive
Officer or, in their absence, by such other director as the Board of Directors
may have designated pursuant to Section 3 of this Article, and shall be called
upon like notice whenever any three of the directors so request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
<PAGE>
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the Executive
Committee. In his absence, the Chief Executive Officer or, in his absence, such
other member of the Committee as the Committee from time to time may designate
shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of whom must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems advisable
with respect to the Company, its various departments and the conduct of its
operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to the
Company, its various departments and the conduct of its operations. The
Committee shall hold regular quarterly meetings and during the intervals thereof
shall meet at other times on call of the Chairman.
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such Committees. Each Committee appointed pursuant to
this Article shall serve at the pleasure of the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a Chairman
of the Board and a Chief Executive Officer; and shall also elect a President,
and may also elect a Senior Vice Chairman, one or more Vice Chairmen, one or
more Executive Vice Presidents, one or more Senior Managing Directors, one or
more Managing Directors, one or more Senior Vice Presidents, one or more
Principals, one or more Vice Presidents, one or more General Managers, a
Secretary, a Controller, a Treasurer, a General Counsel, one or more Associate
General Counsels, a General Auditor, a General Credit Auditor, and one or more
Deputy Auditors, who need not be directors. The officers of the corporation may
also include such other officers or assistant officers as shall from time to
time be elected or appointed by the Board. The Chairman of the Board or the
Chief Executive Officer or, in their absence, the President, the Senior Vice
Chairman or any Vice Chairman, may from time to time appoint assistant officers.
All officers elected or appointed by the Board of Directors shall hold their
respective offices during the pleasure of the Board of Directors, and all
assistant officers shall hold office at the pleasure of the Board or the
Chairman of the Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors
may require any and all officers and employees to give security for the faithful
performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer of
the Company who may also hold the additional title of Chairman of the Board,
President, Senior Vice Chairman or Vice Chairman and such person shall have,
subject to the supervision and direction of the Board of Directors or the
Executive Committee, all of the powers vested in such Chief Executive Officer by
law or by these By-Laws, or which usually attach or pertain to such office. The
other officers shall have, subject to the supervision and direction of the Board
of Directors or the Executive Committee or the Chairman of the Board or, the
Chief Executive Officer, the powers vested by law or by these By-Laws in them as
holders of their respective offices and, in addition, shall perform such other
duties as shall be assigned to them by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the Audit
Committee. The General Auditor shall have unrestricted access to all records and
premises of the Company and shall delegate such authority to his subordinates.
He shall have the duty to report to the Audit Committee on all matters
concerning the internal audit program and the adequacy of the system of internal
controls of the Company which he deems advisable or which the Audit Committee
may request. Additionally, the General Auditor shall have the duty of reporting
independently of all officers of the Company to the Audit Committee at least
quarterly on any matters concerning the internal audit program and the adequacy
of the system of internal controls of the Company that should be brought to the
attention of the directors except those matters responsibility for which has
been vested in the General Credit Auditor. Should the General Auditor deem any
matter to be of special immediate importance, he shall report thereon forthwith
to the Audit Committee. The General Auditor shall report to the Chief Financial
Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
<PAGE>
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of
the New York Banking Law, indemnify any person who is or was made, or threatened
to be made, a party to an action or proceeding, whether civil or criminal,
whether involving any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading statement or
other act or omission and whether brought or threatened in any court or
administrative or legislative body or agency, including an action by or in the
right of the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the Company is servicing or served
in any capacity at the request of the Company by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Company, or is
serving or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement, and costs, charges and expenses, including
attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided by,
the New York Banking Law or other rights created by (i) a resolution of
stockholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that these By-Laws
authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company, evidenced by
a written communication signed by the Chairman of the Board, the Chief Executive
Officer or the President, and (ii) only if and to the extent that, after making
such efforts as the Chairman of the Board, the Chief Executive Officer or the
President shall deem adequate in the circumstances, such person shall be unable
to obtain indemnification from such other enterprise or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the extent permitted by law, or on the basis of the applicable law in effect at
the time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or advancement of
expense pursuant to this Article V (i) is a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses of prosecuting such
claim. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstance, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant is
not entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other documents in accordance with the directions of
the Board of Directors or the Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
<PAGE>
I, _____________________________________, Assistant Secretary of Bankers Trust
Company, New York, New York, hereby certify that the foregoing is a complete,
true and correct copy of the By-Laws of Bankers Trust Company, and that the same
are in full force and effect at this date.
-------------------------------------
ASSISTANT SECRETARY
DATED: ____________________________________
<PAGE>
Legal TitleofBank:BankersTrustCompanyCallDate: 12 31 97 ST-BK:36-4840 FFIEC 031
Address:130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP:New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for December 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
| C400 |
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
ASSETS | |
<S> <C> <C>
1. Cash and balances due from depository institutions (from Schedule RC-A): | |
a. Noninterest-bearing balances and currency and coin (1) ............... | 0081 2,121,000 |1.a.
b. Interest-bearing balances (2) ........................................ | 0071 4,770,000 |1.b.
2. Securities: | |
a. Held-to-maturity securities (from Schedule RC-B, column A) ........... | 1754 0 |2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)........ | 1773 4,015,000 |2.b.
3. Federal funds sold and securities purchased under agreements to resell. | 1350 28,927,000 |3.
4. Loans and lease financing receivables: | |
a. Loans and leases, net of unearned income | |
(from Schedule RC-C)..........................RCFD 2122 17,692,000 | |4.a.
b. LESS: Allowance for loan and lease losses...RCFD 3123 659,000 | |4.b.
c. LESS: Allocated transfer risk reserve ......RCFD 3128 0 | |4.c.
d. Loans and leases, net of unearned income, | |
allowance, and reserve (item 4.a minus 4.b and 4.c) ................ | 2125 17,033,000 |4.d.
5. Trading Assets (from schedule RC-D) .................................. | 3545 45,488,000 |5.
6. Premises and fixed assets (including capitalized leases) .............. | 2145 766,000 |6.
7. Other real estate owned (from Schedule RC-M) .......................... | 2150 188,000 |7.
8. Investments in unconsolidated subsidiaries and associated companies | |
(from Schedule RC-M)................................................... | 2130 58,000 |8.
9. Customers' liability to this bank on acceptances outstanding .......... | 2155 633,000 |9.
10. Intangible assets (from Schedule RC-M) ............................... | 2143 83,000 |10.
11. Other assets (from Schedule RC-F) .................................... | 2160 5,957,000 |11.
12. Total assets (sum of items 1 through 11) ............................. | 2170 110,039,000 |12.
</TABLE>
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Legal Title of Bank:Bankers Trust CompanyCallDate:123197ST-BK:36-4840FFIEC 031
Address:130 Liberty StreetVendorID:DCERT:00623PageRC-2
City,StateZip:New York, NY10006 12
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
<TABLE>
<CAPTION>
Schedule RC--Continued
Dollar Amounts in Thousands | Bil Mil Thou |
LIABILITIES | |
<S> <C> <C> <C>
13. Deposits: | |
a. In domestic offices (sum of totals of columns | |
A and C from Schedule RC-E, part I) | RCON 2200 24,608,000 |13.a.
(1) Noninterest-bearing(1) ...........RCON 6631 2,856,000 | |13.a.(1)
(2) Interest-bearing ..................RCON 6636 21,752,000 | |13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, | |
and IBFs (from Schedule RC-E part II) | RCFN 2200 20,529,000 |13.b.
(1) Noninterest-bearing ..............RCFN 6631 2,122,000 | |13.b.(1)
(2) Interest-bearing .................RCFN 6636 18,407,000 | |13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase | RCFD 2800 13,777,000 |14.
15. a. Demand notes issued to the U.S. Treasury ............ | RCON 2840 0 |15.a.
b. Trading liabilities (from Schedule RC-D)............. | RCFD 3548 24,968,000 |15.b.
16. Other borrowed money (includes mortgage indebtedness | |
and obligations under capitalized leases): | |
a. With a remaining maturity of one year or less ....... | RCFD 2332 5,810,000 |16.a.
b. With a remaining maturity of more than one | |
year through three years............................. | A547 4,702,000 |16.b.
c. With a remaining maturity of more than three years... | A548 1,750,000 |16.c
17. Not Applicable. | |17.
18. Bank's liability on acceptances executed and outstanding ... | RCFD 2920 633,000 |18.
19. Subordinated notes and debentures (2)....................... | RCFD 3200 1,307,000 |19.
20. Other liabilities (from Schedule RC-G) ..................... | RCFD 2930 5,961,000 |20.
21. Total liabilities (sum of items 13 through 20) ............. | RCFD 2948 104,045,000 |21.
22. Not Applicable | |22.
EQUITY CAPITAL | |
23. Perpetual preferred stock and related surplus .............. | RCFD 3838 1,000,000 |23.
24. Common stock ............................................... | RCFD 3230 1,352,000 |24.
25. Surplus (exclude all surplus related to preferred stock) ... | RCFD 3839 540,000 |25.
26. a. Undivided profits and capital reserves ................ | RCFD 3632 3,526,000 |26.a.
b. Net unrealized holding gains (losses) on | |
available-for-sale securities ..................................... | RCFD 8434 (45,000) |26.b.
27. Cumulative foreign currency translation adjustments ........ | RCFD 3284 (379,000) |27.
28. Total equity capital (sum of items 23 through 27) .......... | RCFD 3210 5,994,000 |28.
29. Total liabilities and equity capital (sum of items 21 and 28) | RCFD 3300 110,039,000 |29
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed
for the bank by independent external auditors as of any date during
1996
Number
RCFD 6724 N A | M.1
1 = Independent audit of the bank conducted in accordancewith generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated
holding company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with
generally accepted auditing standards by a certified public accounting
firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external
auditors (may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ----------------------
(1) Including total demand deposits and noninterest-bearing time and
savings deposits.
(2) Includes limited-life preferred stock and related surplus.
