AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1998.
SUBJECT TO AMENDMENT. REGISTRATION NOS. 333-
333- -01
333- -02
333- -03
333- -04
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
(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)
---------------------
THE COMMISSION IS REQUESTED TO MAIL SIGNED COPIES OF ALL ORDERS, NOTICES AND
COMMUNICATIONS TO:
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
(1) Such indeterminate number or amount of Common Stock of The Southern Company,
Debt Securities, Junior Subordinated Trust Notes, Stock Purchase Contracts,
Stock Purchase Units and Preferred Securities as may from time to
time be issued at indeterminate prices. Junior Subordinated Trust Notes may
be issued and sold to Southern Company Capital Trust V, Southern Company
Capital Trust VI and Southern Company Capital Trust VII, in which event such
Junior Subordinated Trust Notes may later be distributed to the holders of
Preferred Securities upon a dissolution of Southern Company Capital Trust V,
Southern Company Capital Trust VI and Southern Company Capital Trust VII and
the distribution of the assets thereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) and exclusive of accrued interest and dividends, if
any. Calculated using the maximum aggregate offering price of such
indeterminate amount of Debt Securities that may be offered from time to
time at an offering price below their face value.
(3) Includes the rights of holders of the Preferred Securities of a Southern
Company Capital Trust under the Preferred Securities Guarantee and back-up
undertakings, consisting of obligations by The Southern Company and Southern
Company Capital Funding, Inc. to provide certain indemnities in respect of,
and pay and be responsible for certain expenses, costs, liabilities and
debts of, as applicable, Southern Company Capital Trust V, Southern Company
Capital Trust VI and Southern Company Capital Trust VII and such other
obligations of The Southern Company and Southern Company Capital Funding,
Inc. set forth in the Amended and Restated Trust Agreement, the Subordinated
Note Indenture and Supplemental Indentures thereto, in each case as further
described in the Registration Statement. No separate consideration will be
received for any Southern Company Guarantees or any back-up undertakings.
(4) No separate consideration will be received for any such Guarantees.
(5) Includes $1,000,000,000 in respect of shares of unsold Common Stock of The
Southern Company previously registered under Registration Statement No.
333-09077 (which shares are valued based upon the average of the high and
low prices on September 29, 1998, as reported by The Wall Street Journal in
its report of NYSE-Composite Transactions).
(6) Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
registration fee consists of $122,810 paid herewith and $260,690 which has
previously been paid. See Note (5).
---------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
THE WITHIN PROSPECTUS CONTAINS THE INFORMATION REQUIRED BY RULE 429 OF THE
COMMISSION UNDER THE SECURITIES ACT OF 1933 WITH RESPECT TO $1,000,000,000 IN
RESPECT OF SHARES OF COMMON STOCK OF THE SOUTHERN COMPANY REMAINING UNSOLD UNDER
REGISTRATION STATEMENT NO. 333-09077.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 SEPTEMBER 30, 1998
PROSPECTUS
$1,300,000,000
THE SOUTHERN COMPANY
COMMON STOCK
THE SOUTHERN COMPANY
SOUTHERN COMPANY CAPITAL FUNDING, INC.
SENIOR NOTES
JUNIOR SUBORDINATED NOTES
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
---------------------------
SOUTHERN COMPANY CAPITAL TRUST V
SOUTHERN COMPANY CAPITAL TRUST VI
SOUTHERN COMPANY CAPITAL TRUST VII
TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
THE SOUTHERN COMPANY
---------------------------
The Southern Company, a Delaware corporation ("Southern"), may offer, from
time to time, shares of its common stock, par value $5 per share (the "Common
Stock"). Southern Company Capital Funding, Inc., a Delaware corporation and a
wholly-owned subsidiary of Southern ("Capital"), may offer, from time to time,
(i) its senior notes (the "Senior Notes") in one or more series, (ii) its junior
subordinated notes (the "Junior Subordinated Notes" and, together with the
Senior Notes, the "Debt Securities") in one or more series, (iii) Stock Purchase
Contracts (the "Stock Purchase Contracts") to purchase shares of Common Stock or
(iv) Stock Purchase Units, each representing ownership of a Stock Purchase
Contract and Debt Securities, Preferred Securities (as defined herein) or debt
obligations of third parties, including U.S. Treasury securities, securing the
holder's obligation to purchase Common Stock under the Stock Purchase Contracts
(the "Stock Purchase Units"). The Senior Notes will be unsecured obligations of
Capital, will rank pari passu (equal in priority) with all other unsecured and
unsubordinated debt of Capital and the due and punctual payment thereof will be
unconditionally guaranteed by Southern pursuant to the Senior Notes Guarantees
(the "Senior Notes Guarantees"). The Junior Subordinated Notes will be unsecured
obligations of Capital and will be subordinate and junior in right of payment to
Senior Indebtedness (as defined herein) of Capital and the due and punctual
payment thereof will be unconditionally guaranteed by Southern pursuant to the
Junior Subordinated Notes Guarantees (the "Junior Subordinated Notes
Guarantees"). The due and punctual payment of the Stock Purchase Contracts and
Stock Purchase Units will be unconditionally guaranteed by Southern pursuant to
the Stock Purchase Contracts Guarantees (the "Stock Purchase Contracts
Guarantees") and the Stock Purchase Units Guarantees (the "Stock Purchase Units
Guarantees" and, together with the Stock Purchase Contracts Guarantees, the
"Stock Purchase Guarantees"), respectively.
Southern Company Capital Trust V, Southern Company Capital Trust VI and
Southern Company Capital Trust VII, each a statutory business trust created
under the laws of the State of Delaware (individually, a "Trust" and
collectively, the "Trusts"), may offer, from time to time, trust preferred
securities (collectively, the "Preferred Securities") representing preferred
undivided beneficial interests in the assets of the respective Trusts. Capital
will own all the common securities (the "Common Securities" and, together with
the Preferred Securities, the "Trust Securities") representing common undivided
beneficial interests in the assets of the respective Trusts. The payment of
periodic cash distributions on the Preferred Securities of each Trust and
payments on liquidation or redemption with respect to such Preferred Securities,
in each case to the extent such Trust has funds legally and immediately
available therefor, will be guaranteed by Southern as described herein
(individually, a "Preferred Securities Guarantee" and collectively, the
"Preferred Securities Guarantees"). See "Description of the Preferred Securities
Guarantees." Southern's obligations under each Preferred Securities Guarantee
will be subordinate and junior in right of payment to all of its other
liabilities and will rank pari passu with the most senior preferred stock of
Southern. Concurrently with the issuance by a Trust of its Preferred Securities,
such Trust will invest the proceeds thereof and of Capital's purchase of the
Common Securities of such Trust in a related series of Junior Subordinated Notes
of Capital with terms corresponding to the terms of such Trust's Preferred
Securities. Junior Subordinated Notes may subsequently be distributed pro rata
to holders of the Trust Securities of a Trust in connection with the termination
of such Trust upon the occurrence of certain events as may be described in an
accompanying Prospectus Supplement.
As described herein, Southern and Capital will, through each Junior
Subordinated Notes Guarantee, each Preferred Securities Guarantee, the
Subordinated Note Indenture, the Junior Subordinated Notes of the related
series, the related Trust Agreement and the related Agreement as to Expenses and
Liabilities, fully and unconditionally guarantee all of each Trust's obligations
with respect to its Preferred Securities.
The Common Stock, the Preferred Securities, the Debt Securities, the Stock
Purchase Contracts and the Stock Purchase Units are referred to herein
collectively as the "Securities." The Preferred Securities Guarantees, the
Senior Notes Guarantees, the Junior Subordinated Notes Guarantees and the Stock
Purchase Guarantees are referred to herein collectively as the "Guarantees."
Specific terms of the Securities in respect of which this Prospectus is being
delivered will be set forth in an accompanying Prospectus Supplement with
respect to such Securities, which will describe, without limitation and where
applicable, the following: (a) in the case of Common Stock, the number of
shares, purchase price and any other specific terms of the offering, (b) in the
case of Debt Securities, the specific designation, aggregate principal amount,
denominations, maturity, interest payment dates, interest rate (or the method of
determining such rate), any redemption, exchange or sinking fund provisions, and
any other specific terms of the offering, (c) in the case of Preferred
Securities, the specific designation, number of Preferred Securities,
liquidation amount per security, distribution rate (or the method of determining
such rate), dates on which distributions will be payable, voting rights, any
redemption, exchange or sinking fund provisions, and any other rights,
preferences, privileges, limitations and restrictions thereof, (d) in the case
of Stock Purchase Contracts, the designation and number of shares of Common
Stock issuable thereunder, the purchase price of the Common Stock, the date or
dates on which the Common Stock is required to be purchased by the holders of
the Stock Purchase Contracts, any periodic payments required to be made by
Southern to the holders of the Stock Purchase Contracts or vice versa, and the
terms of the offering and sale thereof, and (e) in the case of Stock Purchase
Units, the specific terms of the Stock Purchase Contracts and any Preferred
Securities, Debt Securities or debt obligations of third parties securing the
holder's obligation to purchase the Common Stock under the Stock Purchase
Contracts, and the terms of the offering and sale thereof.
The Securities may be offered in amounts, at prices and on terms to be
determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Securities shall not exceed $1,300,000,000.
Southern's Common Stock is listed on the New York Stock Exchange under the
symbol "SO." Any Prospectus Supplement will also contain information, where
applicable, as to any other listing on a securities exchange of the Securities
covered by the Prospectus Supplement.
The Prospectus Supplement relating to any series of Securities will contain
information concerning certain United States federal income tax considerations,
if applicable to such Securities.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
The Securities may be sold directly, through agents, underwriters or dealers
as designated from time to time, or through a combination of such methods. See
"Plan of Distribution." If agents or any underwriters or dealers are involved in
the sale of Securities in respect of which this Prospectus is being delivered,
the names of such agents, underwriters or dealers and any applicable commissions
or discounts will be set forth in or may be calculated from the Prospectus
Supplement with respect to such Securities.
---------------------------
, 1998
AVAILABLE INFORMATION
Southern, Capital and the Trusts have filed with the Securities and
Exchange Commission (the "Commission") a combined registration statement on Form
S-3 (the "Registration Statement," which term encompasses any amendments thereof
and exhibits thereto) under the Securities Act of 1933, as amended (the "1933
Act"). As permitted by the rules and regulations of the Commission, this
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto, to which reference is hereby
made.
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 any Trust have been included
herein. Southern, Capital and the Trusts do not consider that such financial
statements would be material to holders of the Securities because each of
Capital and each 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 each Trust, holding
as trust assets Junior Subordinated Notes, issuing Trust Securities and engaging
in other activities as are necessary, advisable or incidental thereto. See
"Southern Company Capital Funding, Inc.," "Description of the Preferred
Securities," "Description of the Junior Subordinated Notes," "Description of the
Junior Subordinated Notes Guarantees" and "Description of the Preferred
Securities Guarantees." In addition, Southern does not expect that Capital or
any 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;
(b) Southern's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998; and
(c) Southern's Current Reports on Form 8-K dated February 11, 1998 and
June 18, 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.
2
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.
3
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. The principal executive offices of
Capital are located at 1403 Foulk Road, Suite 102, Wilmington, Delaware 19803,
and the telephone number is (302) 427-1935.
THE TRUSTS
Each Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State on September 28, 1998. Each Trust's business is defined in a trust
agreement, executed by Capital, as Depositor, and the Delaware Trustee
thereunder. This trust agreement of each Trust will be amended and restated in
its entirety substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part (the "Trust Agreement"). Each
Trust Agreement will be qualified as an indenture under the Trust Indenture Act
of 1939, as amended (the "1939 Act"). Each Trust exists for the exclusive
purposes of (i) issuing its Trust Securities representing undivided beneficial
interests in the assets of such Trust, (ii) investing the gross proceeds of its
Trust Securities in a related series of Junior Subordinated Notes, and (iii)
engaging in only those other activities necessary, appropriate, convenient or
incidental thereto.
Each Trust's business and affairs will be conducted by its trustees, which
shall be appointed by Capital as the holder of the Common Securities: two
employees of a subsidiary of Southern as Administrative Trustees; Bankers Trust
Company as Property Trustee; and Bankers Trust (Delaware) as Delaware Trustee.
The Property Trustee of each Trust will act as the indenture trustee with
respect to such Trust for purposes of compliance with the provisions of the 1939
Act.
4
The principal place of business of each Trust shall be c/o Southern, 270
Peachtree Street, N.W., Atlanta, Georgia 30303, telephone (770) 393-0650, Attn:
Secretary.
Reference is made to the Prospectus Supplement relating to the Preferred
Securities of a Trust for further information concerning such Trust.
ACCOUNTING TREATMENT OF TRUSTS
For financial reporting purposes, the Trusts will be treated as
subsidiaries of Southern and, accordingly, the accounts of the Trusts 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 Guarantees, the Junior Subordinated Notes
and the Junior Subordinated Notes Guarantees 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.
CERTAIN RATIOS
The following table sets forth the Ratios of Earnings to Fixed Charges and
Earnings to Fixed Charges Plus Preferred Dividend Requirements (Pre-Income Tax
Basis) for the periods indicated.
---------------
(1) 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.
(2) 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.
USE OF PROCEEDS
Each Trust will invest the proceeds received from the sale of its Preferred
Securities in Junior Subordinated Notes. Except as may be otherwise described in
an applicable Prospectus Supplement, the net proceeds received by Southern from
such investment and any proceeds received from the sale of Common Stock, Senior
Notes, Stock Purchase Contracts or Stock Purchase Units or other sales of Junior
Subordinated Notes will be used in connection with its ongoing construction
program, to pay scheduled maturities and/or refundings of its securities, to
repay short-term indebtedness to the extent outstanding and for other general
corporate purposes.
DESCRIPTION OF THE COMMON STOCK
The authorized capital stock of Southern currently consists of
1,000,000,000 shares of common stock, par value $5 per share. As of August 31,
1998, there were 697,798,995 shares of common stock issued and outstanding.
5
All shares of common stock of Southern participate equally with respect to
dividends and rank equally upon liquidation. Each holder is entitled to one vote
for each share held and to cumulative voting at elections of directors. The vote
of two-thirds of the outstanding common stock is required to authorize or create
preferred stock or to effect certain changes in charter provisions affecting the
common stock. No stockholder is entitled to preemptive rights.
The shares of Common Stock offered hereby will be fully paid and
nonassessable by Southern.
The income of Southern is derived mainly from equity in earnings of its
operating affiliates. At June 30, 1998, $2,046,745,000 of consolidated retained
earnings, of a total of $3,886,150,000 at that date, was restricted against the
payment by the operating affiliates of cash dividends on common stock under
terms of bond indentures or charters. Southern's investment in subsidiary
companies is maintained on the equity method of accounting; however, under the
applicable accounting requirements of the Commission, cash dividends are limited
to Southern's retained earnings computed on the cost method of accounting
($501,671,000 at June 30, 1998). The equity in undistributed earnings of
subsidiary companies, except for the $2,046,745,000 restricted under the terms
of bond indentures or charters, will become available for payment of cash
dividends by Southern as such amounts are paid to Southern by the subsidiary
companies.
Certain business combination transactions, including mergers, sales of
assets or securities having a fair market value of $100,000,000 or more,
liquidations, dissolutions, reclassifications or recapitalizations, between
Southern or any of its subsidiaries and any beneficial owner of more than 5% of
the outstanding voting stock of Southern or any affiliate of such owner must be
approved by the holders of 75% of the outstanding voting stock and a majority of
the outstanding voting stock held by persons other than such beneficial owner,
unless approved by a majority of the "Disinterested Directors" (generally
directors not affiliated with such beneficial owner) or certain minimum price
and procedural requirements are met. These provisions may have the effect of
delaying, deferring or preventing a change in control of Southern.
The transfer agent and registrar for the common stock is Southern Company
Services, Inc., Atlanta, Georgia.
DIVIDENDS AND PRICE RANGE
The table below sets forth, for the periods indicated, the high and low
sales prices of Southern's common stock as reported by The Wall Street Journal
as NYSE-Composite Transactions.
The last sale price of the common stock on October , 1998, as reported by
The Wall Street Journal, was $ per share. The consolidated book value per
share of Southern's common stock at June 30, 1998 was $14.05.
6
Dividends have been paid on the common stock without interruption since
1949 when Southern was organized. The following table sets forth the dividends
paid during the period 1994-1997 and the first three quarters of 1998. Future
dividends will depend on future earnings, the financial condition of Southern
and the operating affiliates and other factors.
Southern has an investment plan pursuant to which registered owners of
shares of Southern's common stock may purchase additional shares by having
dividends automatically reinvested, or by making supplemental optional cash
purchases (not more than $150,000 per year), or both. For information concerning
the Southern Investment Plan, write SCS Stockholder Services, P.O. Box 54250,
Atlanta, Georgia 30308-0250.
DESCRIPTION OF THE SENIOR NOTES
Set forth below is a description of the general terms of the Senior Notes.
The following description does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, the Senior Note Indenture to be
entered into among Southern, Capital and the trustee named in the applicable
Prospectus Supplement, as trustee (the "Senior Note Indenture Trustee"), as to
be supplemented by a supplemental indenture thereto establishing the Senior
Notes of each series (the Senior Note Indenture, as so supplemented, is
hereinafter referred to as the "Senior Note Indenture"), the forms of which are
filed as exhibits to the Registration Statement of which this Prospectus forms a
part. The terms of the Senior Notes will include those stated in the Senior Note
Indenture and those made a part of the Senior Note Indenture by reference to the
1939 Act. Certain capitalized terms used herein are defined in the Senior Note
Indenture.
GENERAL
The Senior Notes will be issued as unsecured senior debt securities under
the Senior Note Indenture and will rank pari passu with all other unsecured and
unsubordinated debt of Capital. The Senior Notes will be effectively
subordinated to all secured debt of Capital. At June 30, 1998 Capital had no
outstanding secured debt. The Senior Note Indenture does not limit the aggregate
principal amount of Senior Notes that may be issued thereunder and provides that
Senior Notes may be issued from time to time in one or more series pursuant to
an indenture supplemental to the Senior Note Indenture.
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Senior Notes being offered
thereby: (i) the title of such Senior Notes; (ii) any limit on the aggregate
principal amount of such Senior Notes; (iii) the date or dates on which the
principal of such Senior Notes is payable; (iv) the rate or rates at which such
Senior Notes shall bear interest, if any, or any method by which such rate or
rates will be determined, the date or dates from which such interest will
accrue, the interest payment dates on which such interest shall be payable, and
the regular record date for the interest payable on any interest payment date;
(v) the place or places where the principal of (and premium, if any) and
interest, if any, on such Senior Notes shall be payable; (vi) the period or
periods within which, the price or prices at which and the terms and conditions
on which such Senior Notes may be redeemed, in whole or in part, at the option
of Capital; (vii) the obligation, if any, of Capital to redeem or purchase such
Senior Notes; (viii) the date or dates, if any, after which such Senior Notes
may be converted or exchanged at the option of
7
the holder into or for shares of Common Stock of Southern and the terms for any
such conversion or exchange; (ix) the denominations in which such Senior Notes
shall be issuable; (x) if other than the principal amount thereof, the portion
of the principal amount of such Senior Notes which shall be payable upon
declaration of acceleration of the maturity thereof; (xi) any deletions from,
modifications of or additions to the Events of Default or covenants of Capital
as provided in the Senior Note Indenture pertaining to such Senior Notes; (xii)
whether such Senior Notes shall be issued in whole or in part in the form of a
Global Security; and (xiii) any other terms of such Senior Notes.
The Senior Note Indenture does not contain provisions that afford holders
of Senior Notes protection in the event of a highly leveraged transaction
involving Southern or Capital.
SENIOR NOTES GUARANTEE
Pursuant to the Senior Note Indenture, Southern will irrevocably and
unconditionally guarantee the Senior Notes as described under "Description of
the Senior Notes Guarantees."
EVENTS OF DEFAULT
The Senior Note Indenture provides that any one or more of the following
described events with respect to the Senior Notes of any series, which has
occurred and is continuing, constitutes an "Event of Default" with respect to
the Senior Notes of such series:
(a) failure for 10 days to pay interest on the Senior Notes of such
series, when due on an Interest Payment Date other than at maturity or upon
earlier redemption; or
(b) failure to pay principal or premium, if any, or interest on the
Senior Notes of such series when due at maturity or upon earlier
redemption; or
(c) failure for three Business Days to deposit any sinking fund
payment when due by the terms of a Senior Note of such series; or
(d) failure to observe or perform any other covenant or warranty in
the Senior Note Indenture (other than a covenant or warranty which has
expressly been included therein solely for the benefit of one or more
series of Senior Notes other than such series) for 90 days after written
notice to Southern and Capital from the Senior Note Indenture Trustee or
the holders of at least 25% in principal amount of the outstanding Senior
Notes of such series; or
(e) certain events of bankruptcy, insolvency, or reorganization of
Southern or Capital.
The holders of not less than a majority in aggregate outstanding principal
amount of the Senior Notes of any series have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Senior Note Indenture Trustee with respect to the Senior Notes of such series.
If a Senior Note Indenture Event of Default occurs and is continuing with
respect to the Senior Notes of any series, then the Senior Note Indenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the Senior Notes of such series may declare the principal amount
thereof due and payable immediately by notice in writing to Southern and Capital
(and to the Senior Note Indenture Trustee if given by the holders), and upon any
such declaration such principal amount shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to the Senior
Notes of any series has been made and before a judgment or decree for payment of
the money due has been obtained as provided in Article Five of the Senior Note
Indenture, the holders of not less than a majority in aggregate outstanding
principal amount of the Senior Notes of such series may rescind and annul such
declaration and its consequences if the default has been cured or waived and
Southern or Capital has paid or deposited with the Senior Note Indenture Trustee
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration and all sums paid or advanced by the Senior Note
Indenture Trustee, including reasonable compensation and expenses of the Senior
Note Indenture Trustee.
The holders of not less than a majority in aggregate outstanding principal
amount of the Senior Notes of any series may, on behalf of the holders of all
the Senior Notes of such series, waive any past default with
8
respect to such series, except (i) a default in the payment of principal or
interest or (ii) a default in respect of a covenant or provision which under
Article Nine of the Senior Note Indenture cannot be modified or amended
thereunder without the consent of the holder of each outstanding Senior Note of
such series affected thereby.
REGISTRATION AND TRANSFER
Capital shall not be required to (i) issue, register the transfer of or
exchange Senior Notes of any series during a period of 15 days immediately
preceding the date notice is given identifying the Senior Notes of such series
called for redemption, or (ii) register the transfer of or exchange any Senior
Notes so selected for redemption, in whole or in part, except the unredeemed
portion of any Senior Note being redeemed in part.
PAYMENT AND PAYING AGENT
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of any Senior Notes will be made only against surrender to the
Paying Agent of such Senior Notes. Principal of and interest on Senior Notes
will be payable, subject to any applicable laws and regulations, at the office
of such Paying Agent or Paying Agents as Capital may designate from time to
time, except that, at the option of the Company, payment of any interest may be
made by wire transfer or by check mailed to the address of the person entitled
thereto as such address shall appear in the Security Register with respect to
the Senior Notes. Payment of interest on Senior Notes on any interest payment
date will be made to the person in whose name the Senior Notes (or predecessor
security) are registered at the close of business on the Record Date for such
interest payment (the fifteenth calendar day before such interest payment date).
Unless otherwise indicated in an applicable Prospectus Supplement, the
Senior Indenture Trustee will act as Paying Agent with respect to the Senior
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 moneys paid by Capital to a Paying Agent for the payment of the
principal of or interest on the Senior Notes of any series which remain
unclaimed at the end of two years after such principal or interest shall have
become due and payable will be repaid to Capital, and the holder of such Senior
Notes will thereafter look only to Capital for payment thereof.
MODIFICATION
The Senior Note Indenture contains provisions permitting Capital, Southern
and the Senior Indenture Trustee, with the consent of the holders of not less
than a majority in principal amount of the outstanding Senior Notes of each
series affected thereby, to modify the Senior Note Indenture or the rights of
the holders of the Senior Note of such series; provided, that no such
modification may, without the consent of the holder of each outstanding Senior
Note affected thereby, (i) change the stated maturity of the principal of, or
any installment of principal of or interest on, any Senior Note, or reduce the
principal amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or change the method of calculating the rate of
interest thereon, or impair the right to institute suit for the enforcement of
any such payment on or after the stated maturity thereof (or, in the case of
redemption, on or after the redemption date), or (ii) reduce the percentage of
principal amount of the outstanding Senior Notes of any series, the consent of
whose holders is required for any such supplemental indenture, or the consent of
whose holders is required for any waiver (of compliance with certain provisions
of the Senior Note Indenture or certain defaults thereunder and their
consequences) provided for in the Senior Note Indenture, or (iii) modify any of
the provisions of the Senior Note Indenture relating to supplemental indentures,
waiver of past defaults, or waiver of certain covenants, except to increase any
such percentage or to provide that certain other provisions of the Senior Note
Indenture cannot be modified or waived without the consent of the holder of each
outstanding Senior Note affected thereby.
9
In addition, Capital, Southern and the Senior Note Indenture Trustee may
execute, without the consent of any holders of Senior Notes, any supplemental
indenture for certain other usual purposes, including the creation of any new
series of senior notes.
CONSOLIDATION, MERGER AND SALE
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
Senior Note Indenture Trustee, the payment of the principal of (and premium, if
any) and interest on all the Senior Notes and the performance of every covenant
of the Senior Note Indenture on the part of 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 Senior Note Indenture Trustee an officers' certificate and an opinion of
counsel, each stating that such transaction complies with the provisions of the
Senior Note Indenture governing consolidation, merger, conveyance, transfer or
lease and that all conditions precedent thereto have been complied with.
INFORMATION CONCERNING THE SENIOR NOTE INDENTURE TRUSTEE
The Senior Note Indenture Trustee, prior to an Event of Default with
respect to Senior Notes of any series, undertakes to perform, with respect to
Senior Notes of such series, only such duties as are specifically set forth in
the Senior Note Indenture and, in case an Event of Default with respect to
Senior Notes of any series has occurred and is continuing, shall exercise, with
respect to Senior Notes of such series, the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provision, the Senior Note Indenture Trustee is under no obligation to
exercise any of the powers vested in it by the Senior Note Indenture at the
request of any holder of Senior Notes of any series, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The Senior Note Indenture Trustee is not required to expend
or risk its own funds or otherwise incur any financial liability in the
performance of its duties if the Senior Note Indenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
GOVERNING LAW
The Senior Note Indenture and the Senior Notes will be governed by, and
construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
Each of Southern and Capital will have the right at all times to assign any
of its rights or obligations under the Senior Note Indenture to a direct or
indirect wholly-owned subsidiary of 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 Senior
Note Indenture will be binding upon and inure to the benefit of the parties
thereto and their respective successors and assigns.
10
DESCRIPTION OF SENIOR NOTES GUARANTEES
Pursuant to the Senior Note Indenture, Southern will irrevocably and
unconditionally guarantee the due and punctual payment of principal, premium, if
any, and interest on the Senior Notes when and as the same shall become due and
payable. Each Senior Notes Guarantee will constitute an unsecured and
unsubordinated obligation of Southern and will rank pari passu with all other
unsecured and unsubordinated debt that may be issued by Southern. The Senior
Notes Guarantees will be effectively subordinated to all secured debt of
Southern. As of June 30, 1998, Southern had no secured debt. Since Southern is a
holding company, the right of Southern and, hence, the right of creditors of
Southern (including holders of Senior 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.
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
Set forth below is a description of the general terms of the Junior
Subordinated Notes. The following description does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
Subordinated Note Indenture, dated as of June 1, 1997, among Southern, Capital
and Bankers Trust Company, as trustee (the "Subordinated Note Indenture
Trustee"), as to be supplemented by a supplemental indenture thereto
establishing the Junior Subordinated Notes of each series (the Subordinated Note
Indenture, as so supplemented, is hereinafter referred to as the "Subordinated
Note Indenture"), the forms of which are filed as exhibits to the Registration
Statement of which this Prospectus forms a part. The terms of the Junior
Subordinated Notes will include those stated in the Subordinated Note Indenture
and those made a part of the Subordinated Note Indenture by reference to the
1939 Act. Certain capitalized terms used herein are defined in the Subordinated
Note Indenture.
GENERAL
The Junior Subordinated Notes will be issued as unsecured junior
subordinated debt securities under the Subordinated Note Indenture. The
Subordinated Note Indenture does not limit the aggregate principal amount of
Junior Subordinated Notes that may be issued thereunder and provides that Junior
Subordinated Notes may be issued from time to time in one or more series
pursuant to an indenture supplemental to the Subordinated Note Indenture.
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Junior Subordinated Notes
being offered thereby: (i) the title of such Junior Subordinated Notes; (ii) any
limit on the aggregate principal amount of such Junior Subordinated Notes; (iii)
the date or dates on which the principal of such Junior Subordinated Notes is
payable; (iv) the rate or rates at which such Junior Subordinated Notes shall
bear interest, if any, or any method by which such rate or rates will be
determined, the date or dates from which such interest will accrue, the interest
payment dates on which such interest shall be payable, and the regular record
date for the interest payable on any interest payment date; (v) the place or
places where the principal of (and premium, if any) and interest, if any, on
such Junior Subordinated Notes shall be payable; (vi) the period or periods
within which, the price or prices at which and the terms and conditions on which
such Junior Subordinated Notes may be redeemed, in whole or in part, at the
option of the Company; (vii) the obligation, if any, of Capital to redeem or
purchase such Junior Subordinated Notes; (viii) the date or dates, if any, after
which such Junior Subordinated Notes may be converted or exchanged at the option
of the holder into or for shares of Common Stock of Southern and the terms for
any such conversion or exchange; (ix) the denominations in which such Junior
Subordinated Notes shall be issuable; (x) if other than the principal amount
thereof, the portion of the principal amount of such Junior Subordinated Notes
which shall be payable upon declaration of acceleration of the maturity thereof;
(xi) any deletions from, modifications of or additions to the Events of Default
or covenants of Capital or Southern as provided in the Subordinated Note
Indenture pertaining to such Junior Subordinated Notes; (xii) whether such
Junior Subordinated Notes shall be issued in whole or in part in the form of a
Global Security; (xiii) the right, if any, of Capital to extend the interest
payment periods of such Junior Subordinated Notes; and (xiv) any other terms of
such Junior Subordinated Notes. The terms of each series of Junior
11
Subordinated Notes issued to a Trust will correspond to those of the related
Preferred Securities of such Trust as described in the Prospectus Supplement
relating to such Preferred Securities.
The Subordinated Note Indenture does not contain provisions that afford
holders of Junior Subordinated Notes protection in the event of a highly
leveraged transaction involving 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 including, without limitation, all obligations under its indentures
with various trustees; (ii) all capital lease obligations; (iii) all obligations
issued or assumed as the deferred purchase price of property, all conditional
sale obligations and all obligations of such person under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business and long-term purchase obligations); (iv) all obligations for the
reimbursement of any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (v) all obligations of the type referred
to in clauses (i) through (iv) above of other persons the payment of which 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.
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.
12
JUNIOR SUBORDINATED NOTES GUARANTEE
Pursuant to the Subordinated Note Indenture, Southern will irrevocably and
unconditionally guarantee the Junior Subordinated Notes as described under
"Description of the Junior Subordinated Notes Guarantees."
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 Junior Subordinated 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 Junior Subordinated 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 Securities of such
Trust; provided, however, that any permitted successor of Capital or Southern
under the Subordinated Note Indenture may succeed to 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
13
(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.
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.
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.
14
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 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
15
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.
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 JUNIOR SUBORDINATED NOTES GUARANTEES
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. Each
Junior Subordinated 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 June 30, 1998, Senior Indebtedness of Southern
aggregated approximately $431,000,000. 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.
DESCRIPTION OF THE PREFERRED SECURITIES
Each Trust may issue only one series of Preferred Securities having terms
described in the Prospectus Supplement relating thereto. The Trust Agreement of
each Trust will authorize the Administrative Trustees, on behalf of the Trust,
to issue the Preferred Securities of such Trust. The Preferred Securities of
each Trust will have such terms, including distributions, redemption, voting,
liquidation rights and such other preferred,
16
deferral or other special rights or such restrictions as shall be set forth in
the Trust Agreement of such Trust. Reference is made to the Prospectus
Supplement relating to the Preferred Securities of a Trust for specific terms,
including (i) the distinctive designation of such Preferred Securities; (ii) the
number of Preferred Securities issued by such Trust; (iii) the annual
distribution rate (or method of determining such rate) for Preferred Securities
of such Trust and the date or dates on which such distributions shall be
payable; (iv) whether distributions on such Preferred Securities shall be
cumulative and, in the case of Preferred Securities having cumulative
distribution rights, the date or dates, or method of determining the date or
dates, from which distributions on such Preferred Securities shall be
cumulative; (v) the amount or amounts that shall be paid out of the assets of
such Trust to the holders of the Preferred Securities of such Trust upon
voluntary or involuntary dissolution, winding-up or termination of such Trust;
(vi) the obligation, if any, of such Trust to purchase or redeem such Preferred
Securities and the price or prices at which, the period or periods within which,
and the terms and conditions upon which such Preferred Securities shall be
purchased or redeemed, in whole or in part, pursuant to such obligation; (vii)
the date or dates, if any, after which such Preferred Securities may be
converted or exchanged at the option of the holder into or for shares of Common
Stock of Southern or Debt Securities of Capital and the terms for any such
conversion or exchange; (viii) the voting rights, if any, of such Preferred
Securities in addition to those required by law, including the number of votes
per Preferred Security and any requirement for the approval by the holders of
Preferred Securities as a condition to specified action or amendments to the
Trust Agreement of such Trust; (ix) the rights, if any, to defer distributions
on the Preferred Securities by extending the interest payment period on the
related Junior Subordinated Notes; and (x) any other relative rights,
preferences, privileges, limitations or restrictions of such Preferred
Securities not inconsistent with the Trust Agreement of such Trust or applicable
law. All Preferred Securities offered hereby will be guaranteed by Southern to
the extent set forth under "Description of the Preferred Securities Guarantees."
Any material United States federal income tax considerations applicable to an
offering of Preferred Securities will be described in the Prospectus Supplement
relating thereto.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees that will be executed and delivered by Southern for the
benefit of the holders of Preferred Securities of the respective Trusts from
time to time. Each Preferred Securities Guarantee will be qualified as an
indenture under the 1939 Act. Bankers Trust Company will act as indenture
trustee under each Preferred Securities Guarantee (the "Guarantee Trustee") for
purposes of the 1939 Act. The terms of the respective Preferred Securities
Guarantees will be those set forth therein and those made part thereof by the
1939 Act. The following summary does not purport to be complete and is subject
in all respects to the provisions of, and is qualified in its entirety by
reference to, the Preferred Securities Guarantees, the form of which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part,
and the 1939 Act. Each Preferred Securities Guarantee will be held by the
Guarantee Trustee for the benefit of holders of the Preferred Securities to
which it relates.
GENERAL
Pursuant to each Preferred Securities Guarantee, Southern will irrevocably
and unconditionally agree, to the extent set forth therein, to pay in full, to
the holders of the related Preferred Securities, the Guarantee Payments (as
defined herein), to the extent not paid by, or on behalf of, the related Trust,
regardless of any defense, right of set-off or counterclaim that Southern may
have or assert against any person. The following payments or distributions with
respect to the Preferred Securities of any Trust to the extent not paid or made
by, or on behalf of, such Trust will be subject to the Preferred Securities
Guarantee related thereto (without duplication): (i) any accrued and unpaid
distributions required to be paid on the Preferred Securities of such Trust but
if and only if and to the extent that such Trust has funds legally and
immediately available therefor, (ii) the redemption price, including all accrued
and unpaid distributions to the date of redemption (the "Redemption Price"),
with respect to any Preferred Securities called for redemption by such Trust,
but if and only to the extent such Trust has funds legally and immediately
available therefor, and (iii) upon a dissolution,
17
winding-up or termination of such Trust (other than in connection with the
distribution of Junior Subordinated Notes to the holders of Trust Securities of
such Trust or the redemption of all of the Preferred Securities of such Trust),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on the Preferred Securities of such Trust to the date of
payment, to the extent such Trust has funds legally and immediately available
therefor, and (b) the amount of assets of such Trust remaining available for
distribution to holders of Preferred Securities of such Trust in liquidation of
such 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 related Preferred Securities or by causing the related
Trust to pay such amounts to such holders.
Each Preferred Securities Guarantee will be a guarantee of the Guarantee
Payments with respect to the related Preferred Securities from the time of
issuance of such Preferred Securities, but will not apply to the payment of
distributions and other payments on such Preferred Securities when the related
Trust does not have sufficient funds legally and immediately available to make
such distributions or other payments. IF CAPITAL DOES NOT MAKE INTEREST PAYMENTS
ON THE JUNIOR SUBORDINATED NOTES HELD BY THE PROPERTY TRUSTEE UNDER ANY TRUST,
SUCH TRUST WILL NOT MAKE DISTRIBUTIONS ON ITS PREFERRED SECURITIES.
SUBORDINATION
Southern's obligations under each 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 related
thereto. Southern has outstanding common stock that ranks junior to the
Preferred Securities Guarantees. See "Selected Information -- Selected Financial
Information."
Each 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 related Preferred Securities (in which case
no consent will be required), each 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 such outstanding Preferred Securities. The manner of
obtaining any such approval of holders of the Preferred Securities will be as
set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in each 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 related Preferred Securities
then outstanding.
TERMINATION
Each Preferred Securities Guarantee will terminate and be of no further
force and effect as to the related Preferred Securities upon full payment of the
Redemption Price of all such Preferred Securities, upon distribution of Junior
Subordinated Notes to the holders of such Preferred Securities, or upon full
payment of the amounts payable upon liquidation of the related Trust. Each
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 related
Preferred Securities must restore payment of any sums paid with respect to such
Preferred Securities or under such Preferred Securities Guarantee.
18
EVENTS OF DEFAULT
An event of default under each 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 to which any Preferred Securities Guarantee relates have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of such Preferred Securities
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under such Preferred Securities Guarantee. Any holder of the
related Preferred Securities may institute a legal proceeding directly against
Southern to enforce its rights under such 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 of any series may, by vote, on behalf of the holders of all the
Preferred Securities of such series, waive any past event of default and its
consequences.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of any event of default with
respect to any Preferred Securities Guarantee and after the curing or waiving of
all events of default with respect to such Preferred Securities Guarantee,
undertakes to perform only such duties as are specifically set forth in such
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 any
Preferred Securities Guarantee at the request of any holder of the related
Preferred Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby.
Bankers Trust Company, the Guarantee Trustee, also serves as Property
Trustee and as Subordinated Note 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
Each Preferred Securities Guarantee will be governed by, and construed in
accordance with, the internal laws of the State of New York.
THE AGREEMENTS AS TO EXPENSES AND LIABILITIES
Pursuant to an Agreement as to Expenses and Liabilities to be entered into
by Southern under each Trust Agreement, Southern will irrevocably and
unconditionally guarantee to each person or entity to whom each Trust becomes
indebted or liable the full payment of any indebtedness, expenses or liabilities
of such Trust, other than obligations of such Trust to pay to the holders of the
related Preferred Securities or other similar interests in such Trust the
amounts due such holders pursuant to the terms of such Preferred Securities or
such other similar interests, as the case may be.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED NOTES, THE PREFERRED SECURITIES GUARANTEES AND THE
JUNIOR SUBORDINATED NOTES GUARANTEES
As long as payments of interest and other payments are made when due on
each series of Junior Subordinated Notes issued to a Trust, such payments will
be sufficient to cover distributions and payments due on the related Trust
Securities of such Trust primarily because (i) the aggregate principal amount of
each series of Junior Subordinated Notes will be equal to the sum of the
aggregate stated liquidation amount of the related Trust Securities; (ii) the
interest rate and interest and other payment dates on each series of Junior
Subordinated Notes will match the distribution rate and distribution and other
payment dates for the related
19
Preferred Securities; (iii) Southern shall pay for all costs and expenses of
each Trust pursuant to the Agreements as to Expenses and Liabilities; and (iv)
each Trust Agreement provides that the Securities Trustees thereunder shall not
cause or permit the Trust to, among other things, engage in any activity that is
not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are legally and
immediately available) and other payments due on the Preferred Securities (to
the extent funds therefor are legally and immediately available) will be
guaranteed by Southern as and to the extent set forth under "Description of the
Preferred Securities Guarantees." If Capital does not make interest payments on
any series of Junior Subordinated Notes, it is not expected that the related
Trust will have sufficient funds to pay distributions on its Preferred
Securities. Each 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 related Trust has sufficient funds legally and immediately available
for the payment of such distributions.
If Capital fails to make interest or other payments on any series of Junior
Subordinated Notes when due (taking into account any extension period as
described in the applicable Prospectus Supplement), the Trust Agreement provides
a mechanism whereby the holders of the related Preferred Securities may appoint
a substitute Property Trustee. Such holders may also direct the Property Trustee
to enforce its rights under the Junior Subordinated Notes of such series and the
related Junior Subordinated Notes Guarantee, including proceeding directly
against Capital to enforce such Junior Subordinated Notes and against Southern
to enforce such Junior Subordinated Notes Guarantee. If the Property Trustee
fails to enforce its rights under any series of Junior Subordinated Notes or the
related Junior Subordinated Notes Guarantee, to the fullest extent permitted by
applicable law, any holder of related Preferred Securities may institute a legal
proceeding directly against Capital to enforce the Property Trustee's rights
under such series of Junior Subordinated Notes and against Southern to enforce
such Junior Subordinated 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 Junior Subordinated Notes of the related series having a principal amount
equal to the aggregate stated liquidation amount of the Preferred Securities of
such holder on or after the due dates specified in the Junior Subordinated Notes
of such series.
If Southern fails to make payments under any Preferred Securities
Guarantee, such Preferred Securities Guarantee provides a mechanism whereby the
holders of the Preferred Securities to which such Preferred Securities Guarantee
relates may direct the Guarantee Trustee to enforce its rights thereunder. In
addition, any holder of Preferred Securities may institute a legal proceeding
directly against Southern to enforce the Guarantee Trustee's rights under the
related Preferred Securities Guarantee without first instituting a legal
proceeding against the Guarantee Trustee or any other person or entity.
Each Junior Subordinated Notes Guarantee, each Preferred Securities
Guarantee, the Subordinated Note Indenture, the Junior Subordinated Notes of the
related series, the related Trust Agreement and the related Agreement as to
Expenses and Liabilities, as described above, constitute a full and
unconditional guarantee by Southern and Capital of the payments due on the
related series of Preferred Securities.
Upon any voluntary or involuntary dissolution, winding-up or termination of
any Trust, unless Junior Subordinated Notes of the related series are
distributed in connection therewith, the holders of Preferred Securities of such
Trust will be entitled to receive, out of assets legally available for
distribution to holders, a liquidation distribution in cash as described in the
applicable Prospectus Supplement. Upon any voluntary or involuntary liquidation
or bankruptcy of Capital, the Property Trustee, as holder of the related series
of 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
each Preferred Securities Guarantee and each Junior Subordinated Notes Guarantee
and has agreed to pay for all costs, expenses and liabilities of each Trust
(other than the Trust's obligations to holders of the Preferred Securities)
pursuant to the related Agreement as to Expenses and Liabilities, the positions
of a holder of Preferred Securities and a
20
holder of Junior Subordinated Notes of the related series 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 payments on the
Junior Subordinated Notes of any series would constitute an Event of Default
under the Subordinated Note Indenture with respect to the Junior Subordinated
Notes of such series except that failure to make interest payments on the Junior
Subordinated Notes of such series will not be an Event of Default during an
extension period as described in the applicable Prospectus Supplement.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
Capital may issue and sell from time to time Stock Purchase Contracts,
including contracts obligating holders to purchase from Southern, and Southern
to sell to the holders, a specified number of shares of common stock of Southern
at a future date or dates. The consideration per share of common stock may be
fixed at the time the Stock Purchase Contracts are issued or may be determined
by reference to a specific formula set forth in the Stock Purchase Contracts.
The Stock Purchase Contracts may be issued separately or as a part of units
("Stock Purchase Units") consisting of a Stock Purchase Contract and Debt
Securities, Preferred Securities or debt obligations of third parties, including
U.S. Treasury securities, securing holders' obligations to purchase the common
stock of Southern under the Stock Purchase Contracts. The Stock Purchase
Contracts may require Southern or Capital to make periodic payments to the
holders of the Stock Purchase Units or vice versa, and such payments may be
unsecured or prefunded on some basis. The Stock Purchase Contracts may require
holders to secure their obligations thereunder in a specified manner. The Stock
Purchase Contracts may be guaranteed by Southern as more fully described under
"Description of the Stock Purchase Guarantees."
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units. The description in the Prospectus
Supplement will summarize the terms and conditions of any Stock Purchase
Contracts and Stock Purchase Units, and reference will be made to the Stock
Purchase Contracts, and, if applicable, collateral arrangements and depositary
arrangements, relating to such Stock Purchase Contracts or Stock Purchase Units.
DESCRIPTION OF STOCK PURCHASE GUARANTEES
Pursuant to the documents under which the Stock Purchase Contracts and
Stock Purchase Units will be issued, Southern may irrevocably and
unconditionally guarantee the due and punctual periodic payments to holders of
Stock Purchase Contracts and Stock Purchase Units when and as the same shall
become due and payable. Each Stock Purchase Guarantee will constitute an
unsecured and unsubordinated obligation of Southern and will rank pari passu
with all other unsecured and unsubordinated debt that may be issued by Southern.
The Stock Purchase Guarantees will be effectively subordinated to all secured
debt of Southern. As of June 30, 1998, Southern had no secured debt. Since
Southern is a holding company, the right of Southern and, hence, the right of
creditors of Southern (including holders of Stock Purchase Contracts and Stock
Purchase Units) 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.
PLAN OF DISTRIBUTION
Southern may sell the Common Stock, Capital may sell the Debt Securities,
the Stock Purchase Contracts and the Stock Purchase Units and the Trusts may
sell the Preferred Securities in one or more of the following ways from time to
time: (i) to underwriters for resale to the public or to institutional
investors; (ii) directly to institutional investors; or (iii) through agents to
the public or to institutional investors. The
21
Prospectus Supplement with respect to any Securities will set forth the terms of
the offering of such Securities, including the name or names of any underwriters
or agents, the purchase price of such Securities and the proceeds to Southern,
Capital or the applicable Trust from such sale, any underwriting discounts or
agency fees and other items constituting underwriters' or agents' compensation,
any initial public offering price, any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchange on which such
Securities may be listed.
If underwriters participate in the sale, such Securities will be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale.
Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase any series of Securities will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all of
such series of Securities, if any are purchased.
Underwriters and agents may be entitled under agreements entered into with
Southern, Capital and/or the applicable Trust to indemnification against certain
civil liabilities, including liabilities under the 1933 Act. Underwriters and
agents may engage in transactions with, or perform services for, Southern in the
ordinary course of business.
Each series of Senior Notes, Junior Subordinated Notes, Preferred
Securities, Stock Purchase Contracts or Stock Purchase Units will be a new issue
of securities and will have no established trading market. Any underwriters to
whom Senior Notes, Junior Subordinated Notes, Preferred Securities, Stock
Purchase Contracts or Stock Purchase Units are sold for public offering and sale
may make a market in such Senior Notes, Junior Subordinated Notes, Preferred
Securities, Stock Purchase Contracts or Stock Purchase Units, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. The Senior Notes, Junior Subordinated Notes,
Preferred Securities, Stock Purchase Contracts or Stock Purchase Units may or
may not be listed on a national securities exchange.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of Capital and the Trusts by Richards,
Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel to Capital
and the Trusts. The validity of the Common Stock, Debt Securities, the
Guarantees, the Stock Purchase Contracts, the Stock Purchase Units and certain
matters relating thereto will be passed upon on behalf of Southern and Capital
by Troutman Sanders LLP, Atlanta, Georgia.
EXPERTS
The financial statements and schedules 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 accounting and auditing in giving said reports.
22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.**
---------------
* The Prospectus Supplement will reflect actual filing and listing fees based
upon the amount of the related offering.
** To be supplied by amendment.
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
II-1
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.
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
II-2
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 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.
II-3
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.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
II-4
Exhibits listed above which have heretofore been filed with the Commission
and which were designated as noted above are hereby incorporated herein by
reference and made a part hereof with the same effect as if filed herewith.
---------------
* To be subsequently filed or incorporated by reference.
ITEM 17. UNDERTAKINGS.
(a) Undertaking related to Rule 415 offering:
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement; Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20%
II-5
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, S-8 or F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrants
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) Undertaking related to filings incorporating subsequent Securities
Exchange Act of 1934 documents by reference:
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Company's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Undertaking related to acceleration of effectiveness:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrants pursuant to the foregoing provisions
or otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrants of expenses incurred or paid by a director,
officer or controlling person of the registrants in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrants will, unless in the opinion of their counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-6
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 30th day of September, 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:
II-7
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 29th day of September, 1998.
SOUTHERN COMPANY CAPITAL FUNDING, INC.
By: /s/ W. L. WESTBROOK
------------------------------------
W. L. Westbrook
President and Chief Executive
Officer
Southern Company Capital Funding, Inc. and each person whose signature
appears below constitute and appoint A. W. Dahlberg, W. L. Westbrook, Tommy
Chisholm and Wayne Boston and any agent for service named in this Registration
Statement and each of them, his, her or its true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him, her or
it and in his, her or its name, place and stead, in any and all capacities, to
sign and file any and all amendments (including post-effective amendments) to
this Registration Statement, to sign any related registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same
with all exhibits thereto, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as
he, she or it might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following directors and officers
of Southern Company Capital Funding, Inc. in the capacities and on the dates
indicated.
II-8
Pursuant to the requirements of the Securities Act of 1933, Southern
Company Capital Trust V certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Atlanta, State of Georgia, on the 30th day of
September, 1998.
SOUTHERN COMPANY CAPITAL TRUST V
By: SOUTHERN COMPANY
CAPITAL FUNDING, INC.,
Depositor
By: /s/ WAYNE BOSTON
------------------------------------
Wayne Boston
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, Southern
Company Capital Trust VI 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 30th
day of September, 1998.
SOUTHERN COMPANY CAPITAL TRUST VI
By: SOUTHERN COMPANY
CAPITAL FUNDING, INC.,
Depositor
By: /s/ WAYNE BOSTON
------------------------------------
Wayne Boston
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, Southern
Company Capital Trust VII 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 30th
day of September, 1998.
SOUTHERN COMPANY CAPITAL TRUST VII
By: SOUTHERN COMPANY
CAPITAL FUNDING, INC.,
Depositor
By: /s/ WAYNE BOSTON
------------------------------------
Wayne Boston
Assistant Secretary
II-9
EXHIBIT INDEX
Exhibits listed above which have heretofore been filed with the Commission
and which were designated as noted above are hereby incorporated herein by
reference and made a part hereof with the same effect as if filed herewith.
---------------
* To be subsequently filed or incorporated by reference.
SUBJECT TO AMENDMENT. REGISTRATION NOS. 333-
333- -01
333- -02
333- -03
333- -04
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
(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)
---------------------
THE COMMISSION IS REQUESTED TO MAIL SIGNED COPIES OF ALL ORDERS, NOTICES AND
COMMUNICATIONS TO:
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
(1) Such indeterminate number or amount of Common Stock of The Southern Company,
Debt Securities, Junior Subordinated Trust Notes, Stock Purchase Contracts,
Stock Purchase Units and Preferred Securities as may from time to
time be issued at indeterminate prices. Junior Subordinated Trust Notes may
be issued and sold to Southern Company Capital Trust V, Southern Company
Capital Trust VI and Southern Company Capital Trust VII, in which event such
Junior Subordinated Trust Notes may later be distributed to the holders of
Preferred Securities upon a dissolution of Southern Company Capital Trust V,
Southern Company Capital Trust VI and Southern Company Capital Trust VII and
the distribution of the assets thereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) and exclusive of accrued interest and dividends, if
any. Calculated using the maximum aggregate offering price of such
indeterminate amount of Debt Securities that may be offered from time to
time at an offering price below their face value.
(3) Includes the rights of holders of the Preferred Securities of a Southern
Company Capital Trust under the Preferred Securities Guarantee and back-up
undertakings, consisting of obligations by The Southern Company and Southern
Company Capital Funding, Inc. to provide certain indemnities in respect of,
and pay and be responsible for certain expenses, costs, liabilities and
debts of, as applicable, Southern Company Capital Trust V, Southern Company
Capital Trust VI and Southern Company Capital Trust VII and such other
obligations of The Southern Company and Southern Company Capital Funding,
Inc. set forth in the Amended and Restated Trust Agreement, the Subordinated
Note Indenture and Supplemental Indentures thereto, in each case as further
described in the Registration Statement. No separate consideration will be
received for any Southern Company Guarantees or any back-up undertakings.
(4) No separate consideration will be received for any such Guarantees.
(5) Includes $1,000,000,000 in respect of shares of unsold Common Stock of The
Southern Company previously registered under Registration Statement No.
333-09077 (which shares are valued based upon the average of the high and
low prices on September 29, 1998, as reported by The Wall Street Journal in
its report of NYSE-Composite Transactions).
(6) Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
registration fee consists of $122,810 paid herewith and $260,690 which has
previously been paid. See Note (5).
---------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
THE WITHIN PROSPECTUS CONTAINS THE INFORMATION REQUIRED BY RULE 429 OF THE
COMMISSION UNDER THE SECURITIES ACT OF 1933 WITH RESPECT TO $1,000,000,000 IN
RESPECT OF SHARES OF COMMON STOCK OF THE SOUTHERN COMPANY REMAINING UNSOLD UNDER
REGISTRATION STATEMENT NO. 333-09077.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 SEPTEMBER 30, 1998
PROSPECTUS
$1,300,000,000
THE SOUTHERN COMPANY
COMMON STOCK
THE SOUTHERN COMPANY
SOUTHERN COMPANY CAPITAL FUNDING, INC.
SENIOR NOTES
JUNIOR SUBORDINATED NOTES
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
---------------------------
SOUTHERN COMPANY CAPITAL TRUST V
SOUTHERN COMPANY CAPITAL TRUST VI
SOUTHERN COMPANY CAPITAL TRUST VII
TRUST PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
THE SOUTHERN COMPANY
---------------------------
The Southern Company, a Delaware corporation ("Southern"), may offer, from
time to time, shares of its common stock, par value $5 per share (the "Common
Stock"). Southern Company Capital Funding, Inc., a Delaware corporation and a
wholly-owned subsidiary of Southern ("Capital"), may offer, from time to time,
(i) its senior notes (the "Senior Notes") in one or more series, (ii) its junior
subordinated notes (the "Junior Subordinated Notes" and, together with the
Senior Notes, the "Debt Securities") in one or more series, (iii) Stock Purchase
Contracts (the "Stock Purchase Contracts") to purchase shares of Common Stock or
(iv) Stock Purchase Units, each representing ownership of a Stock Purchase
Contract and Debt Securities, Preferred Securities (as defined herein) or debt
obligations of third parties, including U.S. Treasury securities, securing the
holder's obligation to purchase Common Stock under the Stock Purchase Contracts
(the "Stock Purchase Units"). The Senior Notes will be unsecured obligations of
Capital, will rank pari passu (equal in priority) with all other unsecured and
unsubordinated debt of Capital and the due and punctual payment thereof will be
unconditionally guaranteed by Southern pursuant to the Senior Notes Guarantees
(the "Senior Notes Guarantees"). The Junior Subordinated Notes will be unsecured
obligations of Capital and will be subordinate and junior in right of payment to
Senior Indebtedness (as defined herein) of Capital and the due and punctual
payment thereof will be unconditionally guaranteed by Southern pursuant to the
Junior Subordinated Notes Guarantees (the "Junior Subordinated Notes
Guarantees"). The due and punctual payment of the Stock Purchase Contracts and
Stock Purchase Units will be unconditionally guaranteed by Southern pursuant to
the Stock Purchase Contracts Guarantees (the "Stock Purchase Contracts
Guarantees") and the Stock Purchase Units Guarantees (the "Stock Purchase Units
Guarantees" and, together with the Stock Purchase Contracts Guarantees, the
"Stock Purchase Guarantees"), respectively.
Southern Company Capital Trust V, Southern Company Capital Trust VI and
Southern Company Capital Trust VII, each a statutory business trust created
under the laws of the State of Delaware (individually, a "Trust" and
collectively, the "Trusts"), may offer, from time to time, trust preferred
securities (collectively, the "Preferred Securities") representing preferred
undivided beneficial interests in the assets of the respective Trusts. Capital
will own all the common securities (the "Common Securities" and, together with
the Preferred Securities, the "Trust Securities") representing common undivided
beneficial interests in the assets of the respective Trusts. The payment of
periodic cash distributions on the Preferred Securities of each Trust and
payments on liquidation or redemption with respect to such Preferred Securities,
in each case to the extent such Trust has funds legally and immediately
available therefor, will be guaranteed by Southern as described herein
(individually, a "Preferred Securities Guarantee" and collectively, the
"Preferred Securities Guarantees"). See "Description of the Preferred Securities
Guarantees." Southern's obligations under each Preferred Securities Guarantee
will be subordinate and junior in right of payment to all of its other
liabilities and will rank pari passu with the most senior preferred stock of
Southern. Concurrently with the issuance by a Trust of its Preferred Securities,
such Trust will invest the proceeds thereof and of Capital's purchase of the
Common Securities of such Trust in a related series of Junior Subordinated Notes
of Capital with terms corresponding to the terms of such Trust's Preferred
Securities. Junior Subordinated Notes may subsequently be distributed pro rata
to holders of the Trust Securities of a Trust in connection with the termination
of such Trust upon the occurrence of certain events as may be described in an
accompanying Prospectus Supplement.
As described herein, Southern and Capital will, through each Junior
Subordinated Notes Guarantee, each Preferred Securities Guarantee, the
Subordinated Note Indenture, the Junior Subordinated Notes of the related
series, the related Trust Agreement and the related Agreement as to Expenses and
Liabilities, fully and unconditionally guarantee all of each Trust's obligations
with respect to its Preferred Securities.
The Common Stock, the Preferred Securities, the Debt Securities, the Stock
Purchase Contracts and the Stock Purchase Units are referred to herein
collectively as the "Securities." The Preferred Securities Guarantees, the
Senior Notes Guarantees, the Junior Subordinated Notes Guarantees and the Stock
Purchase Guarantees are referred to herein collectively as the "Guarantees."
Specific terms of the Securities in respect of which this Prospectus is being
delivered will be set forth in an accompanying Prospectus Supplement with
respect to such Securities, which will describe, without limitation and where
applicable, the following: (a) in the case of Common Stock, the number of
shares, purchase price and any other specific terms of the offering, (b) in the
case of Debt Securities, the specific designation, aggregate principal amount,
denominations, maturity, interest payment dates, interest rate (or the method of
determining such rate), any redemption, exchange or sinking fund provisions, and
any other specific terms of the offering, (c) in the case of Preferred
Securities, the specific designation, number of Preferred Securities,
liquidation amount per security, distribution rate (or the method of determining
such rate), dates on which distributions will be payable, voting rights, any
redemption, exchange or sinking fund provisions, and any other rights,
preferences, privileges, limitations and restrictions thereof, (d) in the case
of Stock Purchase Contracts, the designation and number of shares of Common
Stock issuable thereunder, the purchase price of the Common Stock, the date or
dates on which the Common Stock is required to be purchased by the holders of
the Stock Purchase Contracts, any periodic payments required to be made by
Southern to the holders of the Stock Purchase Contracts or vice versa, and the
terms of the offering and sale thereof, and (e) in the case of Stock Purchase
Units, the specific terms of the Stock Purchase Contracts and any Preferred
Securities, Debt Securities or debt obligations of third parties securing the
holder's obligation to purchase the Common Stock under the Stock Purchase
Contracts, and the terms of the offering and sale thereof.
The Securities may be offered in amounts, at prices and on terms to be
determined at the time of offering; provided, however, that the aggregate
initial public offering price of all Securities shall not exceed $1,300,000,000.
Southern's Common Stock is listed on the New York Stock Exchange under the
symbol "SO." Any Prospectus Supplement will also contain information, where
applicable, as to any other listing on a securities exchange of the Securities
covered by the Prospectus Supplement.
The Prospectus Supplement relating to any series of Securities will contain
information concerning certain United States federal income tax considerations,
if applicable to such Securities.
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
The Securities may be sold directly, through agents, underwriters or dealers
as designated from time to time, or through a combination of such methods. See
"Plan of Distribution." If agents or any underwriters or dealers are involved in
the sale of Securities in respect of which this Prospectus is being delivered,
the names of such agents, underwriters or dealers and any applicable commissions
or discounts will be set forth in or may be calculated from the Prospectus
Supplement with respect to such Securities.
---------------------------
, 1998
AVAILABLE INFORMATION
Southern, Capital and the Trusts have filed with the Securities and
Exchange Commission (the "Commission") a combined registration statement on Form
S-3 (the "Registration Statement," which term encompasses any amendments thereof
and exhibits thereto) under the Securities Act of 1933, as amended (the "1933
Act"). As permitted by the rules and regulations of the Commission, this
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto, to which reference is hereby
made.
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 any Trust have been included
herein. Southern, Capital and the Trusts do not consider that such financial
statements would be material to holders of the Securities because each of
Capital and each 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 each Trust, holding
as trust assets Junior Subordinated Notes, issuing Trust Securities and engaging
in other activities as are necessary, advisable or incidental thereto. See
"Southern Company Capital Funding, Inc.," "Description of the Preferred
Securities," "Description of the Junior Subordinated Notes," "Description of the
Junior Subordinated Notes Guarantees" and "Description of the Preferred
Securities Guarantees." In addition, Southern does not expect that Capital or
any 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;
(b) Southern's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1998 and June 30, 1998; and
(c) Southern's Current Reports on Form 8-K dated February 11, 1998 and
June 18, 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.
2
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.
3
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. The principal executive offices of
Capital are located at 1403 Foulk Road, Suite 102, Wilmington, Delaware 19803,
and the telephone number is (302) 427-1935.
THE TRUSTS
Each Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State on September 28, 1998. Each Trust's business is defined in a trust
agreement, executed by Capital, as Depositor, and the Delaware Trustee
thereunder. This trust agreement of each Trust will be amended and restated in
its entirety substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part (the "Trust Agreement"). Each
Trust Agreement will be qualified as an indenture under the Trust Indenture Act
of 1939, as amended (the "1939 Act"). Each Trust exists for the exclusive
purposes of (i) issuing its Trust Securities representing undivided beneficial
interests in the assets of such Trust, (ii) investing the gross proceeds of its
Trust Securities in a related series of Junior Subordinated Notes, and (iii)
engaging in only those other activities necessary, appropriate, convenient or
incidental thereto.
Each Trust's business and affairs will be conducted by its trustees, which
shall be appointed by Capital as the holder of the Common Securities: two
employees of a subsidiary of Southern as Administrative Trustees; Bankers Trust
Company as Property Trustee; and Bankers Trust (Delaware) as Delaware Trustee.
The Property Trustee of each Trust will act as the indenture trustee with
respect to such Trust for purposes of compliance with the provisions of the 1939
Act.
4
The principal place of business of each Trust shall be c/o Southern, 270
Peachtree Street, N.W., Atlanta, Georgia 30303, telephone (770) 393-0650, Attn:
Secretary.
Reference is made to the Prospectus Supplement relating to the Preferred
Securities of a Trust for further information concerning such Trust.
ACCOUNTING TREATMENT OF TRUSTS
For financial reporting purposes, the Trusts will be treated as
subsidiaries of Southern and, accordingly, the accounts of the Trusts 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 Guarantees, the Junior Subordinated Notes
and the Junior Subordinated Notes Guarantees 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.
CERTAIN RATIOS
The following table sets forth the Ratios of Earnings to Fixed Charges and
Earnings to Fixed Charges Plus Preferred Dividend Requirements (Pre-Income Tax
Basis) for the periods indicated.
---------------
(1) 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.
(2) 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.
USE OF PROCEEDS
Each Trust will invest the proceeds received from the sale of its Preferred
Securities in Junior Subordinated Notes. Except as may be otherwise described in
an applicable Prospectus Supplement, the net proceeds received by Southern from
such investment and any proceeds received from the sale of Common Stock, Senior
Notes, Stock Purchase Contracts or Stock Purchase Units or other sales of Junior
Subordinated Notes will be used in connection with its ongoing construction
program, to pay scheduled maturities and/or refundings of its securities, to
repay short-term indebtedness to the extent outstanding and for other general
corporate purposes.
DESCRIPTION OF THE COMMON STOCK
The authorized capital stock of Southern currently consists of
1,000,000,000 shares of common stock, par value $5 per share. As of August 31,
1998, there were 697,798,995 shares of common stock issued and outstanding.
5
All shares of common stock of Southern participate equally with respect to
dividends and rank equally upon liquidation. Each holder is entitled to one vote
for each share held and to cumulative voting at elections of directors. The vote
of two-thirds of the outstanding common stock is required to authorize or create
preferred stock or to effect certain changes in charter provisions affecting the
common stock. No stockholder is entitled to preemptive rights.
The shares of Common Stock offered hereby will be fully paid and
nonassessable by Southern.
The income of Southern is derived mainly from equity in earnings of its
operating affiliates. At June 30, 1998, $2,046,745,000 of consolidated retained
earnings, of a total of $3,886,150,000 at that date, was restricted against the
payment by the operating affiliates of cash dividends on common stock under
terms of bond indentures or charters. Southern's investment in subsidiary
companies is maintained on the equity method of accounting; however, under the
applicable accounting requirements of the Commission, cash dividends are limited
to Southern's retained earnings computed on the cost method of accounting
($501,671,000 at June 30, 1998). The equity in undistributed earnings of
subsidiary companies, except for the $2,046,745,000 restricted under the terms
of bond indentures or charters, will become available for payment of cash
dividends by Southern as such amounts are paid to Southern by the subsidiary
companies.
Certain business combination transactions, including mergers, sales of
assets or securities having a fair market value of $100,000,000 or more,
liquidations, dissolutions, reclassifications or recapitalizations, between
Southern or any of its subsidiaries and any beneficial owner of more than 5% of
the outstanding voting stock of Southern or any affiliate of such owner must be
approved by the holders of 75% of the outstanding voting stock and a majority of
the outstanding voting stock held by persons other than such beneficial owner,
unless approved by a majority of the "Disinterested Directors" (generally
directors not affiliated with such beneficial owner) or certain minimum price
and procedural requirements are met. These provisions may have the effect of
delaying, deferring or preventing a change in control of Southern.
The transfer agent and registrar for the common stock is Southern Company
Services, Inc., Atlanta, Georgia.
DIVIDENDS AND PRICE RANGE
The table below sets forth, for the periods indicated, the high and low
sales prices of Southern's common stock as reported by The Wall Street Journal
as NYSE-Composite Transactions.
The last sale price of the common stock on October , 1998, as reported by
The Wall Street Journal, was $ per share. The consolidated book value per
share of Southern's common stock at June 30, 1998 was $14.05.
6
Dividends have been paid on the common stock without interruption since
1949 when Southern was organized. The following table sets forth the dividends
paid during the period 1994-1997 and the first three quarters of 1998. Future
dividends will depend on future earnings, the financial condition of Southern
and the operating affiliates and other factors.
Southern has an investment plan pursuant to which registered owners of
shares of Southern's common stock may purchase additional shares by having
dividends automatically reinvested, or by making supplemental optional cash
purchases (not more than $150,000 per year), or both. For information concerning
the Southern Investment Plan, write SCS Stockholder Services, P.O. Box 54250,
Atlanta, Georgia 30308-0250.
DESCRIPTION OF THE SENIOR NOTES
Set forth below is a description of the general terms of the Senior Notes.
The following description does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, the Senior Note Indenture to be
entered into among Southern, Capital and the trustee named in the applicable
Prospectus Supplement, as trustee (the "Senior Note Indenture Trustee"), as to
be supplemented by a supplemental indenture thereto establishing the Senior
Notes of each series (the Senior Note Indenture, as so supplemented, is
hereinafter referred to as the "Senior Note Indenture"), the forms of which are
filed as exhibits to the Registration Statement of which this Prospectus forms a
part. The terms of the Senior Notes will include those stated in the Senior Note
Indenture and those made a part of the Senior Note Indenture by reference to the
1939 Act. Certain capitalized terms used herein are defined in the Senior Note
Indenture.
GENERAL
The Senior Notes will be issued as unsecured senior debt securities under
the Senior Note Indenture and will rank pari passu with all other unsecured and
unsubordinated debt of Capital. The Senior Notes will be effectively
subordinated to all secured debt of Capital. At June 30, 1998 Capital had no
outstanding secured debt. The Senior Note Indenture does not limit the aggregate
principal amount of Senior Notes that may be issued thereunder and provides that
Senior Notes may be issued from time to time in one or more series pursuant to
an indenture supplemental to the Senior Note Indenture.
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Senior Notes being offered
thereby: (i) the title of such Senior Notes; (ii) any limit on the aggregate
principal amount of such Senior Notes; (iii) the date or dates on which the
principal of such Senior Notes is payable; (iv) the rate or rates at which such
Senior Notes shall bear interest, if any, or any method by which such rate or
rates will be determined, the date or dates from which such interest will
accrue, the interest payment dates on which such interest shall be payable, and
the regular record date for the interest payable on any interest payment date;
(v) the place or places where the principal of (and premium, if any) and
interest, if any, on such Senior Notes shall be payable; (vi) the period or
periods within which, the price or prices at which and the terms and conditions
on which such Senior Notes may be redeemed, in whole or in part, at the option
of Capital; (vii) the obligation, if any, of Capital to redeem or purchase such
Senior Notes; (viii) the date or dates, if any, after which such Senior Notes
may be converted or exchanged at the option of
7
the holder into or for shares of Common Stock of Southern and the terms for any
such conversion or exchange; (ix) the denominations in which such Senior Notes
shall be issuable; (x) if other than the principal amount thereof, the portion
of the principal amount of such Senior Notes which shall be payable upon
declaration of acceleration of the maturity thereof; (xi) any deletions from,
modifications of or additions to the Events of Default or covenants of Capital
as provided in the Senior Note Indenture pertaining to such Senior Notes; (xii)
whether such Senior Notes shall be issued in whole or in part in the form of a
Global Security; and (xiii) any other terms of such Senior Notes.
The Senior Note Indenture does not contain provisions that afford holders
of Senior Notes protection in the event of a highly leveraged transaction
involving Southern or Capital.
SENIOR NOTES GUARANTEE
Pursuant to the Senior Note Indenture, Southern will irrevocably and
unconditionally guarantee the Senior Notes as described under "Description of
the Senior Notes Guarantees."
EVENTS OF DEFAULT
The Senior Note Indenture provides that any one or more of the following
described events with respect to the Senior Notes of any series, which has
occurred and is continuing, constitutes an "Event of Default" with respect to
the Senior Notes of such series:
(a) failure for 10 days to pay interest on the Senior Notes of such
series, when due on an Interest Payment Date other than at maturity or upon
earlier redemption; or
(b) failure to pay principal or premium, if any, or interest on the
Senior Notes of such series when due at maturity or upon earlier
redemption; or
(c) failure for three Business Days to deposit any sinking fund
payment when due by the terms of a Senior Note of such series; or
(d) failure to observe or perform any other covenant or warranty in
the Senior Note Indenture (other than a covenant or warranty which has
expressly been included therein solely for the benefit of one or more
series of Senior Notes other than such series) for 90 days after written
notice to Southern and Capital from the Senior Note Indenture Trustee or
the holders of at least 25% in principal amount of the outstanding Senior
Notes of such series; or
(e) certain events of bankruptcy, insolvency, or reorganization of
Southern or Capital.
The holders of not less than a majority in aggregate outstanding principal
amount of the Senior Notes of any series have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Senior Note Indenture Trustee with respect to the Senior Notes of such series.
If a Senior Note Indenture Event of Default occurs and is continuing with
respect to the Senior Notes of any series, then the Senior Note Indenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the Senior Notes of such series may declare the principal amount
thereof due and payable immediately by notice in writing to Southern and Capital
(and to the Senior Note Indenture Trustee if given by the holders), and upon any
such declaration such principal amount shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to the Senior
Notes of any series has been made and before a judgment or decree for payment of
the money due has been obtained as provided in Article Five of the Senior Note
Indenture, the holders of not less than a majority in aggregate outstanding
principal amount of the Senior Notes of such series may rescind and annul such
declaration and its consequences if the default has been cured or waived and
Southern or Capital has paid or deposited with the Senior Note Indenture Trustee
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration and all sums paid or advanced by the Senior Note
Indenture Trustee, including reasonable compensation and expenses of the Senior
Note Indenture Trustee.
The holders of not less than a majority in aggregate outstanding principal
amount of the Senior Notes of any series may, on behalf of the holders of all
the Senior Notes of such series, waive any past default with
8
respect to such series, except (i) a default in the payment of principal or
interest or (ii) a default in respect of a covenant or provision which under
Article Nine of the Senior Note Indenture cannot be modified or amended
thereunder without the consent of the holder of each outstanding Senior Note of
such series affected thereby.
REGISTRATION AND TRANSFER
Capital shall not be required to (i) issue, register the transfer of or
exchange Senior Notes of any series during a period of 15 days immediately
preceding the date notice is given identifying the Senior Notes of such series
called for redemption, or (ii) register the transfer of or exchange any Senior
Notes so selected for redemption, in whole or in part, except the unredeemed
portion of any Senior Note being redeemed in part.
PAYMENT AND PAYING AGENT
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of any Senior Notes will be made only against surrender to the
Paying Agent of such Senior Notes. Principal of and interest on Senior Notes
will be payable, subject to any applicable laws and regulations, at the office
of such Paying Agent or Paying Agents as Capital may designate from time to
time, except that, at the option of the Company, payment of any interest may be
made by wire transfer or by check mailed to the address of the person entitled
thereto as such address shall appear in the Security Register with respect to
the Senior Notes. Payment of interest on Senior Notes on any interest payment
date will be made to the person in whose name the Senior Notes (or predecessor
security) are registered at the close of business on the Record Date for such
interest payment (the fifteenth calendar day before such interest payment date).
Unless otherwise indicated in an applicable Prospectus Supplement, the
Senior Indenture Trustee will act as Paying Agent with respect to the Senior
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 moneys paid by Capital to a Paying Agent for the payment of the
principal of or interest on the Senior Notes of any series which remain
unclaimed at the end of two years after such principal or interest shall have
become due and payable will be repaid to Capital, and the holder of such Senior
Notes will thereafter look only to Capital for payment thereof.
MODIFICATION
The Senior Note Indenture contains provisions permitting Capital, Southern
and the Senior Indenture Trustee, with the consent of the holders of not less
than a majority in principal amount of the outstanding Senior Notes of each
series affected thereby, to modify the Senior Note Indenture or the rights of
the holders of the Senior Note of such series; provided, that no such
modification may, without the consent of the holder of each outstanding Senior
Note affected thereby, (i) change the stated maturity of the principal of, or
any installment of principal of or interest on, any Senior Note, or reduce the
principal amount thereof or the rate of interest thereon or any premium payable
upon the redemption thereof, or change the method of calculating the rate of
interest thereon, or impair the right to institute suit for the enforcement of
any such payment on or after the stated maturity thereof (or, in the case of
redemption, on or after the redemption date), or (ii) reduce the percentage of
principal amount of the outstanding Senior Notes of any series, the consent of
whose holders is required for any such supplemental indenture, or the consent of
whose holders is required for any waiver (of compliance with certain provisions
of the Senior Note Indenture or certain defaults thereunder and their
consequences) provided for in the Senior Note Indenture, or (iii) modify any of
the provisions of the Senior Note Indenture relating to supplemental indentures,
waiver of past defaults, or waiver of certain covenants, except to increase any
such percentage or to provide that certain other provisions of the Senior Note
Indenture cannot be modified or waived without the consent of the holder of each
outstanding Senior Note affected thereby.
9
In addition, Capital, Southern and the Senior Note Indenture Trustee may
execute, without the consent of any holders of Senior Notes, any supplemental
indenture for certain other usual purposes, including the creation of any new
series of senior notes.
CONSOLIDATION, MERGER AND SALE
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
Senior Note Indenture Trustee, the payment of the principal of (and premium, if
any) and interest on all the Senior Notes and the performance of every covenant
of the Senior Note Indenture on the part of 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 Senior Note Indenture Trustee an officers' certificate and an opinion of
counsel, each stating that such transaction complies with the provisions of the
Senior Note Indenture governing consolidation, merger, conveyance, transfer or
lease and that all conditions precedent thereto have been complied with.
INFORMATION CONCERNING THE SENIOR NOTE INDENTURE TRUSTEE
The Senior Note Indenture Trustee, prior to an Event of Default with
respect to Senior Notes of any series, undertakes to perform, with respect to
Senior Notes of such series, only such duties as are specifically set forth in
the Senior Note Indenture and, in case an Event of Default with respect to
Senior Notes of any series has occurred and is continuing, shall exercise, with
respect to Senior Notes of such series, the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Subject to
such provision, the Senior Note Indenture Trustee is under no obligation to
exercise any of the powers vested in it by the Senior Note Indenture at the
request of any holder of Senior Notes of any series, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby. The Senior Note Indenture Trustee is not required to expend
or risk its own funds or otherwise incur any financial liability in the
performance of its duties if the Senior Note Indenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
GOVERNING LAW
The Senior Note Indenture and the Senior Notes will be governed by, and
construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
Each of Southern and Capital will have the right at all times to assign any
of its rights or obligations under the Senior Note Indenture to a direct or
indirect wholly-owned subsidiary of 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 Senior
Note Indenture will be binding upon and inure to the benefit of the parties
thereto and their respective successors and assigns.
10
DESCRIPTION OF SENIOR NOTES GUARANTEES
Pursuant to the Senior Note Indenture, Southern will irrevocably and
unconditionally guarantee the due and punctual payment of principal, premium, if
any, and interest on the Senior Notes when and as the same shall become due and
payable. Each Senior Notes Guarantee will constitute an unsecured and
unsubordinated obligation of Southern and will rank pari passu with all other
unsecured and unsubordinated debt that may be issued by Southern. The Senior
Notes Guarantees will be effectively subordinated to all secured debt of
Southern. As of June 30, 1998, Southern had no secured debt. Since Southern is a
holding company, the right of Southern and, hence, the right of creditors of
Southern (including holders of Senior 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.
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
Set forth below is a description of the general terms of the Junior
Subordinated Notes. The following description does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
Subordinated Note Indenture, dated as of June 1, 1997, among Southern, Capital
and Bankers Trust Company, as trustee (the "Subordinated Note Indenture
Trustee"), as to be supplemented by a supplemental indenture thereto
establishing the Junior Subordinated Notes of each series (the Subordinated Note
Indenture, as so supplemented, is hereinafter referred to as the "Subordinated
Note Indenture"), the forms of which are filed as exhibits to the Registration
Statement of which this Prospectus forms a part. The terms of the Junior
Subordinated Notes will include those stated in the Subordinated Note Indenture
and those made a part of the Subordinated Note Indenture by reference to the
1939 Act. Certain capitalized terms used herein are defined in the Subordinated
Note Indenture.
GENERAL
The Junior Subordinated Notes will be issued as unsecured junior
subordinated debt securities under the Subordinated Note Indenture. The
Subordinated Note Indenture does not limit the aggregate principal amount of
Junior Subordinated Notes that may be issued thereunder and provides that Junior
Subordinated Notes may be issued from time to time in one or more series
pursuant to an indenture supplemental to the Subordinated Note Indenture.
Reference is made to the Prospectus Supplement that will accompany this
Prospectus for the following terms of the series of Junior Subordinated Notes
being offered thereby: (i) the title of such Junior Subordinated Notes; (ii) any
limit on the aggregate principal amount of such Junior Subordinated Notes; (iii)
the date or dates on which the principal of such Junior Subordinated Notes is
payable; (iv) the rate or rates at which such Junior Subordinated Notes shall
bear interest, if any, or any method by which such rate or rates will be
determined, the date or dates from which such interest will accrue, the interest
payment dates on which such interest shall be payable, and the regular record
date for the interest payable on any interest payment date; (v) the place or
places where the principal of (and premium, if any) and interest, if any, on
such Junior Subordinated Notes shall be payable; (vi) the period or periods
within which, the price or prices at which and the terms and conditions on which
such Junior Subordinated Notes may be redeemed, in whole or in part, at the
option of the Company; (vii) the obligation, if any, of Capital to redeem or
purchase such Junior Subordinated Notes; (viii) the date or dates, if any, after
which such Junior Subordinated Notes may be converted or exchanged at the option
of the holder into or for shares of Common Stock of Southern and the terms for
any such conversion or exchange; (ix) the denominations in which such Junior
Subordinated Notes shall be issuable; (x) if other than the principal amount
thereof, the portion of the principal amount of such Junior Subordinated Notes
which shall be payable upon declaration of acceleration of the maturity thereof;
(xi) any deletions from, modifications of or additions to the Events of Default
or covenants of Capital or Southern as provided in the Subordinated Note
Indenture pertaining to such Junior Subordinated Notes; (xii) whether such
Junior Subordinated Notes shall be issued in whole or in part in the form of a
Global Security; (xiii) the right, if any, of Capital to extend the interest
payment periods of such Junior Subordinated Notes; and (xiv) any other terms of
such Junior Subordinated Notes. The terms of each series of Junior
11
Subordinated Notes issued to a Trust will correspond to those of the related
Preferred Securities of such Trust as described in the Prospectus Supplement
relating to such Preferred Securities.
The Subordinated Note Indenture does not contain provisions that afford
holders of Junior Subordinated Notes protection in the event of a highly
leveraged transaction involving 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 including, without limitation, all obligations under its indentures
with various trustees; (ii) all capital lease obligations; (iii) all obligations
issued or assumed as the deferred purchase price of property, all conditional
sale obligations and all obligations of such person under any title retention
agreement (but excluding trade accounts payable arising in the ordinary course
of business and long-term purchase obligations); (iv) all obligations for the
reimbursement of any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (v) all obligations of the type referred
to in clauses (i) through (iv) above of other persons the payment of which 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.
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.
12
JUNIOR SUBORDINATED NOTES GUARANTEE
Pursuant to the Subordinated Note Indenture, Southern will irrevocably and
unconditionally guarantee the Junior Subordinated Notes as described under
"Description of the Junior Subordinated Notes Guarantees."
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 Junior Subordinated 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 Junior Subordinated 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 Securities of such
Trust; provided, however, that any permitted successor of Capital or Southern
under the Subordinated Note Indenture may succeed to 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
13
(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.
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.
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.
14
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 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
15
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.
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 JUNIOR SUBORDINATED NOTES GUARANTEES
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. Each
Junior Subordinated 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 June 30, 1998, Senior Indebtedness of Southern
aggregated approximately $431,000,000. 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.
DESCRIPTION OF THE PREFERRED SECURITIES
Each Trust may issue only one series of Preferred Securities having terms
described in the Prospectus Supplement relating thereto. The Trust Agreement of
each Trust will authorize the Administrative Trustees, on behalf of the Trust,
to issue the Preferred Securities of such Trust. The Preferred Securities of
each Trust will have such terms, including distributions, redemption, voting,
liquidation rights and such other preferred,
16
deferral or other special rights or such restrictions as shall be set forth in
the Trust Agreement of such Trust. Reference is made to the Prospectus
Supplement relating to the Preferred Securities of a Trust for specific terms,
including (i) the distinctive designation of such Preferred Securities; (ii) the
number of Preferred Securities issued by such Trust; (iii) the annual
distribution rate (or method of determining such rate) for Preferred Securities
of such Trust and the date or dates on which such distributions shall be
payable; (iv) whether distributions on such Preferred Securities shall be
cumulative and, in the case of Preferred Securities having cumulative
distribution rights, the date or dates, or method of determining the date or
dates, from which distributions on such Preferred Securities shall be
cumulative; (v) the amount or amounts that shall be paid out of the assets of
such Trust to the holders of the Preferred Securities of such Trust upon
voluntary or involuntary dissolution, winding-up or termination of such Trust;
(vi) the obligation, if any, of such Trust to purchase or redeem such Preferred
Securities and the price or prices at which, the period or periods within which,
and the terms and conditions upon which such Preferred Securities shall be
purchased or redeemed, in whole or in part, pursuant to such obligation; (vii)
the date or dates, if any, after which such Preferred Securities may be
converted or exchanged at the option of the holder into or for shares of Common
Stock of Southern or Debt Securities of Capital and the terms for any such
conversion or exchange; (viii) the voting rights, if any, of such Preferred
Securities in addition to those required by law, including the number of votes
per Preferred Security and any requirement for the approval by the holders of
Preferred Securities as a condition to specified action or amendments to the
Trust Agreement of such Trust; (ix) the rights, if any, to defer distributions
on the Preferred Securities by extending the interest payment period on the
related Junior Subordinated Notes; and (x) any other relative rights,
preferences, privileges, limitations or restrictions of such Preferred
Securities not inconsistent with the Trust Agreement of such Trust or applicable
law. All Preferred Securities offered hereby will be guaranteed by Southern to
the extent set forth under "Description of the Preferred Securities Guarantees."
Any material United States federal income tax considerations applicable to an
offering of Preferred Securities will be described in the Prospectus Supplement
relating thereto.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees that will be executed and delivered by Southern for the
benefit of the holders of Preferred Securities of the respective Trusts from
time to time. Each Preferred Securities Guarantee will be qualified as an
indenture under the 1939 Act. Bankers Trust Company will act as indenture
trustee under each Preferred Securities Guarantee (the "Guarantee Trustee") for
purposes of the 1939 Act. The terms of the respective Preferred Securities
Guarantees will be those set forth therein and those made part thereof by the
1939 Act. The following summary does not purport to be complete and is subject
in all respects to the provisions of, and is qualified in its entirety by
reference to, the Preferred Securities Guarantees, the form of which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part,
and the 1939 Act. Each Preferred Securities Guarantee will be held by the
Guarantee Trustee for the benefit of holders of the Preferred Securities to
which it relates.
GENERAL
Pursuant to each Preferred Securities Guarantee, Southern will irrevocably
and unconditionally agree, to the extent set forth therein, to pay in full, to
the holders of the related Preferred Securities, the Guarantee Payments (as
defined herein), to the extent not paid by, or on behalf of, the related Trust,
regardless of any defense, right of set-off or counterclaim that Southern may
have or assert against any person. The following payments or distributions with
respect to the Preferred Securities of any Trust to the extent not paid or made
by, or on behalf of, such Trust will be subject to the Preferred Securities
Guarantee related thereto (without duplication): (i) any accrued and unpaid
distributions required to be paid on the Preferred Securities of such Trust but
if and only if and to the extent that such Trust has funds legally and
immediately available therefor, (ii) the redemption price, including all accrued
and unpaid distributions to the date of redemption (the "Redemption Price"),
with respect to any Preferred Securities called for redemption by such Trust,
but if and only to the extent such Trust has funds legally and immediately
available therefor, and (iii) upon a dissolution,
17
winding-up or termination of such Trust (other than in connection with the
distribution of Junior Subordinated Notes to the holders of Trust Securities of
such Trust or the redemption of all of the Preferred Securities of such Trust),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on the Preferred Securities of such Trust to the date of
payment, to the extent such Trust has funds legally and immediately available
therefor, and (b) the amount of assets of such Trust remaining available for
distribution to holders of Preferred Securities of such Trust in liquidation of
such 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 related Preferred Securities or by causing the related
Trust to pay such amounts to such holders.
Each Preferred Securities Guarantee will be a guarantee of the Guarantee
Payments with respect to the related Preferred Securities from the time of
issuance of such Preferred Securities, but will not apply to the payment of
distributions and other payments on such Preferred Securities when the related
Trust does not have sufficient funds legally and immediately available to make
such distributions or other payments. IF CAPITAL DOES NOT MAKE INTEREST PAYMENTS
ON THE JUNIOR SUBORDINATED NOTES HELD BY THE PROPERTY TRUSTEE UNDER ANY TRUST,
SUCH TRUST WILL NOT MAKE DISTRIBUTIONS ON ITS PREFERRED SECURITIES.
SUBORDINATION
Southern's obligations under each 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 related
thereto. Southern has outstanding common stock that ranks junior to the
Preferred Securities Guarantees. See "Selected Information -- Selected Financial
Information."
Each 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 related Preferred Securities (in which case
no consent will be required), each 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 such outstanding Preferred Securities. The manner of
obtaining any such approval of holders of the Preferred Securities will be as
set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in each 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 related Preferred Securities
then outstanding.
TERMINATION
Each Preferred Securities Guarantee will terminate and be of no further
force and effect as to the related Preferred Securities upon full payment of the
Redemption Price of all such Preferred Securities, upon distribution of Junior
Subordinated Notes to the holders of such Preferred Securities, or upon full
payment of the amounts payable upon liquidation of the related Trust. Each
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 related
Preferred Securities must restore payment of any sums paid with respect to such
Preferred Securities or under such Preferred Securities Guarantee.
18
EVENTS OF DEFAULT
An event of default under each 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 to which any Preferred Securities Guarantee relates have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of such Preferred Securities
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under such Preferred Securities Guarantee. Any holder of the
related Preferred Securities may institute a legal proceeding directly against
Southern to enforce its rights under such 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 of any series may, by vote, on behalf of the holders of all the
Preferred Securities of such series, waive any past event of default and its
consequences.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of any event of default with
respect to any Preferred Securities Guarantee and after the curing or waiving of
all events of default with respect to such Preferred Securities Guarantee,
undertakes to perform only such duties as are specifically set forth in such
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 any
Preferred Securities Guarantee at the request of any holder of the related
Preferred Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby.
Bankers Trust Company, the Guarantee Trustee, also serves as Property
Trustee and as Subordinated Note 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
Each Preferred Securities Guarantee will be governed by, and construed in
accordance with, the internal laws of the State of New York.
THE AGREEMENTS AS TO EXPENSES AND LIABILITIES
Pursuant to an Agreement as to Expenses and Liabilities to be entered into
by Southern under each Trust Agreement, Southern will irrevocably and
unconditionally guarantee to each person or entity to whom each Trust becomes
indebted or liable the full payment of any indebtedness, expenses or liabilities
of such Trust, other than obligations of such Trust to pay to the holders of the
related Preferred Securities or other similar interests in such Trust the
amounts due such holders pursuant to the terms of such Preferred Securities or
such other similar interests, as the case may be.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED NOTES, THE PREFERRED SECURITIES GUARANTEES AND THE
JUNIOR SUBORDINATED NOTES GUARANTEES
As long as payments of interest and other payments are made when due on
each series of Junior Subordinated Notes issued to a Trust, such payments will
be sufficient to cover distributions and payments due on the related Trust
Securities of such Trust primarily because (i) the aggregate principal amount of
each series of Junior Subordinated Notes will be equal to the sum of the
aggregate stated liquidation amount of the related Trust Securities; (ii) the
interest rate and interest and other payment dates on each series of Junior
Subordinated Notes will match the distribution rate and distribution and other
payment dates for the related
19
Preferred Securities; (iii) Southern shall pay for all costs and expenses of
each Trust pursuant to the Agreements as to Expenses and Liabilities; and (iv)
each Trust Agreement provides that the Securities Trustees thereunder shall not
cause or permit the Trust to, among other things, engage in any activity that is
not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are legally and
immediately available) and other payments due on the Preferred Securities (to
the extent funds therefor are legally and immediately available) will be
guaranteed by Southern as and to the extent set forth under "Description of the
Preferred Securities Guarantees." If Capital does not make interest payments on
any series of Junior Subordinated Notes, it is not expected that the related
Trust will have sufficient funds to pay distributions on its Preferred
Securities. Each 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 related Trust has sufficient funds legally and immediately available
for the payment of such distributions.
If Capital fails to make interest or other payments on any series of Junior
Subordinated Notes when due (taking into account any extension period as
described in the applicable Prospectus Supplement), the Trust Agreement provides
a mechanism whereby the holders of the related Preferred Securities may appoint
a substitute Property Trustee. Such holders may also direct the Property Trustee
to enforce its rights under the Junior Subordinated Notes of such series and the
related Junior Subordinated Notes Guarantee, including proceeding directly
against Capital to enforce such Junior Subordinated Notes and against Southern
to enforce such Junior Subordinated Notes Guarantee. If the Property Trustee
fails to enforce its rights under any series of Junior Subordinated Notes or the
related Junior Subordinated Notes Guarantee, to the fullest extent permitted by
applicable law, any holder of related Preferred Securities may institute a legal
proceeding directly against Capital to enforce the Property Trustee's rights
under such series of Junior Subordinated Notes and against Southern to enforce
such Junior Subordinated 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 Junior Subordinated Notes of the related series having a principal amount
equal to the aggregate stated liquidation amount of the Preferred Securities of
such holder on or after the due dates specified in the Junior Subordinated Notes
of such series.
If Southern fails to make payments under any Preferred Securities
Guarantee, such Preferred Securities Guarantee provides a mechanism whereby the
holders of the Preferred Securities to which such Preferred Securities Guarantee
relates may direct the Guarantee Trustee to enforce its rights thereunder. In
addition, any holder of Preferred Securities may institute a legal proceeding
directly against Southern to enforce the Guarantee Trustee's rights under the
related Preferred Securities Guarantee without first instituting a legal
proceeding against the Guarantee Trustee or any other person or entity.
Each Junior Subordinated Notes Guarantee, each Preferred Securities
Guarantee, the Subordinated Note Indenture, the Junior Subordinated Notes of the
related series, the related Trust Agreement and the related Agreement as to
Expenses and Liabilities, as described above, constitute a full and
unconditional guarantee by Southern and Capital of the payments due on the
related series of Preferred Securities.
Upon any voluntary or involuntary dissolution, winding-up or termination of
any Trust, unless Junior Subordinated Notes of the related series are
distributed in connection therewith, the holders of Preferred Securities of such
Trust will be entitled to receive, out of assets legally available for
distribution to holders, a liquidation distribution in cash as described in the
applicable Prospectus Supplement. Upon any voluntary or involuntary liquidation
or bankruptcy of Capital, the Property Trustee, as holder of the related series
of 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
each Preferred Securities Guarantee and each Junior Subordinated Notes Guarantee
and has agreed to pay for all costs, expenses and liabilities of each Trust
(other than the Trust's obligations to holders of the Preferred Securities)
pursuant to the related Agreement as to Expenses and Liabilities, the positions
of a holder of Preferred Securities and a
20
holder of Junior Subordinated Notes of the related series 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 payments on the
Junior Subordinated Notes of any series would constitute an Event of Default
under the Subordinated Note Indenture with respect to the Junior Subordinated
Notes of such series except that failure to make interest payments on the Junior
Subordinated Notes of such series will not be an Event of Default during an
extension period as described in the applicable Prospectus Supplement.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
Capital may issue and sell from time to time Stock Purchase Contracts,
including contracts obligating holders to purchase from Southern, and Southern
to sell to the holders, a specified number of shares of common stock of Southern
at a future date or dates. The consideration per share of common stock may be
fixed at the time the Stock Purchase Contracts are issued or may be determined
by reference to a specific formula set forth in the Stock Purchase Contracts.
The Stock Purchase Contracts may be issued separately or as a part of units
("Stock Purchase Units") consisting of a Stock Purchase Contract and Debt
Securities, Preferred Securities or debt obligations of third parties, including
U.S. Treasury securities, securing holders' obligations to purchase the common
stock of Southern under the Stock Purchase Contracts. The Stock Purchase
Contracts may require Southern or Capital to make periodic payments to the
holders of the Stock Purchase Units or vice versa, and such payments may be
unsecured or prefunded on some basis. The Stock Purchase Contracts may require
holders to secure their obligations thereunder in a specified manner. The Stock
Purchase Contracts may be guaranteed by Southern as more fully described under
"Description of the Stock Purchase Guarantees."
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units. The description in the Prospectus
Supplement will summarize the terms and conditions of any Stock Purchase
Contracts and Stock Purchase Units, and reference will be made to the Stock
Purchase Contracts, and, if applicable, collateral arrangements and depositary
arrangements, relating to such Stock Purchase Contracts or Stock Purchase Units.
DESCRIPTION OF STOCK PURCHASE GUARANTEES
Pursuant to the documents under which the Stock Purchase Contracts and
Stock Purchase Units will be issued, Southern may irrevocably and
unconditionally guarantee the due and punctual periodic payments to holders of
Stock Purchase Contracts and Stock Purchase Units when and as the same shall
become due and payable. Each Stock Purchase Guarantee will constitute an
unsecured and unsubordinated obligation of Southern and will rank pari passu
with all other unsecured and unsubordinated debt that may be issued by Southern.
The Stock Purchase Guarantees will be effectively subordinated to all secured
debt of Southern. As of June 30, 1998, Southern had no secured debt. Since
Southern is a holding company, the right of Southern and, hence, the right of
creditors of Southern (including holders of Stock Purchase Contracts and Stock
Purchase Units) 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.
PLAN OF DISTRIBUTION
Southern may sell the Common Stock, Capital may sell the Debt Securities,
the Stock Purchase Contracts and the Stock Purchase Units and the Trusts may
sell the Preferred Securities in one or more of the following ways from time to
time: (i) to underwriters for resale to the public or to institutional
investors; (ii) directly to institutional investors; or (iii) through agents to
the public or to institutional investors. The
21
Prospectus Supplement with respect to any Securities will set forth the terms of
the offering of such Securities, including the name or names of any underwriters
or agents, the purchase price of such Securities and the proceeds to Southern,
Capital or the applicable Trust from such sale, any underwriting discounts or
agency fees and other items constituting underwriters' or agents' compensation,
any initial public offering price, any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchange on which such
Securities may be listed.
If underwriters participate in the sale, such Securities will be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale.
Unless otherwise set forth in the Prospectus Supplement, the obligations of
the underwriters to purchase any series of Securities will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all of
such series of Securities, if any are purchased.
Underwriters and agents may be entitled under agreements entered into with
Southern, Capital and/or the applicable Trust to indemnification against certain
civil liabilities, including liabilities under the 1933 Act. Underwriters and
agents may engage in transactions with, or perform services for, Southern in the
ordinary course of business.
Each series of Senior Notes, Junior Subordinated Notes, Preferred
Securities, Stock Purchase Contracts or Stock Purchase Units will be a new issue
of securities and will have no established trading market. Any underwriters to
whom Senior Notes, Junior Subordinated Notes, Preferred Securities, Stock
Purchase Contracts or Stock Purchase Units are sold for public offering and sale
may make a market in such Senior Notes, Junior Subordinated Notes, Preferred
Securities, Stock Purchase Contracts or Stock Purchase Units, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. The Senior Notes, Junior Subordinated Notes,
Preferred Securities, Stock Purchase Contracts or Stock Purchase Units may or
may not be listed on a national securities exchange.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of Capital and the Trusts by Richards,
Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel to Capital
and the Trusts. The validity of the Common Stock, Debt Securities, the
Guarantees, the Stock Purchase Contracts, the Stock Purchase Units and certain
matters relating thereto will be passed upon on behalf of Southern and Capital
by Troutman Sanders LLP, Atlanta, Georgia.
EXPERTS
The financial statements and schedules 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 accounting and auditing in giving said reports.
22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.**
---------------
* The Prospectus Supplement will reflect actual filing and listing fees based
upon the amount of the related offering.
** To be supplied by amendment.
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
II-1
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.
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
II-2
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 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.
II-3
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.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
II-4
Exhibits listed above which have heretofore been filed with the Commission
and which were designated as noted above are hereby incorporated herein by
reference and made a part hereof with the same effect as if filed herewith.
---------------
* To be subsequently filed or incorporated by reference.
ITEM 17. UNDERTAKINGS.
(a) Undertaking related to Rule 415 offering:
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement; Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20%
II-5
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, S-8 or F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrants
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) Undertaking related to filings incorporating subsequent Securities
Exchange Act of 1934 documents by reference:
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the Company's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Undertaking related to acceleration of effectiveness:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrants pursuant to the foregoing provisions
or otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrants of expenses incurred or paid by a director,
officer or controlling person of the registrants in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrants will, unless in the opinion of their counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(d) The undersigned registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-6
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 30th day of September, 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:
II-7
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 29th day of September, 1998.
SOUTHERN COMPANY CAPITAL FUNDING, INC.
By: /s/ W. L. WESTBROOK
------------------------------------
W. L. Westbrook
President and Chief Executive
Officer
Southern Company Capital Funding, Inc. and each person whose signature
appears below constitute and appoint A. W. Dahlberg, W. L. Westbrook, Tommy
Chisholm and Wayne Boston and any agent for service named in this Registration
Statement and each of them, his, her or its true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, for him, her or
it and in his, her or its name, place and stead, in any and all capacities, to
sign and file any and all amendments (including post-effective amendments) to
this Registration Statement, to sign any related registration statement filed
pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same
with all exhibits thereto, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as
he, she or it might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following directors and officers
of Southern Company Capital Funding, Inc. in the capacities and on the dates
indicated.
II-8
Pursuant to the requirements of the Securities Act of 1933, Southern
Company Capital Trust V certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Atlanta, State of Georgia, on the 30th day of
September, 1998.
SOUTHERN COMPANY CAPITAL TRUST V
By: SOUTHERN COMPANY
CAPITAL FUNDING, INC.,
Depositor
By: /s/ WAYNE BOSTON
------------------------------------
Wayne Boston
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, Southern
Company Capital Trust VI 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 30th
day of September, 1998.
SOUTHERN COMPANY CAPITAL TRUST VI
By: SOUTHERN COMPANY
CAPITAL FUNDING, INC.,
Depositor
By: /s/ WAYNE BOSTON
------------------------------------
Wayne Boston
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, Southern
Company Capital Trust VII 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 30th
day of September, 1998.
SOUTHERN COMPANY CAPITAL TRUST VII
By: SOUTHERN COMPANY
CAPITAL FUNDING, INC.,
Depositor
By: /s/ WAYNE BOSTON
------------------------------------
Wayne Boston
Assistant Secretary
II-9
EXHIBIT INDEX
Exhibits listed above which have heretofore been filed with the Commission
and which were designated as noted above are hereby incorporated herein by
reference and made a part hereof with the same effect as if filed herewith.
---------------
* To be subsequently filed or incorporated by reference.