Exhibit 1.1
4,000,000 Shares
of
5.30% Class A Preferred Stock
Cumulative, Par Value $1 Per Share
(Stated Capital $25 Per Share)
ALABAMA POWER COMPANY
UNDERWRITING AGREEMENT
February 5, 2004
Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
Ladies and Gentlemen:
Alabama Power Company, an Alabama corporation (the "Company"),
confirms its agreement (the "Agreement") with you (the "Underwriter"), with
respect to the sale by the Company and the purchase by the Underwriter of
4,000,000 shares of 5.30% Class A Preferred Stock, Cumulative, Par Value $1 Per
Share (Stated Capital $25 Per Share) of the Company (the "Preferred Stock").
The Company understands that the Underwriter proposes to make
a public offering of the Preferred Stock as soon as the Underwriter deems
advisable after this Agreement has been executed and delivered.
SECTION 1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to the Underwriter as follows:
(a) A registration statement on Form S-3 (File Nos. 333-110950,
333-110950-01, 333-110950-02 and 333-110950-03) in respect of
the Preferred Stock and certain other securities has been
prepared and filed in accordance with the provisions of the
Securities Act of 1933, as amended (the "1933 Act"), with the
Securities and Exchange Commission (the "Commission"); such
registration statement and any post-effective amendment
thereto, each in the form heretofore delivered or to be
delivered to the Underwriter, has been declared effective by
the Commission in such form (except that copies of the
registration statement and any post-effective amendment
delivered to the Underwriter need not include exhibits but
shall include all documents incorporated by reference
therein); and no stop order suspending the effectiveness of
such registration statement has been issued and no proceeding
for that purpose has been initiated or, to the best knowledge
of the Company, threatened by the Commission (any preliminary
prospectus included in such registration statement or filed
with the Commission pursuant to Rule 424(a) of the rules and
regulations of the Commission under the 1933 Act, being
hereinafter called a "Preliminary Prospectus"); such
registration statement, as it became effective, including the
exhibits thereto and all documents incorporated by reference
therein pursuant to Item 12 of Form S-3 at the time such
registration statement became effective, being hereinafter
called the "Registration Statement"; the prospectus relating
to the Preferred Stock, in the form in which it was included
in the Registration Statement at the time it became effective,
being hereinafter called the "Prospectus"; any reference
herein to any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated
by reference therein pursuant to Item 12 of Form S-3 under the
1933 Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment
or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus,
as the case may be, under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and incorporated by reference in
such Preliminary Prospectus or Prospectus, as the case may be;
any reference to any amendment to the Registration Statement
shall be deemed to refer to and include any annual report of
the Company filed pursuant to Section 13(a) or 15(d) of the
1934 Act after the effective date of the Registration
Statement that is incorporated by reference in the
Registration Statement; and the Prospectus as amended or
supplemented in final form by a prospectus supplement relating
to the Preferred Stock which it is filed with the Commission,
pursuant to Rule 424(b) under the 1933 Act in accordance with
Section 3(f) hereof, including any documents incorporated by
reference therein as of the date of such filing, being
hereinafter called the "Final Supplemented Prospectus".
(b) The documents incorporated by reference in the Registration
Statement or Prospectus, when they were filed with the
Commission, complied in all material respects with the
applicable provisions of the 1934 Act and the rules and
regulations of the Commission thereunder, and as of such time
of filing, when read together with the Prospectus, none of
such documents contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; and any further documents so filed and
incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents are filed
with the Commission, will comply in all material respects with
the applicable provisions of the 1934 Act and the rules and
regulations of the Commission thereunder and, when read
together with the Prospectus as it otherwise may be amended or
supplemented, will not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, except that the Company makes no warranty or
representation to the Underwriter with respect to: (A) any
statements or omissions made in reliance upon and in
conformity with information furnished in writing to the
Company by the Underwriter expressly for use in the Final
Supplemented Prospectus; (B) any information set forth in that
part of the Registration Statement which shall constitute the
Statements of Eligibility (Form T-1) under the Trust Indenture
Act of 1939, as amended (the "1939 Act"); or (C) any
information set forth in the Final Supplemented Prospectus
under the caption "Certain Terms of the New Stock - Book-Entry
Only Issuance - The Depository Trust Company".
(c) The Registration Statement, the Prospectus and the Final
Supplemented Prospectus comply, and any further amendments or
supplements to the Registration Statement or the Prospectus,
when any such post-effective amendments are declared effective
or supplements are filed with the Commission, as the case may
be, will comply, in all material respects with the applicable
provisions of the 1933 Act, the 1934 Act, the 1939 Act and the
General Rules and Regulations of the Commission thereunder and
do not and will not, (i) as of the applicable effective date
as to the Registration Statement and any amendment thereto,
and (ii) as of the applicable filing date as to the Final
Supplemented Prospectus and any Prospectus as further amended
or supplemented, contain an untrue statement of a material
fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; except that the
Company makes no warranties or representations with respect to
statements or omissions made in the Registration Statement or
the Final Supplemented Prospectus in reliance upon and in
conformity with information furnished in writing to the
Company by the Underwriter expressly for use therein or any
information set forth in the Final Supplemented Prospectus
under the caption "Certain Terms of the New Stock - Book-Entry
Only Issuance - The Depository Trust Company".
(d) With respect to the Registration Statement, the conditions for
use of Form S-3, as set forth in the General Instructions
thereof, have been satisfied.
(e) Since the respective dates as of which information is given in
the Registration Statement and the Final Supplemented
Prospectus, except as otherwise stated therein, there has been
no material adverse change in the business, properties or
financial condition of the Company, whether or not arising in
the ordinary course of business.
(f) The Company is a corporation duly organized and existing under
the laws of the State of Alabama and has due corporate
authority to carry on the public utility business in which it
is engaged and to own and operate the properties used by it in
such business, to enter into and perform its obligations under
this Agreement and to issue and sell the Preferred Stock to
the Underwriter.
(g) This Agreement has been duly authorized, executed and
delivered by the Company.
(h) The issuance and delivery of the Preferred Stock has been duly
authorized by the Company and, on the Closing Date, the
Preferred Stock will have been duly executed by the Company
and, when issued and delivered against payment therefor as
described in the Final Supplemented Prospectus, will be
validly issued and fully paid and non-assessable and will
conform in all material respects to all statements relating
thereto in the Final Supplemented Prospectus.
(i) The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the
transactions contemplated herein and compliance by the Company
with its obligations hereunder shall have been duly authorized
by all necessary action (corporate or otherwise) on the part
of the Company and does not and will not result in any
violation of the charter or bylaws of the Company, and does
not and will not conflict with, or result in a breach of any
of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company under
(A) any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which the Company is
a party or by which it may be bound or to which any of its
properties may be subject (except for conflicts, breaches or
defaults which would not, individually or in the aggregate, be
materially adverse to the Company or materially adverse to the
transactions contemplated by this Agreement), or (B) any
existing applicable law, rule, regulation, judgment, order or
decree of any government, governmental instrumentality or
court, domestic or foreign, or any regulatory body or
administrative agency or other governmental body having
jurisdiction over the Company, or any of its properties.
(j) No authorization, approval, consent or order of any court or
governmental authority or agency is necessary in connection
with the issuance and sale by the Company of the Preferred
Stock or the transactions by the Company contemplated in this
Agreement, except (A) such as may be required under the 1933
Act or the rules and regulations thereunder; (B) such as may
be required under the Public Utility Holding Company Act of
1935, as amended; (C) the approval of the Alabama Public
Service Commission (the "Alabama Commission"); and (D) such
consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or
"blue sky" laws.
(k) The financial statements incorporated by reference in the
Registration Statement and the Final Supplemented Prospectus,
together with the related schedules and notes, present fairly,
in all material respects, the financial position, results of
operations and cash flows of the Company as of and for the
dates indicated; said financial statements have been prepared
in conformity with accounting principles generally accepted in
the United States ("GAAP") applied on a consistent basis
(except that the unaudited financial statements may be subject
to normal year-end adjustments) throughout the periods
involved and necessarily include amounts that are based on the
best estimates and judgments of management. The selected
financial data and the summary financial information included
in the Registration Statement and the Final Supplemented
Prospectus present fairly the information shown therein and
have been compiled on a basis consistent with that of the
audited and unaudited financial statements incorporated by
reference in the Registration Statement.
SECTION 2. SALE AND DELIVERY TO UNDERWRITER; CLOSING.
(a) On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, (i) the Company agrees to
sell to the Underwriter, and the Underwriter agrees to purchase from the
Company, 4,000,000 shares of Preferred Stock at a price equal to $25.00 per
share of Preferred Stock and (ii) the Company agrees to pay the Underwriter as
compensation hereunder, a commission equal to $0.50 per share of Preferred
Stock.
(b) Payment for and delivery of certificates for the Preferred Stock shall be
made at the offices of Troutman Sanders LLP, 600 Peachtree Street, N.E., Suite
5200, Atlanta, Georgia 30308 at 10:00 A.M., New York time, on February 17, 2004
or such other time, place or date as shall be agreed upon by the Underwriter and
the Company (such time and date of payment and delivery being herein called the
"Closing Date"). Payment shall be made to the Company by wire transfer in
federal funds at the Closing Date against delivery of certificates for the
shares of Preferred Stock to the Underwriter.
The delivery of the Preferred Stock shall be made in fully
registered form, registered in the name of CEDE & CO., to the offices of The
Depository Trust Company in New York, New York or its designee, and the
Underwriter shall accept such delivery.
The certificate(s) for the shares of Preferred Stock will be
made available for examination by the Underwriter not later than 12:00 Noon, New
York time, on the last business day prior to the Closing Date.
On the Closing Date, the Company will pay the commission
payable to the Underwriter pursuant to paragraph (a) of this Section 2 by wire
transfer in federal funds against receipt therefor by the Underwriter.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with the Underwriter
as follows:
(a) The Company, on or prior to the Closing Date, will deliver to
the Underwriter conformed copies of the Registration Statement
as originally filed and of all amendments thereto, heretofore
or hereafter made, including any post-effective amendment (in
each case including all exhibits filed therewith, and
including unsigned copies of each consent and certificate
included therein or filed as an exhibit thereto, except
exhibits incorporated by reference, unless specifically
requested). As soon as the Company is advised thereof, it will
advise the Underwriter orally of the issuance of any stop
order under the 1933 Act with respect to the Registration
Statement, or the institution of any proceedings therefor, of
which the Company shall have received notice, and will use its
best efforts to prevent the issuance of any such stop order
and to secure the prompt removal thereof, if issued. The
Company will deliver to the Underwriter sufficient conformed
copies of the Registration Statement, the Prospectus and the
Final Supplemented Prospectus and of all supplements and
amendments thereto (in each case without exhibits) and, from
time to time, as many copies of the Prospectus and the Final
Supplemented Prospectus as the Underwriter may reasonably
request for the purposes contemplated by the 1933 Act or the
1934 Act.
(b) The Company will furnish the Underwriter with copies of each
amendment and supplement to the Final Supplemented Prospectus
relating to the offering of the Preferred Stock in such
quantities as the Underwriter may from time to time reasonably
request. If, during the period (not exceeding nine months)
when the delivery of a prospectus shall be required by law in
connection with the sale of any Preferred Stock by the
Underwriter or a dealer, any event relating to or affecting
the Company, or of which the Company shall be advised in
writing by the Underwriter, shall occur, which in the opinion
of the Company or of Underwriter's counsel should be set forth
in a supplement to or an amendment of the Final Supplemented
Prospectus in order to make the Final Supplemented Prospectus
not misleading in the light of the circumstances when it is
delivered, or if for any other reason it shall be necessary
during such period to amend or supplement the Final
Supplemented Prospectus or to file under the 1934 Act any
document incorporated by reference in the Preliminary
Prospectus or Prospectus in order to comply with the 1933 Act
or the 1934 Act, the Company forthwith will (i) notify the
Underwriter to suspend solicitation of purchases of the
Preferred Stock and (ii) at its expense, make any such filing
or prepare and furnish to the Underwriter a reasonable number
of copies of a supplement or supplements or an amendment or
amendments to the Final Supplemented Prospectus which will
supplement or amend the Final Supplemented Prospectus so that,
as supplemented or amended, it will not contain any untrue
statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances when the Final Supplemented
Prospectus is delivered, not misleading or which will effect
any other necessary compliance. In case the Underwriter is
required to deliver a prospectus in connection with the sale
of any Preferred Stock after the expiration of the period
specified in the preceding sentence, the Company, upon the
request of the Underwriter, will furnish to the Underwriter,
at the expense of the Underwriter, a reasonable quantity of a
supplemented or amended Prospectus, or supplements or
amendments to the Final Supplemented Prospectus, complying
with Section 10(a) of the 1933 Act. During the period
specified in the second sentence of this subsection, the
Company will continue to prepare and file with the Commission
on a timely basis all documents or amendments required under
the 1934 Act and the rules and regulations thereunder;
provided, that the Company shall not file such documents or
-------- amendments without also furnishing copies thereof
prior to such filing to the Underwriter and Dewey Ballantine
LLP.
(c) The Company will endeavor, in cooperation with the
Underwriter, to qualify the Preferred Stock for offering and
sale under the applicable securities laws of such states and
the other jurisdictions of the United States as the
Underwriter may designate; provided, however, that the Company
shall not be obligated to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified or to file a
consent to service of process or to file annual reports or to
comply with any other requirements in connection with such
qualification deemed by the Company to be unduly burdensome.
(d) The Company will make generally available to its security
holders as soon as practicable but not later than 45 days
after the close of the period covered thereby, an earnings
statement of the Company (in form complying with the
provisions of Rule 158 of the rules and regulations under the
1933 Act) covering a twelve-month period beginning not later
than the first day of the Company's fiscal quarter next
following the "effective date" (as defined in Rule 158) of the
Registration Statement.
(e) During a period of 15 days from the date of this Agreement,
the Company will not, without the Underwriter's prior written
consent, directly or indirectly, sell, offer to sell, grant
any option for the sale of, or otherwise dispose of, any share
of Preferred Stock or any security convertible into or
exchangeable into or exercisable for preferred stock of the
Company or any securities substantially similar to the
Preferred Stock (except for the Preferred Stock issued
pursuant to this Agreement).
(f) As soon as practicable after the date of this Agreement, and
in any event within the time prescribed by Rule 424 under the
1933 Act, to file the Final Supplemented Prospectus with the
Commission and to advise the Underwriter of such filing and to
confirm such advice in writing.
(g) The Company will file in the office of the Secretary of the
State of Alabama a charter amendment creating the Preferred
Stock.
(h) The Company will use its best efforts to effect the listing of
the Preferred Stock on the New York Stock Exchange.
SECTION 4. PAYMENT OF EXPENSES. The Company will pay all expenses incidental to
the performance of its obligations under this Agreement, including, but not
limited to, the expenses of (i) the printing and filing of the Registration
Statement as originally filed and of each amendment thereto, (ii) the
preparation, issuance and delivery of the certificate(s) for the shares of
Preferred Stock to the Underwriter, (iii) the fees and disbursements of the
Company's counsel and accountants, (iv) the qualification of the Preferred Stock
under securities laws in accordance with the provisions of Section 3(c) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriter in connection therewith and in connection with the preparation
of any blue sky survey (such fees and disbursements of counsel shall not exceed
$3,500), (v) the printing and delivery to the Underwriter of copies of the
Registration Statement as originally filed and of each amendment thereto and of
the Prospectus, the Final Supplemented Prospectus, and any amendments or
supplements thereto, (vi) the printing and delivery to the Underwriter of copies
of any blue sky survey, (vii) the fee of the National Association of Securities
Dealers, Inc. in connection with its review of the offering contemplated by this
Agreement, if applicable, (viii) the cost and charges of any transfer agent or
registrar, (ix) the fees to rating agencies in connection with rating the
Preferred Stock, (x) the fees and expenses incurred in connection with the
listing of the Preferred Stock on the New York Stock Exchange and (xi) the cost
of qualifying the Preferred Stock with The Depository Trust Company.
Except as otherwise provided in Section 9 hereof, the
Underwriter shall pay all other expenses incurred by it in connection with its
offering of the Preferred Stock including fees and disbursements of its counsel,
Dewey Ballantine LLP. The Underwriter agrees to reimburse the Company for
expenses incurred by the Company in connection with the offering of the
Preferred Stock up to $250,000.
SECTION 5. CONDITIONS OF THE UNDERWRITER'S OBLIGATIONS. The obligations of the
Underwriter to purchase and pay for the shares of Preferred Stock are subject to
the following conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall be in effect on the Closing Date and no
proceedings for that purpose shall be pending before, or to
the knowledge of the Company threatened by, the Commission on
such date. If filing of the Final Supplemented Prospectus, or
any supplement thereto, is required pursuant to Rule 424, the
Final Supplemented Prospectus, and any such supplement, shall
have been filed in the manner and within the time period
required by Rule 424.
(b) Any required orders of the Alabama Commission and the
Commission permitting the transactions contemplated hereby
substantially in accordance with the terms and conditions
hereof shall be in full force and effect and shall contain no
provision unacceptable to the Underwriter or the Company (but
all provisions of such order or orders heretofore entered,
copies of which have heretofore been delivered to the
Underwriter, are deemed acceptable to the Underwriter and the
Company and all provisions of such order or orders hereafter
entered shall be deemed acceptable to the Underwriter and the
Company unless within 24 hours after receiving a copy of any
such order any party to this Agreement shall give notice to
the other parties to the effect that such order contains an
unacceptable provision).
(c) On the Closing Date the Underwriter shall have received:
(1) The opinion, dated the Closing Date, of Balch &
Bingham LLP, general counsel for the Company,
substantially in the form attached hereto as Schedule
I-A.
(2) The opinion, dated the Closing Date, of Troutman
Sanders LLP, counsel for the Company, substantially
in the form attached hereto as Schedule I-B.
(3) The opinion, dated the Closing Date, of Dewey
Ballantine LLP, counsel for the Underwriter,
substantially in the form attached hereto as Schedule
II.
(d) At the Closing Date, there shall not have been, since the date
hereof or since the respective dates as of which information
is given in the Registration Statement and the Final
Supplemented Prospectus, any material adverse change in the
business, properties or financial condition of the Company,
whether or not arising in the ordinary course of business, and
the Underwriter shall have received a certificate of the
President or any Vice President of the Company, and dated as
of the Closing Date, to the effect that (i) there has been no
such material adverse change, (ii) the representations and
warranties in Section 1 hereof are true and correct with the
same force and effect as though expressly made at and as of
the Closing Date, (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be
performed or satisfied on or prior to the Closing Date, and
(iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for
that purpose have been initiated or, to the knowledge of the
Company, threatened by the Commission.
(e) On the Closing Date, the Underwriter shall have received from
Deloitte & Touche LLP, a letter dated the Closing Date to the
effect that: (A) they are independent public accountants with
respect to the Company within the meaning of the 1933 Act and
the rules and regulations under the 1933 Act; (B) in their
opinion, the financial statements audited by them and
incorporated by reference in the Final Supplemented Prospectus
comply as to form in all material respects with the applicable
accounting requirements of the 1934 Act and the rules and
regulations under the 1934 Act; and (C) on the basis of
certain limited procedures performed through a specified date
not more than five business days prior to the date of such
letter, namely (i) reading the minute books of the Company;
(ii) performing the procedures specified by the American
Institute of Certified Public Accountants for a review of
interim financial information as described in Statement on
Auditing Standards No. 71, "Interim Financial Information" and
in Statement on Auditing Standards No. 100, "Interim Financial
Information", on the unaudited financial statements, if any,
of the Company incorporated in the Prospectus and on the
latest available unaudited financial statements of the
Company, if any, for any calendar quarter subsequent to the
date of those incorporated in the Prospectus; and (iii) making
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters regarding
such unaudited financial statements or any specified unaudited
amounts derived therefrom (it being understood that the
foregoing procedures do not constitute an audit performed in
accordance with generally accepted auditing standards and they
would not necessarily reveal matters of significance with
respect to the comments made in such letter, and accordingly
that Deloitte & Touche LLP make no representations as to the
sufficiency of such procedures for the Underwriter's
purposes), nothing came to their attention that caused them to
believe that: (1) any material modifications should be made to
the unaudited condensed financial statements, if any
incorporated in the Prospectus, for them to be in conformity
with generally accepted accounting principles; (2) such
unaudited condensed financial statements do not comply as to
form in all material respects with the applicable accounting
requirements of the 1934 Act as it applies to Form 10-Q and
the related published rules and regulations thereunder; (3)
the unaudited amounts for Operating Revenues, Earnings Before
Income Taxes and Net Income After Dividends on Preferred Stock
and the unaudited Ratios of Earnings to Fixed Charges and
Earnings to Fixed Charges Plus Preferred Dividend Requirements
(Pre-Income Tax Basis) set forth in the Final Supplemented
Prospectus do not agree with the amounts set forth in or
derived from the unaudited financial statements for the same
period; (4) as of a specified date not more than five business
days prior to the date of delivery of such letter, there has
been any change in the capital stock or long-term debt of the
Company or any decrease in net assets as compared with amounts
shown in the latest balance sheet incorporated in the
Prospectus, except in each case for changes or decreases which
(i) the Prospectus discloses have occurred or may occur, (ii)
are occasioned by the declaration of dividends, (iii) are
occasioned by draw-downs under existing pollution control
financing arrangements, (iv) are occasioned by draw-downs and
regularly scheduled payments of capitalized lease obligations,
(v) are occasioned by the purchase or redemption of bonds or
stock to satisfy mandatory or optional redemption provisions
relating thereto, (vi) are occasioned by the reclassification
of current maturities of long-term debt or (vii) are disclosed
in such letter; and (5) the unaudited amounts for Operating
Revenues, Earnings Before Income Taxes and Net Income After
Dividends on Preferred Stock and the unaudited Ratios of
Earnings to Fixed Charges and Earnings to Fixed Charges Plus
Preferred Dividend Requirements (Pre-Income Tax Basis) for any
calendar quarter subsequent to those set forth in (3) above,
which, if available, shall be set forth in such letter, do not
agree with the amounts set forth in or derived from the
unaudited financial statements for the same period or were not
determined on a basis substantially consistent with that of
the corresponding audited amounts or ratios included or
incorporated by reference in the Final Supplemented
Prospectus.
(f) On the Closing Date, counsel for the Underwriter shall have
been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass
upon the issuance and sale of the Preferred Stock as herein
contemplated and related proceedings, or in order to evidence
the accuracy of any of the representations or warranties, or
the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with
the issuance and sale of the Preferred Stock as herein
contemplated shall be satisfactory in form and substance to
the Underwriter and Dewey Ballantine LLP, counsel for the
Underwriter.
(g) No amendment or supplement to the Registration Statement or
the Final Supplemented Prospectus filed subsequent to the date
of this Agreement (including any filing made by the Company
pursuant to Section 13 or 14 of the 1934 Act) shall be
unsatisfactory in form to Dewey Ballantine LLP or shall
contain information (other than with respect to an amendment
or supplement relating solely to the activity of the
Underwriter) which, in the reasonable judgment of the
Underwriter, shall materially impair the marketability of the
Preferred Stock.
(h) The Company shall have performed its obligations when and as
provided under this Agreement.
(i) On the Closing Date, the Preferred Stock shall have been
approved for listing on the New York Stock Exchange upon
notice of issuance.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Underwriter by notice to the Company at any time prior to the Closing
Date, and such termination shall be without liability of any party to any other
party except as provided in Sections 4, 7 and 9(b) hereof.
SECTION 6. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company shall be subject to the conditions set
forth in the first sentence of Section 5(a) and in Section 5(b) and to the
issuance by the Company and the purchase by The Southern Company on or before
the Closing Date of at least 311,000 shares of the Company's common stock. In
case such conditions shall not have been fulfilled, this Agreement may be
terminated by the Company by mailing or delivering written notice thereof to the
Underwriter. Any such termination shall be without liability of any party to any
other party except as otherwise provided in Sections 4, 7 and 9(b) hereof.
SECTION 7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the Underwriter and each
person, if any, who controls the Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20(a) of the 1934 Act, against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the 1933 Act, 1934 Act or otherwise, and to reimburse
the Underwriter and such controlling person or persons, if any, for any legal or
other expenses incurred by them in connection with defending any actions,
insofar as such losses, claims, damages, liabilities or actions arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement, the
Prospectus or the Final Supplemented Prospectus or, if the Company shall furnish
to the Underwriter any amendments or any supplements thereto, or shall make any
filings pursuant to Section 13 or 14 of the 1934 Act which are incorporated
therein by reference, in any Preliminary Prospectus, the Registration Statement,
the Prospectus or the Final Supplemented Prospectus as so amended or
supplemented, or arise out of or are based upon any omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
which was made in such Registration Statement, Preliminary Prospectus,
Prospectus or the Final Supplemented Prospectus in reliance upon and in
conformity with information furnished in writing to the Company by the
Underwriter for use therein and except that this indemnity with respect to the
Preliminary Prospectus, the Prospectus or the Final Supplemented Prospectus, if
the Company shall have furnished any amendment or supplement thereto, shall not
inure to the benefit of the Underwriter (or of any person controlling the
Underwriter) on account of any losses, claims, damages, liabilities or actions
arising from the sale of the Preferred Stock to any person if a copy of the
Preliminary Prospectus, the Prospectus or the Final Supplemented Prospectus
(exclusive of documents incorporated therein by reference pursuant to Item 12 of
Form S-3), as the same may then be amended or supplemented, shall not have been
sent or given by or on behalf of the Underwriter to such person with or prior to
the written confirmation of the sale involved and the untrue statement or
alleged untrue statement or omission or alleged omission was corrected in the
Preliminary Prospectus, the Prospectus or the Final Supplemented Prospectus as
supplemented or amended at the time of such confirmation. The Underwriter
agrees, within ten days after the receipt by it of notice of the commencement of
any action in respect of which indemnity may be sought by it, or by any person
controlling it, from the Company on account of its agreement contained in this
Section 7, to notify the Company in writing of the commencement thereof but the
omission of the Underwriter so to notify the Company of any such action shall
not release the Company from any liability which it may have to the Underwriter
or to such controlling person otherwise than on account of the indemnity
agreement contained in this Section 7. In case any such action shall be brought
against the Underwriter or any such person controlling the Underwriter and the
Underwriter shall notify the Company of the commencement thereof as above
provided, the Company shall be entitled to participate in (and, to the extent
that it shall wish, including the selection of counsel, to direct) the defense
thereof, at its own expense. In case the Company elects to direct such defense
and select such counsel, the Underwriter or any controlling person shall have
the right to employ its own counsel, but, in any such case, the fees and
expenses of such counsel shall be at the expense of the Underwriter or such
controlling person unless the employment of such counsel has been authorized in
writing by the Company in connection with defending such action. No indemnifying
party shall, without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification may be sought hereunder (whether or not the indemnified party is
an actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include any statement as to, or an admission of, fault, culpability or a failure
to act, by or on behalf of any indemnified party. In no event shall any
indemnifying party have any liability or responsibility in respect of the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim effected without its prior
written consent.
(b) The Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors and such of its officers who have signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act to
the same extent and upon the same terms as the indemnity agreement of the
Company set forth in Section 7(a) hereof, but only with respect to alleged
untrue statements or omissions made in the Registration Statement, the
Preliminary Prospectus, the Prospectus or the Final Supplemented Prospectus, or
such documents as amended or supplemented, in reliance upon and in conformity
with information furnished in writing to the Company by the Underwriter for use
therein.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in
this Agreement, or contained in certificates of officers of the Company
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Underwriter or
controlling person, or by, or on behalf of the Company and shall survive
delivery of the Preferred Stock to the Underwriter.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Underwriter may terminate this Agreement, by notice to the Company, at
any time at or prior to the Closing Date if (i) trading in securities on the New
York Stock Exchange shall have been generally suspended or there shall have been
a material disruption in settlement of securities generally, (ii) minimum or
maximum ranges for prices shall have been generally established on the New York
Stock Exchange by the Commission or by the New York Stock Exchange, (iii) a
general banking moratorium shall have been declared by federal or New York State
authorities, or (iv) there shall have occurred any outbreak or escalation of
major hostilities in which the United States is involved, any declaration of war
by the United States Congress or any other substantial national or international
calamity, crisis or emergency (including, without limitation, acts of terrorism)
affecting the United States, in any such case provided for in clauses (i)
through (iv) with the result that, in the reasonable judgment of the
Underwriter, the marketability of the Preferred Stock shall have been materially
impaired.
(b) If this Agreement shall be terminated by the Underwriter pursuant to
subsection (a) above or because of any failure or refusal on the part of the
Company to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company shall be unable to perform its
obligations under this Agreement, then in any such case, the Company will
reimburse the Underwriter for the reasonable fees and disbursements of Dewey
Ballantine LLP and for the out of pocket expenses (in an amount not exceeding
$10,000) reasonably incurred by the Underwriter in making preparations for the
purchase, sale and delivery of the shares of Preferred Stock and, upon such
reimbursement, the Company shall be absolved from any further liability
hereunder, except as provided in Sections 4 and 7.
SECTION 10. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriter shall be
directed to Lehman Brothers Inc., 745 Seventh Avenue, New York, New York 10019,
Attention: Managing Director, Debt Capital Markets with a copy to the General
Counsel; notices to the Company shall be delivered to 600 North 18th Street,
Birmingham, Alabama 35291, Attention: Corporate Secretary, with a copy to
Southern Company Services, Inc., 270 Peachtree Street, N.W., Atlanta, Georgia
30303, Attention: Earl C. Long.
SECTION 11. PARTIES. This Agreement shall inure to the benefit of and be binding
upon the Underwriter, the Company and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriter and the Company
and their respective successors and the controlling persons and officers and
directors referred to in Section 7 and their heirs and legal representatives,
any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision herein contained. This Agreement and all conditions
and provisions hereof are intended to be for the sole and exclusive benefit of
the Underwriter and the Company and their respective successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Preferred Stock from the Underwriter shall be deemed to be a
successor by reason merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State. Except as otherwise set forth
herein, specified times of day refer to New York City time.
SECTION 13. COUNTERPARTS. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be deemed
to be an original, but all such respective counterparts shall together
constitute one and the same instrument.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriter and the Company in accordance with its terms.
Very truly yours,
ALABAMA POWER COMPANY
By: ________________________________
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written
LEHMAN BROTHERS INC.
By:__________________________
Title:
Schedule I-A
[Letterhead of Balch & Bingham LLP]
___________ __, 200_
Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
ALABAMA POWER COMPANY
4,000,000 Shares
of
_% Class A Preferred Stock
Cumulative, Par Value $1 Per Share
(Stated Capital $25 Per Share)
Ladies and Gentlemen:
We have acted as general counsel to Alabama Power Company (the
"Company") in connection with the purchase by you of 4,000,000 shares of _%
Class A Preferred Stock, Cumulative, Par Value $1 Per Share (Stated Capital $25
Per Share) of the Company (the "Preferred Stock") pursuant to the terms of an
Underwriting Agreement dated _______, 2004 (the "Underwriting Agreement"),
between the Company and you. This opinion is being delivered to you pursuant to
Section 5(c)(1) thereof.
All capitalized terms not otherwise defined herein shall have
the meanings set forth in the Underwriting Agreement.
In rendering the opinions expressed below, we have examined
the registration statement on Form S-3 (File Nos. 333-110950, 333-110950-01,
333-110950-02 and 333-110950-03) pertaining to the Preferred Stock (the
"Registration Statement") filed under the Securities Act of 1933, as amended
(the "Act"), and the prospectus dated December 19, 2003 as supplemented by a
final prospectus supplement dated __________, 200_ (the "Final Supplemented
Prospectus"), which pursuant to Form S-3 incorporates by reference the Annual
Report on Form 10-K of the Company for the fiscal year ended December 31, 2002,
the Quarterly Reports on Form 10-Q of the Company for the quarters ended March
31, 2003, June 30, 2003 and September 30, 2003 and the Current Reports on Form
8-K of the Company dated February 5, 2003, February 11, 2003, March 12, 2003,
April 15, 2003, May 1, 2003, November 14, 2003, December 2, 2003, December 8,
2003 and _____ (the "Exchange Act Documents"), each as filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
In addition, we have examined, and have relied as to matters
of fact upon, the documents delivered to you at the closing (except the
certificates representing the Preferred Stock, of which we have examined a
specimen), and we have made such other and further investigations as we deemed
necessary to express the opinions hereinafter set forth. In such examination, we
have assumed the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such latter
documents.
Based upon the foregoing, and subject to the qualifications
and limitations stated herein, we are of the opinion, relying as to matters of
New York law upon the opinion dated the date hereof rendered to you by Dewey
Ballantine LLP, that:
1. The Company has been duly organized and is validly existing and in
good standing as a corporation under the laws of the State of Alabama and has
due corporate authority to carry on the public utility business in which it is
engaged and to own and operate the properties used by it in such business and to
enter into and perform its obligations under the Underwriting Agreement.
2. The execution, delivery and performance by the Company of the
Underwriting Agreement have been duly authorized by all necessary corporate
action, and the Underwriting Agreement has been duly executed and delivered by
the Company.
3. All orders, consents, or other authorizations or approvals of the
Alabama Public Service Commission and the Commission legally required for the
issuance and sale of the Preferred Stock have been obtained; such orders are
sufficient for the issuance and the sale of the Preferred Stock; the issuance
and the sale of the Preferred Stock conform in all material respects with the
terms of such orders; and no other order, consent or other authorization or
approval of any Alabama or United States governmental body (other than in
connection or in compliance with the provisions of the securities or "blue sky"
laws of any jurisdiction, as to which we express no opinion) is legally required
for the issuance and sale of the Preferred Stock in accordance with the terms of
the Underwriting Agreement.
4. The Preferred Stock has been duly authorized by the Company and,
upon payment and delivery in accordance with the Underwriting Agreement, will be
validly issued, fully paid and nonassessable.
5. The statements made in the Final Supplemented Prospectus under the
captions "Description of the New Stock" and "Certain Terms of the New Stock"
constitute accurate summaries of the terms of the articles of incorporation of
the Company and the Preferred Stock in all material respects.
We have not independently verified the accuracy, completeness
or fairness of the statements made or included in the Registration Statement,
the Final Supplemented Prospectus or the Exchange Act Documents and take no
responsibility therefor, except as and to the extent set forth in paragraph 5
above. In the course of the preparation by the Company of the Registration
Statement, the Final Supplemented Prospectus and the Exchange Act Documents, we
participated in conferences with certain officers and employees of the Company,
with other counsel for the Company, with representatives of Deloitte & Touche
LLP and with your counsel. Based upon our examination of the Registration
Statement, the Final Supplemented Prospectus and the Exchange Act Documents, our
investigations made in connection with the preparation of the Registration
Statement, the Final Supplemented Prospectus and the Exchange Act Documents and
our participation in the conferences referred to above, (i) we are of the
opinion that the Registration Statement, as of its effective date, and the Final
Supplemented Prospectus, as of __________, complied as to form in all material
respects with the requirements of the Act and the applicable rules and
regulations of the Commission thereunder and that the Exchange Act Documents, as
of their respective dates of filing with the Commission, complied as to form in
all material respects with the relevant requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder, except that in
each case we express no opinion as to the financial statements or other
financial or statistical data contained or incorporated by reference in the
Registration Statement, the Final Supplemented Prospectus or the Exchange Act
Documents, and (ii) nothing came to our attention which gives us reason to
believe that the Registration Statement, as of its effective date (including the
Exchange Act Documents on file with the Commission as of such date), contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or that the Final Supplemented Prospectus (including the
Exchange Act Documents) contained, as of its date, or contains, on the date
hereof, any untrue statement therein of a material fact or omitted as of its
date, or omits, on the date hereof, to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that in each case we express no opinion
or belief with respect to the financial statements or other financial or
statistical data contained or incorporated by reference in the Registration
Statement, the Final Supplemented Prospectus or the Exchange Act Documents and
with respect to information set forth in the Final Supplemented Prospectus under
the caption "Certain Terms of the New Stock - Book-Entry Only Issuance - The
Depository Trust Company".
We are members of the State Bar of Alabama and we do not
express any opinion herein concerning any law other than the law of such State
and, to the extent set forth herein, the law of the State of New York and the
federal law of the United States.
This opinion is rendered to you in connection with the
above-described transaction. This opinion may not be relied upon by you for any
other purpose, or relied upon by or furnished to any other person without our
prior written consent, except that Troutman Sanders LLP and Dewey Ballantine LLP
may rely on this opinion in giving their opinions pursuant to Section 5(c) of
the Underwriting Agreement insofar as such opinion relates to matters of Alabama
law.
Yours very truly,
BALCH & BINGHAM LLP
[Letterhead of TROUTMAN SANDERS LLP]
__________ __, 200_
Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
ALABAMA POWER COMPANY
4,000,000 Shares
of
_% Class A Preferred Stock
Cumulative, Par Value $1 Per Share
(Stated Capital $25 Per Share)
Ladies and Gentlemen:
We have acted as counsel to Alabama Power Company (the
"Company") in connection with the purchase by you of 4,000,000 shares of _%
Class A Preferred Stock, Cumulative, Par Value $1 Per Share (Stated Capital $25
Per Share) of the Company (the "Preferred Stock") pursuant to the terms of an
Underwriting Agreement dated ________, 2004 (the "Underwriting Agreement"),
between the Company and you. This opinion is being delivered to you pursuant to
Section 5(c)(2) thereof.
All capitalized terms not otherwise defined herein shall have
the meanings set forth in the Underwriting Agreement.
In rendering the opinions expressed below, we have examined
the registration statement on Form S-3 (File Nos. 333-110950, 333-110950-01,
333-110950-02 and 333-110950-03) pertaining to the Preferred Stock (the
"Registration Statement") filed under the Securities Act of 1933, as amended
(the "Act"), and the prospectus dated December 19, 2003 as supplemented by a
final prospectus supplement dated __________, 200_ (the "Final Supplemented
Prospectus"), which pursuant to Form S-3 incorporates by reference the Annual
Report on Form 10-K of the Company for the fiscal year ended December 31, 2002,
the Quarterly Reports on Form 10-Q of the Company for the quarters ended March
31, 2003, June 30, 2003 and September 30, 2003 and the Current Reports on Form
8-K of the Company dated February 5, 2003, February 11, 2003, March 12, 2003,
April 15, 2003, May 1, 2003, November 14, 2003, December 2, 2003, December 8,
2003 and _____ (the "Exchange Act Documents"), each as filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
In addition, we have examined, and have relied as to matters
of fact upon, the documents delivered to you at the closing (except the
certificates representing the Preferred Stock, of which we have examined a
specimen), and we have made such other and further investigations as we deemed
necessary to express the opinions hereinafter set forth. In such examination, we
have assumed the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such latter
documents.
Based upon the foregoing, and subject to the qualifications
and limitations stated herein, we are of the opinion, relying as to matters of
Alabama law upon the opinion dated the date hereof rendered to you by Balch &
Bingham LLP and relying as to matters of New York law upon the opinion dated the
date hereof rendered to you by Dewey Ballantine LLP, that:
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Alabama and has due
corporate authority to carry on the public utility business in which it is
engaged, to own and operate the properties used by it in such business and to
enter into and perform its obligations under the Agreements.
2. The execution, delivery and performance by the Company of the
Underwriting Agreement have been duly authorized by all necessary corporate
action, and the Underwriting Agreement has been duly executed and delivered by
the Company.
3. All orders, consents or other authorizations or approvals of the
Alabama Public Service Commission and the Commission legally required for the
issuance and sale of the Preferred Stock have been obtained; such orders are
sufficient for the issuance and sale of the Preferred Stock; the issuance and
sale of the Preferred Stock conform in all material respects with the terms of
such orders; and no other order, consent or other authorization or approval of
any Alabama or United States governmental body (other than in connection or in
compliance with the provisions of the securities or "blue sky" laws of any
jurisdiction, as to which we express no opinion) is legally required for the
issuance and sale of the Preferred Stock in accordance with the terms of the
Underwriting Agreement.
4. The Preferred Stock has been duly authorized by the Company and,
upon payment and delivery in accordance with the Underwriting Agreement, will be
validly issued, fully paid and nonassessable.
5. The statements made in the Final Supplemental Prospectus under the
captions "Description of the New Stock" and "Certain Terms of the New Stock"
constitute accurate summaries of the terms of the articles of incorporation of
the Company and the Preferred Stock in all material respects.
We have not independently verified the accuracy, completeness
or fairness of the statements made or included in the Registration Statement,
the Final Supplemented Prospectus or the Exchange Act Documents and take no
responsibility therefor, except as and to the extent set forth in paragraph 5
above. In the course of the preparation by the Company of the Registration
Statement, the Final Supplemented Prospectus and the Exchange Act Documents, we
participated in conferences with certain officers and employees of the Company,
with other counsel for the Company, with representatives of Deloitte & Touche
LLP and with your counsel. Based upon our examination of the Registration
Statement, the Final Supplemented Prospectus and the Exchange Act Documents, our
investigations made in connection with the preparation of the Registration
Statement, the Final Supplemented Prospectus and the Exchange Act Documents and
our participation in the conferences referred to above, (i) we are of the
opinion that the Registration Statement, as of its effective date, and the Final
Supplemented Prospectus, as of _______________, complied as to form in all
material respects with the requirements of the Act and the applicable rules and
regulations of the Commission thereunder and that the Exchange Act Documents, as
of their respective dates of filing with the Commission, complied as to form in
all material respects with the relevant requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder, except that in
each case we express no opinion as to the financial statements or other
financial or statistical data contained or incorporated by reference in the
Registration Statement, the Final Supplemented Prospectus or the Exchange Act
Documents, and (ii) nothing came to our attention which gives us reason to
believe that the Registration Statement, as of its effective date (including the
Exchange Act Documents on file with the Commission as of such date), contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or that the Final Supplemented Prospectus (including the
Exchange Act Documents) contained, as of its date, or contains, on the date
hereof, any untrue statement therein of a material fact or omitted, as of its
date, or omits, on the date hereof, to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that in each case we express no opinion
or belief with respect to the financial statements or other financial or
statistical data contained or incorporated by reference in the Registration
Statement, the Final Supplemented Prospectus or the Exchange Act Documents and
with respect to information set forth in the Final Supplemented Prospectus under
the caption "Certain Terms of the New Stock - Book-Entry Only Issuance - The
Depository Trust Company".
We are members of the State Bar of Georgia and we do not
express any opinion herein concerning any law other than the law of the State of
Georgia and the federal law of the United States and, to the extent set forth
herein, the laws of the States of Alabama and New York.
This opinion is rendered to you in connection with the
above-described transaction. This opinion may not be relied upon by you for any
other purpose, or relied upon by or furnished to any other person without our
prior written consent.
Yours very truly,
TROUTMAN SANDERS LLP
Schedule II
[Letterhead of DEWEY BALLANTINE LLP]
__________ __, 200_
Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
ALABAMA POWER COMPANY
4,000,000 Shares
of
_% Class A Preferred Stock
Cumulative, Par Value $1 Per Share
(Stated Capital $25 Per Share)
Ladies and Gentlemen:
We have represented you in connection with the purchase by you
of 4,000,000 shares of _% Class A Preferred Stock, Cumulative, Par Value $1 Per
Share (Stated Capital $25 Per Share) of the Company (the "Preferred Stock")
pursuant to the terms of an Underwriting Agreement dated ________________, 2004
(the "Underwriting Agreement"), between the Company and you. This opinion is
being delivered to you pursuant to Section 5(c)(3) thereof.
All capitalized terms not otherwise defined herein shall have
the meanings set forth in the Underwriting Agreement.
In rendering the opinions expressed below, we have examined
the registration statement on Form S-3 (File Nos. 333-110950, 333-110950-01,
333-110950-02 and 333-110950-03) pertaining to the Preferred Stock (the
"Registration Statement"), filed under the Securities Act of 1933, as amended
(the "Act"), and the prospectus dated December 19, 2003, as supplemented by a
final prospectus supplement dated ___, 200_ (the "Final Supplemented
Prospectus"), which pursuant to Form S-3 incorporates by reference the Annual
Report on Form 10-K of the Company for the fiscal year ended December 31, 2002,
the Quarterly Reports on Form 10-Q of the Company for the quarters ended March
31, 2003, June 30, 2003 and September 30, 2003 and the Current Reports on Form
8-K of the Company dated February 5, 2003, February 11, 2003, March 12, 2003,
April 15, 2003, May 1, 2003, November 14, 2003, December 2, 2003, December 8,
2003 and _____ (the "Exchange Act Documents"), each as filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
In addition, we have examined, and have relied as to matters
of fact upon, the documents delivered to you at the closing (except the
certificates representing the Preferred Stock, of which we have examined a
specimen), and we have made such other and further investigations as we deemed
necessary to express the opinions hereinafter set forth. In such examination, we
have assumed the genuineness of all signatures, the legal capacity of natural
persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such latter
documents.
Based upon the foregoing, and subject to the qualifications
and limitations stated herein, we are of the opinion, relying as aforesaid and
as to all matters covered hereby which are governed by or dependent upon the
laws of the State of Alabama upon the opinion of Balch & Bingham LLP dated the
date hereof and addressed to you and a form of which is attached as Schedule I-A
to the Underwriting Agreement, that:
1. The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Alabama and has due corporate authority to carry on the public utility business
in which it is engaged and to own and operate the properties used by it in such
business and to enter into and perform its obligations under the Underwriting
Agreement.
2. The execution, delivery and performance by the Company of
the Underwriting Agreement have been duly authorized by all necessary corporate
action, and the Underwriting Agreement has been duly executed and delivered by
the Company.
3. All orders, consents or other authorizations or approvals
of the Alabama Public Service Commission and the Commission legally required for
the issuance and sale of the Preferred Stock have been obtained; such orders are
sufficient for the issuance and sale of the Preferred Stock; the issuance and
sale of the Preferred Stock conform in all material respects with the terms of
such orders; and no other order, consent or other authorization or approval of
any Alabama or United States governmental body (other than in connection or in
compliance with the provisions of the securities or "blue sky" laws of any
jurisdiction, as to which we express no opinion) is legally required for the
issuance and sale of the Preferred Stock in accordance with the terms of the
Underwriting Agreement.
4. The Preferred Stock has been duly authorized by the Company
and, upon payment and delivery in accordance with the Underwriting Agreement,
will be validly issued, fully paid and nonassessable.
5. The statements made in the Final Supplemented Prospectus
under the captions "Description of the New Stock" and "Certain Terms of the New
Stock" constitute accurate summaries of the terms of the articles of
incorporation of the Company and Preferred Stock in all material respects.
We have not independently verified the accuracy, completeness
or fairness of the statements made or included in the Registration Statement,
the Final Supplemented Prospectus or the Exchange Act Documents and take no
responsibility therefor, except as and to the extent set forth in paragraph 5
above. In the course of the preparation by the Company of the Registration
Statement, the Final Supplemented Prospectus and the Exchange Act Documents, we
participated in conferences with certain officers and employees of the Company,
with representatives of Deloitte & Touche LLP and with counsel to the Company.
Based upon our examination of the Registration Statement, the Final Supplemented
Prospectus and the Exchange Act Documents, our investigations made in connection
with the preparation of the Registration Statement and the Final Supplemented
Prospectus and our participation in the conferences referred to above, (i) we
are of the opinion that the Registration Statement, as of its effective date,
and the Final Supplemented Prospectus, as of ___________, complied as to form in
all material respects with the requirements of the Act and the applicable rules
and regulations of the Commission thereunder and that the Exchange Act
Documents, as of their respective dates of filing with the Commission, complied
as to form in all material respects with the relevant requirements of the
Exchange Act and the applicable rules and regulations of the Commission
thereunder, except that in each case we express no opinion as to the financial
statements or other financial or statistical data contained or incorporated by
reference in the Registration Statement, the Final Supplemented Prospectus or
the Exchange Act Documents, and (ii) nothing came to our attention which gives
us reason to believe that the Registration Statement, as of its effective date
(including the Exchange Act Documents on file with the Commission as of such
date), contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, or that the Final Supplemented Prospectus
(including the Exchange Act Documents) contained, as of its date, or contains,
on the date hereof, any untrue statement of a material fact or omitted, as of
its date, or omits, on the date hereof, to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that in each case we express no
opinion or belief with respect to the financial statements or other financial or
statistical data contained or incorporated by reference in the Registration
Statement, the Final Supplemented Prospectus or the Exchange Act Documents or
with respect to information set forth in the Final Supplemented Prospectus under
the caption "Certain Terms of the New Stock - Book-Entry Only Issuance - The
Depository Trust Company".
We are members of the State Bar of New York and we do not
express any opinion herein concerning any law other than the law of the State of
New York and the federal law of the United States and, to the extent set forth
herein, the law of the State of Alabama.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by or furnished to any other person without our prior written
consent, except that Balch & Bingham LLP and Troutman Sanders LLP may rely on
this opinion in giving their opinions pursuant to Section 5 of the Underwriting
Agreement, insofar as such opinions relate to matters of New York law.
Very truly yours,
DEWEY BALLANTINE LLP