Exhibit 1
$150,000,000
Series AA 5 5/8% Senior Notes
due April 15, 2034
ALABAMA POWER COMPANY
UNDERWRITING AGREEMENT
April 7, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters
Ladies and Gentlemen:
Alabama Power Company, an Alabama corporation (the "Company"), confirms its
agreement (the "Agreement") with you and the other Underwriters named in
Schedule I hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof) for whom you are acting as representative (in such capacity you shall
hereinafter be referred to as the "Representative"), with respect to the sale by
the Company and the purchase by the Underwriters, acting severally and not
jointly, of $150,000,000 aggregate principal amount of the Series AA 5 5/8%
Senior Notes due April 15, 2034 (the "Senior Notes") as set forth in Schedule I
hereto.
The Company understands that the Underwriters are making a public offering
of the Senior Notes pursuant to this Agreement. The Senior Notes will be issued
pursuant to an indenture, dated as of December 1, 1997, as heretofore
supplemented (the "Base Indenture"), between the Company and JPMorgan Chase Bank
(formerly known as The Chase Manhattan Bank), as trustee (the "Trustee"), and as
further supplemented by a twenty-seventh supplemental indenture, dated as of
April 21, 2004, to the Base Indenture relating to the Senior Notes (the
"Supplemental Indenture" and, together with the Base Indenture and any other
amendments or supplements thereto, the "Indenture"), between the Company and the
Trustee.
SECTION 1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Underwriters as follows:
(a) A registration statement on Form S-3 (File Nos. 333-110950, ▇▇▇-▇▇▇▇▇▇-▇▇,
▇▇▇-▇▇▇▇▇▇-▇▇ and 333-110950-03) in respect of the Senior Notes 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 Underwriters, 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 Underwriters 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, as
supplemented by a preliminary prospectus supplement, 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 Senior
Notes, 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 Senior Notes in the form in which it is filed with the
Commission, pursuant to Rule 424(b) under the 1933 Act in accordance with
Section 3(e) 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 Underwriters 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 Underwriters expressly for use
in the Final Supplemented Prospectus; or (B) any information set forth in
the Final Supplemented Prospectus under the captions "Description of the
Series AA Senior Notes - Book-Entry-Only Issuance - The Depository Trust
Company, " "The Policy and the Insurer" and "Experts" or in Appendix A
thereto.
(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
(hereinafter defined) 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 (A) 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"), (B) 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
Underwriters expressly for use therein or (C) any information set forth in
the Final Supplemented Prospectus under the captions "Description of the
Series AA Senior Notes - Book-Entry-Only Issuance - The Depository Trust
Company, " "The Policy and the Insurer" and "Experts" or in Appendix A
thereto.
(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 the Indenture and to issue and sell
the Senior Notes to the Underwriters.
(g) This Agreement has been duly authorized, executed and delivered by the
Company.
(h) The Indenture has been duly authorized by the Company and, on the Closing
Date (as hereinafter defined), will have been duly executed and delivered
by the Company, and, assuming due authorization, execution and delivery of
the Indenture by the Trustee, the Indenture will, on the Closing Date
constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by (1) bankruptcy, insolvency,
reorganization, receivership, liquidation, fraudulent conveyance,
moratorium or other similar laws affecting creditors' rights generally or
(2) general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity) (the "Enforceability
Exceptions"); the Indenture will conform in all material respects to all
statements relating thereto contained in the Final Supplemented Prospectus;
and, on the Closing Date, the Indenture will have been duly qualified under
the 1939 Act.
(i) The issuance and delivery of the Senior Notes have been duly authorized by
the Company and, on the Closing Date, the Senior Notes will have been duly
executed by the Company and, when authenticated in the manner provided for
in the Indenture and delivered against payment therefor as described in the
Final Supplemented Prospectus, will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance
with their terms, except to the extent that enforcement thereof may be
limited by the Enforceability Exceptions, will be in the form contemplated
by, and entitled to the benefits of, the Indenture and will conform in all
material respects to all statements relating thereto in the Final
Supplemented Prospectus.
(j) The execution, delivery and performance by the Company of this Agreement,
the Indenture and the Senior Notes and the consummation by the Company of
the transactions contemplated herein and therein and compliance by the
Company with its obligations hereunder and thereunder shall have been duly
authorized by all necessary corporate action on the part of the Company and
do not and will not result in any violation of the charter or bylaws of the
Company, and do 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.
(k) The Company has duly authorized all necessary action to be taken by it for
the procurement of an irrevocable financial guarantee insurance policy or
surety bond (the "Insurance Policy") to be issued by Financial Guaranty
Insurance Company (the "Insurer"), insuring the payment of principal of and
interest on the Senior Notes, when due.
(l) 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 Senior Notes 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 qualification of the Indenture under the 1939 Act; (D) the approval
of the Alabama Public Service Commission (the "Alabama Commission"); and
(E) such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or "blue sky"
laws.
(m) 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 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 THE UNDERWRITERS; CLOSING.
(a) On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company agrees to sell
to each Underwriter, severally and not jointly, and each Underwriter, severally
and not jointly, agrees to purchase from the Company, the principal amount of
the Senior Notes set forth in Schedule I to this Agreement opposite the name of
such Underwriter (plus any additional amount of the Senior Notes that such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof), at a price equal to 96.85% of the principal amount thereof.
(b) Payment for and delivery of certificates for the Senior Notes shall be made
at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M., Central Time, on April 21, 2004 (unless
postponed in accordance with the provisions of Section 10) or such other time,
place or date as shall be agreed upon by the Representative 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 the Senior Notes to the Representative.
It is understood that each Underwriter has authorized the Representative, for
each Underwriter's account, to accept delivery of, receipt for, and make payment
of the principal amount of the Senior Notes which each Underwriter has agreed to
purchase. The Representative, individually and not as Representative of the
Underwriters, may (but shall not be obligated to) make payment of the principal
amount of the Senior Notes to be purchased by any Underwriter whose payment has
not been received by the Closing Date, but such payment shall not relieve such
Underwriter from its obligations hereunder.
The delivery of the Senior Notes 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 Underwriters shall accept
such delivery.
The certificate(s) for the Senior Notes will be made available for
examination by the Representative not later than 12:00 Noon, New York time, on
the last business day prior to the Closing Date.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with the
Underwriters as follows:
(a) The Company, on or prior to the Closing Date, will deliver to the
Underwriters 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 Representative 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 Representative
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) for distribution to the
Underwriters and, from time to time, as many copies of the Prospectus and
the Final Supplemented Prospectus as the Underwriters may reasonably
request for the purposes contemplated by the 1933 Act or the ▇▇▇▇ ▇▇▇.
(b) The Company will furnish the Underwriters with copies of each amendment and
supplement to the Final Supplemented Prospectus relating to the offering of
the Senior Notes in such quantities as the Underwriters 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 Senior Notes by an Underwriter, any event relating to
or affecting the Company, or of which the Company shall be advised in
writing by the Underwriters, shall occur, which in the opinion of the
Company or of Underwriters' counsel should be set forth in a supplement to
or an amendment of the Final Supplemented Prospectus, as the case may be,
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 Underwriters to suspend solicitation of purchases of
the Senior Notes and (ii) at its expense, make any such filing or prepare
and furnish to the Underwriters 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 any Underwriter is required to deliver a prospectus in
connection with the sale of any Senior Notes after the expiration of the
period specified in the preceding sentence, the Company, upon the request
of such Underwriter, will furnish to such Underwriter, at the expense of
such 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 Representative and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP.
(c) The Company will endeavor, in cooperation with the Underwriters, to qualify
the Senior Notes for offering and sale under the applicable securities laws
of such states and the other jurisdictions of the United States as the
Representative 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 ▇▇▇▇
▇▇▇) 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) 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
Representative of such filing and to confirm such advice in writing.
(f) During a period of 15 days from the date of this Agreement, the Company
will not, without the Representative's prior written consent, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or
otherwise dispose of, any Senior Notes or any security convertible into or
exchangeable into or exercisable for the Senior Notes or any debt
securities substantially similar to the Senior Notes (except for the Senior
Notes issued pursuant to this Agreement). The Representative agrees that
commercial paper or other debt securities with scheduled maturities of less
than one year are not subject to this Section 3(f).
(g) The Company will use its best efforts to effect the listing of the Senior
Notes 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 Senior
Notes, (iii) the fees and disbursements of the Company's counsel and
accountants, (iv) the qualification of the Senior Notes 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 Underwriters 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 Underwriters 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 Underwriters 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 fees and expenses of the Trustee, including
the fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Senior Notes, (ix) any fees payable in connection with the
rating of the Senior Notes, (x) the cost and charges of any transfer agent or
registrar, (xi) the premium payable to the Insurer in connection with the
issuance of the Insurance Policy, (xii) the fees and expenses incurred in the
connection with the listing of the Senior Notes on the New York Stock Exchange,
and (xiii) the cost of qualifying the Senior Notes with The Depository Trust
Company.
Except as otherwise provided in Section 9 hereof, the Underwriters shall
pay all other expenses incurred by them in connection with their offering of the
Senior Notes including fees and disbursements of their counsel, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
LLP.
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters to purchase and pay for the Senior Notes 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 Underwriters or the Company (but
all provisions of such order or orders heretofore entered, copies of which
have heretofore been delivered to the Representative, are deemed acceptable
to the Underwriters and the Company and all provisions of such order or
orders hereafter entered shall be deemed acceptable to the Underwriters 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 Representative shall have received:
(1) The opinion, dated the Closing Date, of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, general
counsel for the Company, substantially in the form attached hereto as
Schedule II-A.
(2) The opinion, dated the Closing Date, of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, counsel
for the Company, substantially in the form attached hereto as Schedule
II-B.
(3) The opinion, dated the Closing Date, of Cravath, Swaine & ▇▇▇▇▇ LLP,
counsel to the Trustee, substantially in the form attached hereto as
Schedule III.
(4) The opinion, dated the Closing Date, of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel
for the Underwriters, substantially in the form attached hereto as
Schedule IV.
(5) The opinion, dated the Closing Date, of internal counsel for the
Insurer, substantially in the form attached hereto as Schedule V.
(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
Representative 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 Representative 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", as applicable, on the unaudited financial statements, if any,
of the Company incorporated by reference in the Final Supplemented
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 Final Supplemented 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
Underwriters' 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 Final
Supplemented Prospectus, for them to be in conformity with GAAP; (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 Ratio of Earnings to Fixed Charges 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
included or incorporated by reference in the Registration Statement; (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 Final
Supplemented Prospectus, except in each case for changes or decreases which
(i) the Final Supplemented 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 Ratio of Earnings to Fixed Charges 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 Underwriters shall have been furnished
with such documents and opinions as it may reasonably require for the
purpose of enabling it to pass upon the issuance and sale of the Senior
Notes 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 Senior
Notes as herein contemplated shall be satisfactory in form and substance to
the Representative and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters.
(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 ▇▇▇▇ ▇▇▇) shall be unsatisfactory in form to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP or
shall contain information (other than with respect to an amendment or
supplement relating solely to the activity of the Underwriters) which, in
the reasonable judgment of the Representative, shall materially impair the
marketability of the Senior Notes.
(h) The Company shall have performed its obligations when and as provided under
this Agreement.
(i) On the Closing Date, the Representative shall have received evidence that
the Insurance Policy has been issued by the Insurer and confirmation that
the Senior Notes have been rated at least Aaa by ▇▇▇▇▇'▇ Investors
Services, Inc. and at least AAA by Standard & Poor's, a division of the
▇▇▇▇▇▇-▇▇▇▇ Companies.
(j) On the Closing Date, the Senior Notes 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
Representative 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). 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 Representative. 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 each of the
Underwriters and each person, if any, who controls any such 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 such 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 Underwriters 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 Final Supplemented Prospectus in reliance
upon and in conformity with information furnished in writing to the Company by,
or through the Representative on behalf of, the Underwriters 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
any Underwriter (or of any person controlling such Underwriter) on account of
any losses, claims, damages, liabilities or actions arising from the sale of the
Senior Notes 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 such 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. Each 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
such Underwriter so to notify the Company of any such action shall not release
the Company from any liability which it may have to such 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 an
Underwriter or any such person controlling such Underwriter and such 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, any Underwriter or 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 such 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) Each 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, or through the
Representative on behalf of, such 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 any Underwriter or controlling person, or
by, or on behalf of the Company and shall survive delivery of the Senior Notes
to the Underwriters.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Representative 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 in 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 Representative, the marketability of the Senior Notes
shall have been materially impaired.
(b) If this Agreement shall be terminated by the Representative 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 Underwriters for the reasonable fees and disbursements of ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ LLP and for the out of pocket expenses (in an amount not exceeding
$10,000) reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Senior Notes and, upon such reimbursement,
the Company shall be absolved from any further liability hereunder, except as
provided in Sections 4 and 7.
SECTION 10. DEFAULT BY AN UNDERWRITER. If an Underwriter shall fail on the
Closing Date to purchase the Senior Notes that it is obligated to purchase under
this Agreement (the "Defaulted Securities"), the Representative shall have the
right, within 24 hours thereafter, to make arrangements for the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth. If, however, the Representative shall not have completed
such arrangements within such 24-hour period, then:
(a) if the principal amount of Defaulted Securities does not exceed 10% of
the Senior Notes, the non-defaulting Underwriters shall be obligated, severally
and not jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Underwriters, or
(b) if the principal amount of Defaulted Securities exceeds 10% of the
Senior Notes, this Agreement shall terminate without liability on the part of
any non-defaulting Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representative or the Company shall have the right to
postpone the Closing Date for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Final Supplemented
Prospectus or in any other documents or arrangements.
SECTION 11. 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
Underwriters shall be directed to the Representative at ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, III; notices to the Company shall be mailed to ▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate
Secretary, with a copy to Southern Company Services, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇.
SECTION 12. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, 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 Underwriters
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 Underwriters 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 Senior Notes from any of the Underwriters shall be
deemed to be a successor by reason merely of such purchase.
SECTION 13. 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 14. 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 Underwriters and the Company in accordance with its terms.
Very truly yours,
ALABAMA POWER COMPANY
By: /s/J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Treasurer
CONFIRMED AND ACCEPTED,
as of the date first above written
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO. INCORPORATED
By: /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ III
Title: Executive Director
As Representative of the Underwriters named in Schedule I hereto
SCHEDULE I
Principal Amount of
Name of Underwriters Series AA Senior Notes
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated $30,000,000
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. $30,000,000
Citigroup Global Markets Inc. $30,000,000
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated $30,000,000
ABI Capital Management, LLC $ 7,500,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. $ 7,500,000
Pershing LLC $ 7,500,000
SunTrust Capital Markets, Inc. $ 7,500,000
TOTAL: $150,000,000
============
Schedule II-A
[Letterhead of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP]
April __, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters
ALABAMA POWER COMPANY
Series AA 5 5/8% Senior Notes
due April 15, 2034
Ladies and Gentlemen:
We have acted as general counsel to Alabama Power Company (the "Company")
in connection with (i) the Company's issuance of $150,000,000 aggregate
principal amount of its Series AA 5 5/8% Senior Notes due April 15, 2034 (the
"Notes") pursuant to a Senior Note Indenture dated as of December 1, 1997, by
and between the Company and JPMorgan Chase Bank (formerly known as The Chase
Manhattan Bank), as trustee (the "Trustee"), as heretofore supplemented and as
further supplemented by the Twenty-Seventh Supplemental Indenture dated as of
April 21, 2004 (collectively, the "Indenture"); and (ii) the purchase by the
Underwriters (as defined herein) of the Notes pursuant to the terms of an
Underwriting Agreement dated April 7, 2004 (the "Underwriting Agreement"), among
the Company and the Underwriters named in Schedule I thereto (the
"Underwriters") for whom you are acting as representative (the
"Representative"). This opinion is being delivered to you as Representative
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, ▇▇▇-▇▇▇▇▇▇-▇▇,
▇▇▇-▇▇▇▇▇▇-▇▇ and 333-110950-03) pertaining to the Notes and certain other
securities (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 relating to the Notes dated April
7, 2004 (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, 2003 (the "Form 10-K") and the Current Reports on
Form 8-K of the Company dated February 5, 2004, February 10, 2004 and April 7,
2004 (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 certificate
representing the Notes, 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 (other than those of the Company), 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.
The Indenture and the Underwriting Agreement are herein referred to as the
"Agreements".
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 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 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 Agreements and the Notes.
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 Notes have been obtained; such orders are sufficient
for the issuance and the sale of the Notes; the issuance and the sale of the
Notes 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
Notes in accordance with the terms of the Underwriting Agreement.
4. The Indenture has been duly authorized, executed and delivered by the
Company and, assuming the due authorization, execution and delivery thereof by
the Trustee, constitutes a valid and legally binding instrument of the Company,
enforceable against the Company in accordance with its terms, subject to the
qualifications that the enforceability of the Company's obligations under the
Indenture may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights generally and
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and the Indenture conforms as
to legal matters in all material respects to the description thereof in the
Final Supplemented Prospectus.
5. The Notes have been duly authorized and executed by the Company and,
when authenticated by the Trustee in the manner provided in the Indenture and
delivered to and paid for by the Underwriters pursuant to the Underwriting
Agreement, will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to the
qualifications that the enforceability of the Company's obligations under the
Notes may be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and by
general principles of equity; and the Notes conform as to legal matters in all
material respects to the description thereof in the Final Supplemented
Prospectus.
6. The Indenture has been duly qualified under the Trust Indenture Act of
1939, as amended.
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 paragraphs 4 and 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 April 7, 2004, 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 the date of the filing of the
Form 10-K (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, as of 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 captions "Description of the Series AA Senior
Notes - Book-Entry-Only Issuance - The Depository Trust Company," "The Policy
and the Insurer" and "Experts" or in Appendix A thereto.
We are members of the State Bar of Alabama and we do not express any
opinion herein concerning any law other than the laws 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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP may rely on
this opinion in giving their opinions pursuant to the Underwriting Agreement
insofar as such opinion relates to matters of Alabama law.
Yours very truly,
▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Schedule II-B
[Letterhead of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP]
April __, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters
ALABAMA POWER COMPANY
Series AA 5 5/8% Senior Notes
due April 15, 2034
Ladies and Gentlemen:
We have acted as counsel to Alabama Power Company (the "Company") in
connection with (i) the Company's issuance of $150,000,000 aggregate principal
amount of its Series AA 5 5/8% Senior Notes due April 15, 2034 (the "Notes")
pursuant to a Senior Note Indenture dated as of December 1, 1997, by and between
the Company and JPMorgan Chase Bank (formerly known as The Chase Manhattan
Bank), as trustee (the "Trustee"), as heretofore supplemented and as further
supplemented by the Twenty-Seventh Supplemental Indenture dated as of April 21,
2004 (collectively, the "Indenture"); and (ii) the purchase by the Underwriters
(as defined herein) of the Notes pursuant to the terms of an Underwriting
Agreement dated April 7, 2004 (the "Underwriting Agreement"), among the Company
and the Underwriters named in Schedule I thereto (the "Underwriters") for whom
you are acting as representative (the "Representative"). This opinion is being
delivered to you as Representative 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, ▇▇▇-▇▇▇▇▇▇-▇▇,
▇▇▇-▇▇▇▇▇▇-▇▇ and 333-110950-03) pertaining to the Notes and certain other
securities (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 relating to the Notes dated April
7, 2004 (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, 2003 (the "Form 10-K") and the Current Reports on
Form 8-K of the Company dated February 5, 2004, February 10, 2004 and April 7,
2004 (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 certificate
representing the Notes, 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.
The Indenture and the Underwriting Agreement are herein referred to
collectively as the "Agreements".
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 ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP and
relying as to matters of New York law upon the opinion dated the date hereof
rendered to you by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 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 and the Notes.
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 Securities and Exchange Commission (the
"Commission") legally required for the issuance and sale of the Notes have been
obtained; such orders are sufficient for the issuance and sale of the Notes; the
issuance and sale of the Notes 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 Notes in accordance with the terms of the Underwriting
Agreement.
4. The Indenture has been duly authorized, executed and delivered by the
Company and, assuming the due authorization, execution and delivery thereof by
the Trustee, constitutes a valid and legally binding instrument of the Company,
enforceable against the Company in accordance with its terms, subject to the
qualifications that the enforceability of the Company's obligations under the
Indenture may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights generally and
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and the Indenture conforms as
to legal matters in all material respects to the description thereof in the
Final Supplemented Prospectus.
5. The Notes have been duly authorized and executed by the Company and,
when authenticated by the Trustee in the manner provided in the Indenture and
delivered to and paid for by the Underwriters pursuant to the Underwriting
Agreement, will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, subject to the
qualifications that the enforceability of the Company's obligations under the
Notes may be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and the Notes conform as to
legal matters in all material respects to the description thereof in the Final
Supplemented Prospectus.
6. The Indenture has been duly qualified under the Trust Indenture Act of
1939, as amended.
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 paragraphs 4 and 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 April 7, 2004, 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 the date of the filing of the
Form 10-K (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, as of 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 captions "Description of the Series AA Senior
Notes - Book-Entry-Only Issuance - The Depository Trust Company," "The Policy
and the Insurer" and "Experts" or in Appendix A thereto.
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,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
Schedule III
[Letterhead of Cravath, Swaine & ▇▇▇▇▇ LLP]
April __, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters
Alabama Power Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Financial Guaranty Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ALABAMA POWER COMPANY
Series AA 5 5/8% Senior Notes
due April 15, 2034
Ladies and Gentlemen:
We have acted as counsel to JPMorgan Chase Bank (formerly known as The
Chase Manhattan Bank) (the "Bank") in connection with (a) the Senior Note
Indenture, dated as of December 1, 1997 as heretofore supplemented (the
"Original Indenture"), between Alabama Power Company (the "Company") and the
Bank, as Trustee, and (b) the Twenty-Seventh Supplemental Indenture, dated as of
April 21, 2004 (together with the Original Indenture, herein called the
"Indenture"), between the Company and the Bank, as Trustee.
In that connection, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, records and other
instruments as we have deemed necessary or appropriate for the purpose of this
opinion, including copies of the Indenture and certain resolutions adopted by
the Board of Directors of the Bank.
Based upon the foregoing, we are of the opinion that:
i) the Bank has been duly incorporated and is validly existing as a banking
corporation in good standing under the laws of the State of New York;
ii) the Bank has the corporate trust power and authority to execute,
deliver and perform its duties under the Indenture, has duly executed and
delivered the Indenture and, insofar as the laws governing the trust powers of
the Bank are concerned and assuming due authorization, execution and delivery
thereof by the Company, the Indenture constitutes a legal, valid and binding
agreement of the Bank, enforceable against the Bank in accordance with its terms
subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other laws affecting creditors' rights generally
from time to time in effect and to general principles of equity (including,
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing), regardless of whether considered in a proceeding in equity or at law;
iii) the execution, delivery and performance by the Bank of the Indenture
do not conflict with or constitute a breach of the charter or bylaws of the
Bank; and
iv) no approval, authorization or other action by, or filing with, any
governmental authority of the United States of America or the State of New York
having jurisdiction over the trust powers of the Bank is required in connection
with the execution and delivery by the Bank of the Indenture or the performance
by the Bank of its duties thereunder, except such as have been obtained, taken
or made.
We are admitted to practice only in the State of New York, and we express
no opinion as to matters governed by any laws other than the laws of the State
of New York and the Federal law of the United States of America. We are
furnishing this opinion to you solely for your benefit. This opinion is not to
be relied upon by any other person or used, circulated, quoted or otherwise
referred to for any other purpose.
Very truly yours,
CRAVATH, SWAINE & ▇▇▇▇▇ LLP
Schedule IV
[Letterhead of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP]
April __, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters
ALABAMA POWER COMPANY
Series AA 5 5/8% Senior Notes
due April 15, 2034
Ladies and Gentlemen:
We have represented the Underwriters (hereinafter defined) in connection
with (i) the issuance and sale by Alabama Power Company (the "Company") of
$150,000,000 aggregate principal amount of its Series AA 5 5/8% Senior Notes due
April 15, 2034 (the "Notes") pursuant to a Senior Note Indenture dated as of
December 1, 1997, by and between the Company and JPMorgan Chase Bank (formerly
known as The Chase Manhattan Bank), as trustee (the "Trustee"), as heretofore
supplemented and as further supplemented by the Twenty-Seventh Supplemental
Indenture, dated as of April 21, 2004 (collectively, the "Indenture"); and (ii)
the purchase by the Underwriters of the Notes pursuant to the terms of an
Underwriting Agreement dated April 7, 2004 (the "Underwriting Agreement"), among
the Company and the Underwriters named in Schedule I thereto (the
"Underwriters") for whom you are acting as representative (the
"Representative"). This opinion is being delivered to you, as Representative,
pursuant to Section 5(c)(4) 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, ▇▇▇-▇▇▇▇▇▇-▇▇,
▇▇▇-▇▇▇▇▇▇-▇▇ and 333-110950-03) pertaining to the Notes and certain other
securities (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 relating to the Notes dated April
7, 2004 (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, 2003 (the "Form 10-K") and the Current Reports on
Form 8-K of the Company dated February 5, 2004, February 10, 2004 and April 7,
2004 (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 certificate
representing the Notes, 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.
The Indenture and the Underwriting Agreement are herein referred to as the
"Agreements".
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 law of the State of
Alabama upon the opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP dated the date hereof and
addressed to you, 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 Agreements and the Notes.
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 Securities and Exchange Commission (the
"Commission") legally required for the issuance and sale of the Notes have been
obtained; such orders are sufficient for the issuance and sale of the Notes; the
issuance and sale of the Notes 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 Notes in accordance with the terms of the Underwriting
Agreement.
4. The Indenture has been duly authorized, executed and delivered by the
Company and, assuming the due authorization, execution and delivery thereof by
the Trustee, constitutes a valid and legally binding instrument of the Company,
enforceable against the Company in accordance with its terms, subject to the
qualifications that the enforceability of the Company's obligations under the
Indenture may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights generally and
by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and the Indenture conforms as
to legal matters in all material respects to the description thereof in the
Final Supplemented Prospectus.
5. The Notes have been duly authorized and executed by the Company and,
when authenticated by the Trustee in the manner provided in the Indenture and
delivered to and paid for by the Underwriters pursuant to the Underwriting
Agreement, will constitute valid and binding obligations of the Company
enforceable against the Company in accordance with their terms, subject to the
qualifications that the enforceability of the Company's obligations under the
Notes may be limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and the Notes conform as to
legal matters in all material respects to the description thereof in the Final
Supplemented Prospectus.
6. The Indenture has been duly qualified under the Trust Indenture Act of
1939, as amended.
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 paragraphs 4 and 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 April 7, 2004, 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 the date of the
filing of the Form 10-K (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 and with respect to information set forth in the
Final Supplemented Prospectus under the captions "Description of the Series AA
Senior Notes - Book-Entry-Only Issuance - The Depository Trust Company," "The
Policy and the Insurer" and "Experts" or in Appendix A thereto.
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 ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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, and ▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP may rely on this opinion in giving its opinion (i) pursuant to Sections 102,
302 and 904 of the Indenture and (ii) in connection with the Company's listing
application with respect to the Notes to The New York Stock Exchange, Inc.,
insofar as such opinion relates to matters of New York law.
Very truly yours,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
Schedule V
[Letterhead of Financial Guaranty Insurance Company]
April__, 2004
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters
Alabama Power Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
JPMorgan Chase Bank
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ALABAMA POWER COMPANY
Series AA 5 5/8% Senior Notes
due April 15, 2034
Ladies and Gentlemen:
I am Senior Counsel of Financial Guaranty Insurance Company ("Financial
Guaranty"), and have been requested to render an opinion concerning the issuance
by Financial Guaranty of its Surety Bond No. ________ (the "Surety Bond") in
connection with the issuance of the captioned obligations (the "Bonds"). I have
examined such documents and records as I have deemed relevant for purposes of
this opinion, including (a) the Certificate of Incorporation of Financial
Guaranty, including all amendments thereto, (b) the amended By-laws of Financial
Guaranty as in effect on the date hereof, (c) the certificate of authority
issued to Financial Guaranty by the Superintendent of Insurance of the State of
New York, (d) the certificate of authority issued to Financial Guaranty by the
Commissioner of Insurance of the State of Alabama, (e) the executed Surety Bond
and (f) the statements in the Prospectus Supplement dated April 7, 2004 relating
to the Bonds (the "Prospectus Supplement") under the caption "The Policy and the
Insurer" and "Appendix A - Form of Policy."
On the basis of the foregoing, it is my opinion that:
1. Financial Guaranty is a stock insurance corporation validly
existing and in good standing under the laws of the State of New York
and qualified to do business therein and is licensed and authorized to
issue its financial guaranty insurance policies under the laws of the
State of Alabama.
2. The Surety Bond is valid and binding upon Financial
Guaranty and enforceable in accordance with its terms, subject to
applicable laws affecting creditors' rights generally.
3. The execution and delivery by Financial Guaranty of the
Surety Bond, and the performance by Financial Guaranty of the terms
thereof, will not: (i) conflict with any of the terms, conditions or
provisions of (A) the Certificate of Incorporation of Financial
Guaranty, including any amendments thereto, (B) the amended By-laws of
Financial Guaranty as in effect on the date hereof, or (C) to my actual
knowledge, any covenant contained in any contract, agreement or
instrument to which Financial Guaranty is bound, which contract,
agreement or instrument is material to the financial condition of
Financial Guaranty; (ii) to my actual knowledge, constitute a default
under any such contract, agreement or instrument or (iii) contravene
any law or governmental regulation or order presently binding on
Financial Guaranty the contravention of which would affect the validity
and enforcement of the Surety Bond.
4. Financial Guaranty, as an insurance company, is not
eligible for relief under the Federal Bankruptcy Laws. Any proceedings
for the liquidation, conservation or rehabilitation of Financial
Guaranty would be governed by the provisions of the Insurance Law of
the State of New York.
5. The statements described above in the Prospectus Supplement
dated April 7, 2004 relating to Financial Guaranty and the Surety Bond
accurately and fairly present the summary information set forth therein
and do not omit any material fact with respect to the description of
Financial Guaranty relative to the material terms of the Surety Bond or
the ability of Financial Guaranty to meet its obligations under the
Surety Bond. The form of Surety Bond contained in the Prospectus
Supplement is a true and complete form of the Surety Bond.
6. The Surety Bond constitutes an "insurance policy" within
the meaning of Section 3(a)(8) of the Securities Act of 1933, as
amended (the "Act"), and is not required to be registered under the
Act.
Very truly yours,