Exhibit B-1
FINANCIAL SERVICES AGREEMENT
This Financial Services Agreement, made and entered into as of
________________, between ___________ Power Company, a _______________
corporation (the "Operating Company"), and Southern Company Funding Corporation,
a Delaware corporation ("Funding").
W I T N E S S E T H:
WHEREAS, Funding has been formed to issue its commercial paper at the
request and for the benefit of the Operating Company and for other entities that
are Eligible Southern Company Affiliates (as hereinafter defined); and
WHEREAS, the parties have determined to enter into this agreement for
the provision of such service by Funding to the Operating Company;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto hereby agree as follows:
1. The Operating Company hereby represents to Funding, as of the date
hereof and as of each date a loan is made to it by Funding, that it is an
Eligible Southern Company Affiliate. For the purposes of this agreement,
"Eligible Southern Company Affiliate" shall mean an entity 100% of the common
stock of which is owned, directly or indirectly, by The Southern Company, a
Delaware corporation; provided, however, that the Operating Company shall cease
to be an "Eligible Southern Company Affiliate" at any time any of the following
apply:
(a) Funding has received notice that (i) Xxxxx'x Investors
Service, Inc. ("Moody's") has provided a publicly-issued rating on the
Operating Company's short-term debt below the publicly-issued rating
that Moody's has provided with regard to the commercial paper of
Funding, or (ii) Standard & Poor's, a division of the XxXxxx-Xxxx
Companies, Inc. ("S&P"), has provided a publicly-issued rating on the
Operating Company's short-term debt below the publicly-issued rating
that S&P has provided with regard to the commercial paper of Funding;
or
(b) At any time the Operating Company does not have a
publicly-issued rating on its short-term debt from Moody's, and (i) the
publicly-issued rating provided by Moody's on Funding's commercial
paper is P-1 or its equivalent and the publicly-issued rating provided
by Moody's on the Operating Company's long-term unsecured debt falls
below A2 or its equivalent, or (ii) the publicly-issued rating provided
by Moody's on Funding's commercial paper is P-2 or its equivalent, and
the publicly-issued rating provided by Moody's on the Operating
Company's long-term unsecured debt falls below Baa2 or its equivalent;
or
(c) At any time the Operating Company does not have a rating
on its short-term debt from S&P, and (i) the publicly-issued rating
provided by S&P on Funding's commercial paper is A-1 or its equivalent,
and the publicly-issued rating provided by S&P on an Operating
Company's long-term unsecured debt falls below A or its equivalent, or
(ii) the publicly-issued rating provided by S&P on Funding's commercial
paper is A-2 or its equivalent, and the publicly-issued rating provided
by S&P on the Operating Company's long-term unsecured debt falls below
BBB or its equivalent.
2. Funding agrees to use its reasonable best efforts to issue
commercial paper in amounts and at times as requested by the Operating Company;
provided, however:
(a) Funding may suspend issuing commercial paper as requested
by or for the benefit of the Operating Company if Funding has
determined, in its sole discretion, that, as a result of any
circumstance relating to the Operating Company, the interest rate on
commercial paper issued by Funding after public disclosure of such
circumstance is greater than such interest rate prior to such public
disclosure. The duration of such suspension pursuant to this
sub-paragraph (a) shall be at the sole discretion of Funding; and
(b) Funding will suspend issuing commercial paper as requested
by or for the benefit of the Operating Company if the Operating Company
has ceased to be an Eligible Southern Company Affiliate. The duration
of such suspension pursuant to this sub-paragraph (b) shall be for so
long as the Operating Company fails to be an Eligible Southern Company
Affiliate.
No such suspension under sub-paragraphs (a) or (b) of this paragraph 2
shall affect the Operating Company's outstanding obligations under the Note (as
defined herein) or the obligation of Funding under the commercial paper.
3. Funding shall lend the cash proceeds of each issuance of commercial
paper described in paragraph 2 hereof to the Operating Company, which loans
shall be evidenced by the Operating Company's duly executed promissory note
substantially in the form attached as Exhibit A hereto (the "Note"). The terms
of each such loan shall be identical to those of the related commercial paper
issued for the benefit of the Operating Company.
4. After execution by the parties hereto, this agreement shall become
effective as of __________, subject to receipt of any required regulatory
approval, and shall remain in effect until terminated by mutual agreement of the
parties.
5. The parties acknowledge that Funding intends to execute financial
services agreements substantially similar to this agreement with other Eligible
Southern Company Affiliates. It is expressly agreed that the obligations of each
Eligible Southern Company Affiliate to Funding are several and not joint and,
subject to paragraph 6 below, that the Operating Company shall not be
responsible to Funding or any assignee or creditor of Funding for any payment in
excess of payments due under the Note.
6. (a) As a condition precedent to each commercial paper dealer and
placement agent (each, a "Placement Agent") entering into a dealer or placement
agreement with Funding (each such agreement, a "Placement Agreement"), the
Operating Company agrees: (i) to pay all costs, expenses, liabilities, losses
and damages, including liabilities in respect of Funding's indemnification
obligations under the Placement Agreements (collectively, the "Liabilities")
which Funding may incur relating to the offer and sale of Funding's commercial
paper the proceeds of which were used to make any loan to the Operating Company
under this agreement, and (ii) to pay its Pro Rata Share of all other
Liabilities which Funding may incur other than any such Liability which relates
to the offer and sale of Funding's commercial paper the proceeds of which were
used to make any loan to any other affiliate of The Southern Company in respect
of which such other affiliate is obligated to pay the full amount of such
Liability in accordance with a provision identical to this Section 6 . As used
herein the term "Pro Rata Share" of any Liability shall mean an amount equal to
the product of such Liability and a fraction expressed as a percentage (x) the
numerator of which is the average outstanding loans made to the Operating
Company during the period from the date which is three years prior to the date
such Liability is due and payable to the date such Liability is due and payable
(the "Determination Period"), and (y) the denominator of which is the average
aggregate outstanding loans made during the Determination Period to the
Operating Company and all other affiliates of The Southern Company which
received loans from Funding and which are obligated to pay such Liability in
accordance with a provision identical to this Section 6.
(b) The Operating Company and Funding hereby acknowledge and
agree that each Placement Agent is a third-party beneficiary of this Section 6
and is entitled to the benefits of the obligations of the Operating Company
contained in this Section 6 and is entitled to bring any action to enforce such
obligations directly against the Operating Company. In the case of any Liability
arising out of or in connection with the Placement Agreement, the Operating
Company shall pay the amount of such Liability directly to such Placement Agent
or as the Placement Agent directs.
(c) This Section 6 shall not be amended or modified without
the prior written consent of each Placement Agent. The agreements and
obligations of the Operating Company set forth in this Section 6 shall survive
the termination of this agreement.
7. This agreement shall be governed by and construed in accordance with
the internal laws of the State of [ ], without regard to the conflict of laws
provisions thereof.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed by their duly authorized officers and their respective seals to be
affixed as of the day and year first above written.
POWER COMPANY
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By:
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Name:
Title:
Attest:
Name:
Title:
Southern Company Funding Corporation
By:
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Name:
Title:
Attest:
Name:
Title:
EXHIBIT A
PROMISSORY NOTE
[Date]
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
Southern Company Funding Corporation ("Funding") the principal sum of
$____________________ or, if less, the aggregate unpaid principal balance of all
borrowings by the undersigned from Funding under that certain Financial Services
Agreement dated as of __________________ (the "Agreement"), between the
undersigned and Funding, in lawful money of the United States of America in
immediately available funds, and to pay interest on any and all principal
amounts hereof outstanding from time to time in like funds, all as indicated on
the grid attached hereto.
All borrowings by the undersigned from Funding under the Agreement
outstanding from the date hereof and all payments on account of principal hereof
shall be recorded by Funding and endorsed on the grid attached hereto and made a
part hereof; provided, however, that no failure to make or any error in making
such endorsements shall affect the obligations of the undersigned hereunder.
The obligations of the undersigned shall be unconditional irrespective
of the validity or enforceability of any provisions of the Agreement.
The undersigned hereby waives presentment, demand for payment, notice
of dishonor and all other notices or demands in connection with the delivery,
acceptance, performance, default or endorsement of this Note.
This Note shall be governed by and construed in accordance with the
internal laws of the State of [ ], without regard to the conflict of laws
provisions thereof.
The undersigned promises to pay all out-of-pocket costs and expenses
which Funding may incur: (i) relating to the offer and sale of commercial paper
issued, at the undersigned's request, by Funding pursuant to the Agreement
(including obligations and claims under any agreement with a dealer or placement
agent of Funding's commercial paper, provided that such obligations and claims
relate to commercial paper issued at the undersigned's request), and (ii) in the
enforcement of this Note (including reasonable fees and out-of-pocket costs and
expenses of legal counsel).
POWER COMPANY
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By:
-------------------------------------
Name:
Title:
Attest:
Name:
Title:
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Principal Discount or Principal Repaid
Date Borrowed Maturity Interest Rate Notation
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