-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OeMo8lfZpnmhMhY1zL3oof2mjR5X0fSp74TT483tTx9FlsLiyFBhnPymvsv4Hpai 1DDKLNP8tt7neWqRf0UaPQ== 0000092122-02-000090.txt : 20021216 0000092122-02-000090.hdr.sgml : 20021216 20021216150617 ACCESSION NUMBER: 0000092122-02-000090 CONFORMED SUBMISSION TYPE: POS AMC PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20021216 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN CO CENTRAL INDEX KEY: 0000092122 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 580690070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AMC SEC ACT: 1935 Act SEC FILE NUMBER: 070-09701 FILM NUMBER: 02858550 BUSINESS ADDRESS: STREET 1: 270 PEACHTREE ST CITY: ATLANTA STATE: GA ZIP: 30303 BUSINESS PHONE: 4045065000 MAIL ADDRESS: STREET 1: 270 PEACHTREE STREET CITY: ATLANTA STATE: GA ZIP: 30303 POS AMC 1 am6_9701.txt File No. 70-9701 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Amendment No. 6 (Post-Effective Amendment No. 1) to FORM U-1 APPLICATION OR DECLARATION under The Public Utility Holding Company Act of 1935 THE SOUTHERN COMPANY 270 Peachtree Street, N.W. Atlanta, Georgia 30303 SOUTHERN POWER COMPANY 270 Peachtree Street, N.W. Atlanta, Georgia 30303 (Name of company or companies filing this statement and addresses of principal executive offices) THE SOUTHERN COMPANY (Name of top registered holding company parent of each applicant or declarant) Tommy Chisholm, Corporate Secretary and Assistant Treasurer The Southern Company 270 Peachtree Street, N.W. Atlanta, Georgia 30303 (Names and address of agents for service) This Commission is requested to mail signed copies of all orders, notices and communications to: Gale E. Klappa Executive Vice President, Chief Financial Officer and Treasurer The Southern Company 270 Peachtree Street, N.W. Atlanta, Georgia 30303 Cliff S. Thrasher John D. McLanahan, Esq. Vice President, Chief Financial Troutman Sanders LLP Officer and Treasurer 600 Peachtree Street, N.E. Southern Power Company Suite 5200 270 Peachtree Street, N.W. Atlanta, Georgia 30308-2216 Atlanta, Georgia 30303 INFORMATION REQUIRED Item 1. Description of Proposed Transactions. 1.1 Background. The Southern Company ("Southern") is a registered holding company under the Public Utility Holding Company Act of 1935, as amended (the "Act"). Southern Power Company ("Southern Power") is a public utility company subsidiary of Southern. By order dated December 27, 2000 (the "2000 Order"), the Securities and Exchange Commission (the "Commission") authorized Southern to form NewCo,1 a new subsidiary, and approved certain financing authority for NewCo. Under the 2000 Order, the Commission reserved jurisdiction over "sale/leaseback" transactions by NewCo pending completion of the record. In December 2000 and December 2001, Georgia Power Company ("Georgia Power"), a public utility company subsidiary of Southern, completed a series of transactions as described more fully below in Section 1.2 and substantially similar to the transactions for which authority is being requested hereby. Such prior transactions did not require Commission approval because the transactions did not involve the sale of a "utility asset" as defined by the Act. In December 2001, Georgia Power assigned all of its rights, titles and interests in the transactions to Southern Power and Southern Power assumed all of Georgia Power's rights, titles and interests. In June 2002, the Project (as defined below) became operational and is now, therefore, deemed to be a "utility asset." Therefore, Southern Power now requests that the Commission release jurisdiction over the "sale/leaseback" transactions of utility assets described below. Southern Power is not herein _________________________________ 1 NewCo is presently known as Southern Power Company, a Delaware corporation. requesting any other modification to the terms and conditions of the 2000 Order. 1.2 The "Sale/Leaseback" Transaction. Southern Power has completed construction of, and owns, Units 6 and 7 at Georgia Power's Plant Wansley site in Heard County, Georgia ("Project"). Pursuant to a tax abatement agreement, ("Tax Abatement Agreement"), Heard County, Georgia ("County"), acting by and through its Board of Commissioners, the Board of Tax Assessors of Heard County, the Development Authority of Heard County ("Authority") and Southern Power have agreed to levelize and abate the property taxes due from Southern Power to the County over a period of approximately 20 years, as follows: a) Southern Power will sell an interest in the Project to the County in an amount equal to approximately $42,000,000 ("Sale Price"). To finance the purchase of such interest in the Project, the Authority will issue and sell its revenue bonds ("Revenue Bonds") to Southern Power (or its assignee) in the aggregate amount of the Sale Price.2 Since the Sale Price equals the cost of such Revenue Bonds, no money will be exchanged between Southern Power and the Authority. b) Simultaneously with the sale of the Project to the Authority, Southern Power will lease the Project back from the Authority for a term of approximately 20 years (the estimated useful life of the Project) pursuant to a lease agreement ("Agreement"), the substantial form of which is attached as Exhibit A-1. The Agreement provides for lease payments to be made by Southern Power at times and in amounts which correspond to the payments with respect to the _________________________________________ 2 In December 2000, the Authority issued $125,000,000 in Revenue Bonds. In December 2001, the Authority issued $265,000,000 in Revenue Bonds. After the Commission's approval, the Authority will issue $42,000,000 in Revenue Bonds. The aggregate amount of the Revenue Bonds previously issued and the Revenue Bonds contemplated hereby will be $432,000,000, the total cost of the Project. 2 principal of and interest on the Revenue Bonds whenever and in whatever manner the same shall become due, whether at stated maturity, upon redemption or declaration or otherwise. c) The Agreement provides for lease payments to be deposited with a trustee ("Trustee") under an indenture between the Authority and the Trustee ("Trust Indenture"), the substantial form of which is attached as Exhibit A-2, and pursuant to which the Revenue Bonds will be issued and secured. Since Southern Power will make lease payments in the same amounts and at the same times that the Trustee will pay interest and principal on the Revenue Bonds to Southern Power, no lease payments or Revenue Bond payments actually will be paid by or to Southern Power. The Trust Indenture will provide for the specific terms of the Revenue Bonds, including a final maturity of January 1, 2023 and an interest rate of 5.00%. The Trust Indenture will also specify the term and details of the Revenue Bonds and will contain various provisions, covenants and agreements to protect the security of the bondholders, including the following: (a) pledging and assigning the rents, revenues and receipts of the County derived from the Project to secure the payment of the Revenue Bond; (b) describing the redemption provisions and other features of the Revenue Bond; (c) setting forth the form of the Revenue Bond; (d) establishing the various funds and accounts to handle the Revenue Bond proceeds and revenues of the Project and setting forth covenants regarding the administration and investment of such funds and accounts by the trustee bank; (e) setting forth the duties of the trustee bank; (f) defining events of default and provisions for enforcing the rights and remedies of the bondholder in such events; and (g) restricting the issuance of additional bonds and the terms upon which the same may be issued and secured. The Agreement obligates Southern Power to pay the fees and charges of the Trustee. d) The Agreement permits Southern Power (or its assignee) to buy the Project back from the Authority for a nominal purchase price at the expiration (or earlier termination) thereof. 3 e) Accordingly, Southern Power is treated as the owner of the Project for financial accounting purposes and federal income tax purposes, and Southern Power is in fact the beneficial owner of, with full control over, the Project. As described herein, the Tax Abatement Agreement obligates Southern Power to make level property tax payments on the lease payments, plus a fee to the County. Item 2. Fees, Commissions and Expenses. The fees, commissions and expenses to be incurred in connection herewith are estimated to be approximately $40,000. Item 3. Applicable Statutory Provisions. Southern Power considers that Sections 9 and 12 of the Act and Rules 44 and 54 under the Act may be applicable to the proposed transactions. The acquisition of the Revenue Bonds by the Company are exempt pursuant to Section 9(c)(1) of the Act. Prior to becoming a utility asset, the "sale/leaseback" of the unimproved and partially improved property at the Plant Wansley site was not subject to the Commission's jurisdiction. To the extent that other sections of the Act or the rules thereunder are deemed to be applicable to the transactions described herein, such sections and rules should be considered to be set forth in this Item 3. Rule 54 Analysis: The proposed transaction is also subject to Rule 54, which provides that, in determining whether to approve an application which does not relate to any "exempt wholesale generator" ("EWG") or "foreign utility company" ("FUCO"), the Commission shall not consider the effect of the capitalization or earnings of any such EWG or FUCO which is a 4 subsidiary of a registered holding company if the requirements of Rule 53(a), (b) and (c) are satisfied. Southern currently meets all of the conditions of Rule 53(a). At September 30, 2002, Southern's "aggregate investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $231.3 million, or 4.99% of Southern's "consolidated retained earnings," also as defined in Rule 53(a)(1), as of September 30, 2002 ($4.640 billion).3 In addition, Southern has complied and will continue to comply with the record-keeping requirements of Rule 53(a)(2), the limitation under Rule 53(a)(3) on the use of operating company personnel to render services to EWGs and FUCOs, and the requirements of Rule 53(a)(4) concerning the submission of copies of certain filings under the Act to retail rate regulatory commissions. Further, none of the circumstances described in Rule 53(b) has occurred. Item 4. Regulatory Approval. No state or federal regulatory agency, other than the Commission, has jurisdiction over the proposed transactions. _______________________________________ 3 As discussed in Southern's Application on Form U-1 (File No. 70-9727) relating to the spin-off of Mirant Corporation ("Mirant"), Southern and Mirant reorganized certain energy-related and FUCO activities and Mirant completed a tax-free distribution to Southern of these activities on March 5, 2001 (the "Mini-Spin"). On April 2, 2001, Southern completed the spin-off of its remaining ownership interest in Mirant to Southern's shareholders. Therefore, the four indirect subsidiaries (EPZ Lease, Inc., Dutch Gas Lease, Inc., GAMOG Lease, Inc. and NUON Lease, Inc.) obtained through the Mini-Spin are the only remaining FUCO investments held by Southern. Although Southern now owns all of the equity in these companies as a result of the Mini-Spin, Southern has no direct or indirect investment or any aggregate investment within the meaning of Rule 53 in these FUCOs, including any direct or indirect guarantees or credit positions related to any capital or financing leases. Southern has executed limited keep-well commitments whereby Southern would be required to make capital contributions to Southern Energy Finance Capital Corp. or to Southern Energy Finance Company, Inc. in the event of a shortfall in the scheduled debt service resulting from certain changes in the payments due from Southern under the Southern Company Income Tax Allocation Agreement. The maximum potential capital contribution required under these commitments is the unamortized balance of the related loans, which totaled approximately $372,000,000 as of September 30, 2002. Furthermore, the only remaining EWG investment held by Southern after the spin-off is Southern Company-Florida LLC, which was organized during the first quarter of 2001. 5 Item 5. Procedure. Southern Power hereby requests that the Commission's order be issued as soon as the rules allow. Southern Power hereby waives a recommended decision by a hearing officer or other responsible officer of the Commission, consents that the Division of Investment Management may assist in the preparation of the Commission's decision and/or order in this matter, unless such Division opposes the transactions proposed herein, and requests that there be no 30-day waiting period between the issuance of the Commission's order and the date on which it is to become effective. Item 6. Exhibits and Financial Statements. The following exhibits and financial statements are filed as a part of this Application/Declaration: (a) Exhibits A-1 - Form of Agreement. A-2 - Form of Trust Indenture. F - Opinion of counsel. (b) Financial Statements Financial statements for Southern Power have been omitted because they are not deemed to be material to or necessary for a proper disposition of the proposed transactions. Item 7. Information as to Environmental Effects. (a) The issuance of an order by the Commission with respect to the proposed transactions will not constitute a major federal action significantly affecting the quality of the human environment. 6 (b) No other federal agency has prepared or is preparing an environmental impact statement with regard to the proposed transactions. SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this statement to be signed on its behalf by the undersigned hereunto duly authorized. Date: December 16, 2002 THE SOUTHERN COMPANY By: /s/Tommy Chisholm Tommy Chisholm Corporate Secretary and Assistant Treasurer SOUTHERN POWER COMPANY By: /s/Tommy Chisholm Tommy Chisholm Secretary EX-99 3 exa1_am6.txt EXHIBIT A-1 Exhibit A-1 SECOND AMENDATORY AND SUPPLEMENTAL LEASE AGREEMENT between DEVELOPMENT AUTHORITY OF HEARD COUNTY and SOUTHERN POWER COMPANY Dated as of December 1, 2002 - ------------------------------------------------------------------------------ This Second Amendatory and Supplemental Lease Agreement and all right, title and interest of the Development Authority of Heard County in any rents, revenues and receipts derived under this Second Amendatory and Supplemental Lease Agreement have been assigned to The Bank of New York, as Trustee under the Indenture of Trust, dated as of December 1, 2000, as amended and supplemented by the First Supplemental Indenture of Trust, dated as of December 1, 2001, and as further amended and supplemented by the Second Supplemental Indenture of Trust, dated December 1, 2002, from the Development Authority of Heard County which secures Development Authority of Heard County Taxable Industrial Development Revenue Bonds (Wansley Project) issued or to be issued thereunder. - ----------------------------------------------------------------------------- This instrument was prepared by and after recording return to: Melissa K. Caen Troutman Sanders LLP 600 Peachtree Street, N.E., Suite 5200 Atlanta, Georgia 30308-2216 SECOND AMENDATORY AND SUPPLEMENTAL LEASE AGREEMENT TABLE OF CONTENTS (The Table of Contents for this Second Amendatory and Supplemental Lease Agreement is for convenience of reference only and is not intended to define, limit or describe the scope or intent of any provisions of this Second Amendatory and Supplemental Lease Agreement.) Page ARTICLE I. DEFINITIONS.....................................................1 ------------ Section 1.1. Definitions.....................................1 ARTICLE II. REPRESENTATIONS AND WARRANTIES.................................1 ------------------------------- Section 2.1. Representations and Warranties by the Issuer..........................................1 Section 2.2. Representations and Warranties by the Lessee..........................................2 ARTICLE III. COMMENCEMENT AND COMPLETION OF THE PROJECT; ISSUANCE OF THE SERIES 2002 BONDS; ADDITIONAL BONDS...............4 --------------------------------------------------- Section 3.1. Agreement to Construct and Install the Project.....................................4 Section 3.2. Agreement to Issue Series 2002 Bonds; Application of Series 2002 Bond Proceeds........................................4 ARTICLE IV. EFFECTIVE DATE OF THIS SECOND SUPPLEMENTAL LEASE; ------- DURATION OF LEASE TERM; RENTAL PROVISIONS.........................5 ----------------------------------------- Section 4.1. Effective Date of this Second Supplemental Lease; Duration of Lease Term............................................5 Section 4.2. Delivery and Acceptance of Possession...........5 Section 4.3. Rents and Other Amounts Payable.................5 Section 4.4. Place of Rental Payments........................6 Section 4.5. Obligations of Lessee Hereunder Absolute and Unconditional......................6 Section 4.6. Lessee's Performance under Indenture............7 ARTICLE V. MISCELLANEOUS...................................................7 -------------- Section 5.1. Original Lease, First Supplemental Lease and Second Supplemental Lease as One Document.................................7 Section 5.2. Binding Effect..................................7 Section 5.3. Severability....................................7 Section 5.4. Execution Counterparts..........................7 Section 5.5. Captions........................................7 Section 5.6. Recording of Lease..............................7 Section 5.7. Law Governing Construction of Lease.............7 EXHIBIT "A"..................................DESCRIPTION OF LEASED EQUIPMENT SECOND AMENDATORY AND SUPPLEMENTAL LEASE AGREEMENT THIS SECOND AMENDATORY AND SUPPLEMENTAL LEASE AGREEMENT, dated as of December 1, 2002, by and between the DEVELOPMENT AUTHORITY OF HEARD COUNTY (the "Issuer"), a public body corporate and politic of the State of Georgia, as lessor, and SOUTHERN POWER COMPANY (the "Lessee"), a Delaware corporation, as lessee; W I T N E S E T H: That in consideration of the respective representations and agreements hereinafter contained and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Issuer and the Lessee agree as follows (provided, that in the performance of the agreements of the Issuer herein contained, any obligation it may thereby incur for the payment of money shall not be a general debt on its part but shall be payable solely out of the rents, revenues and receipts derived from the Lease Agreement, dated as of December 1, 2000 (the "Original Lease"), as amended and supplemented by the First Amendatory and Supplemental Lease Agreement, dated as of December 1, 2001 (the "First Supplemental Lease") and this Second Amendatory and Supplemental Lease Agreement (the "Second Supplemental Lease"), the sale of the Bonds, any insurance and condemnation awards as herein described and any other rents, revenues and receipts arising out of or in connection with its ownership of the Project as hereinafter defined): ARTICLE I. DEFINITIONS Section 1.1. Definitions. All capitalized terms and words used in this Second Supplemental Lease and not otherwise defined herein shall have the meanings set forth, respectively, in Section 1.1 of the Original Lease or Section 1.02 of the Second Supplemental Indenture unless the context or use clearly indicates another or different meaning or intent. ARTICLE II. REPRESENTATIONS AND WARRANTIES Section 2.1. Representations and Warranties by the Issuer. The Issuer makes the following representations and warranties: (a) Organization and Authority. The Issuer is a public body corporate and politic, created and validly existing pursuant to the Constitution and laws of the State of Georgia, including particularly the provisions of the Act. Under the provisions of the Act, the Issuer has the power to execute and deliver the Second Supplemental Indenture and this Second Supplemental Lease, to enter into the transactions contemplated hereby and thereby and to perform and observe its obligations contained herein and therein in accordance with the terms thereof. By proper corporate action, the Issuer has duly authorized the execution and delivery of the Second Supplemental Indenture and this Second Supplemental Lease. (b) Ability to Finance Project Under Act. The Project constitutes an undertaking within the scope of the Issuer's power for which bonds may be issued to finance under the Act. (c) Public Purpose. The Issuer has found and hereby declares that the issuance of the Series 2002 Bonds and the use of the proceeds of the Series 2002 Bonds to finance a portion of the cost of the Project and the leasing of the Project to the Lessee and the sale of the Project to the Lessee at the expiration or sooner termination of the Lease Term is in furtherance of the public purposes for which the Issuer is created. (d) Agreements are Legal and Authorized. The Issuer is not subject to any charter, by-law or contractual limitation or provision of any nature whatsoever which in any way limits, restricts or prevents the Issuer from entering into the Second Supplemental Indenture and this Second Supplemental Lease or performing any of its obligations under the Lease or the Indenture. (e) No Prior Pledge. The Trust Estate has not been pledged or hypothecated in any manner or for any purpose other than as provided in the Indenture. (f) Governmental Consents. Neither the nature of the Issuer nor any of its activities or properties, nor any relationship between the Issuer and any other person, nor any circumstance in connection with the offer, issue, sale or delivery of any of the Bonds is such as to require the consent, approval or authorization of, or the filing, registration or qualification with, any governmental authority on the part of the Issuer in connection with the execution, delivery and performance of, the Second Supplemental Indenture and this Second Supplemental Lease or the offer, issue, sale or delivery of the Series 2002 Bonds, other than those already obtained or filed; provided, however, no representation is made herein as to compliance with the securities or "blue sky" laws of any jurisdiction nor is any representation made as to any governmental consents, approvals or permits required in connection with the construction or operation of the Project. (g) No Defaults. No event has occurred and no condition exists with respect to the Issuer which would constitute an event of default, as defined herein or therein, under any of the Second Supplemental Indenture and this Second Supplemental Lease or which, with the lapse of time or with the giving of notice or both, would become an event of default under any of the Second Supplemental Indenture or this Second Supplemental Lease. (h) Enforceability. The Original Lease, as amended and supplemented by the First Supplemental Lease and this Second Supplemental Lease, is a legal, valid and binding obligation of the Issuer. Section 2.2. Representations and Warranties by the Lessee. The Lessee makes the following representations and warranties: (a) Organization and Power. The Lessee is a corporation duly incorporated and existing under the laws of the State of Delaware and has due corporate authority to enter into this Second Supplemental Lease and to perform its obligations contained herein and under the Lessee Documents, and this Second Supplemental Lease, when executed and delivered by the Lessee and assuming due authorization, execution and delivery hereof by the Issuer, will be duly authorized, executed and delivered by the Lessee. (b) Pending Litigation. There is no action, suit, proceeding, inquiry or investigation known to the Lessee to be pending or threatened against or directly affecting the Lessee wherein an unfavorable decision, ruling or finding (i) are reasonably anticipated to materially and adversely affect the transactions contemplated on its part by the Lease or (ii) are reasonably anticipated to adversely affect the validity or enforceability of the Series 2002 Bonds or the Lessee Documents. (c) No Violation or Breach. The execution and delivery by the Lessee of this Second Supplemental Lease and the compliance by the Lessee with its obligations hereunder do not result in any violation of the charter or by-laws of the Lessee and do not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, (i) any indenture, mortgage, deed of trust, lease, note agreement or other agreement or instrument to which the Lessee is a party or by which the Lessee is presently bound (except for conflicts, breaches or defaults which would not, individually or in the aggregate, be materially adverse to the Lessee) or (ii) any existing applicable law or any order, rule or regulation of any court or governmental or regulatory authorities having jurisdiction over the Lessee, applicable to the Lessee. (d) Governmental Consents. Neither the Lessee nor any of its business or properties, nor any relationship between the Lessee and any other Person, nor any circumstance in connection with the execution, delivery and performance by the Lessee of this Second Supplemental Lease, or the offer, issue, sale or delivery by the Issuer of the Series 2002 Bonds, is such as to require the consent, approval or authorization of, or the filing, registration or qualification with, any governmental authority on the part of the Lessee, other than those already obtained or filed; provided, however, no representation is made herein as to compliance with the securities or "blue sky" laws of any jurisdiction, nor is any representation made as to any permits or other similar approvals not required as of the date hereof with respect to the Project. (e) No Defaults. No event has occurred and no condition exists with respect to the Lessee that would constitute an event of default, as defined herein or therein, under this Lease or which, with the lapse of time or with the giving of notice or both, would become such an event of default. (f) Enforceability. The Original Lease, as supplemented by the First Supplemental Lease and this Second Supplemental Lease (when executed and delivered by the Lessee and assuming due authorization, execution and delivery thereof by the Issuer), will be a legal, valid and binding obligation of the Lessee, except to the extent that enforcement thereof may be limited by (i) bankruptcy, insolvency, reorganization, receivership, liquidation, fraudulent conveyance, moratorium or other similar laws affecting creditors' rights generally or (ii) general principles of equity (regardless of whether enforcement is considered in a proceeding at law or in equity) and except as limited by any principles of public policy limiting the right to enforce the indemnification provisions of the Lease. ARTICLE III. COMMENCEMENT AND COMPLETION OF THE PROJECT; ISSUANCE OF THE SERIES 2002 BONDS; ADDITIONAL BONDS Section 3.1. Agreement to Construct and Install the Project. The Issuer has acquired the title in and to the Leased Land. As provided in Article IV of the Original Lease, the Issuer has agreed that it will cause the acquisition, construction and installation of the Buildings to be made in accordance with the Project Summary, as may be amended from time to time by the Lessee, and will cause to be acquired and installed in the Building or on the Leased Land, the Leased Equipment, to consist of machinery, equipment and related property described in the list attached to the Original Lease as Exhibit "B" and such other items of machinery, equipment and related property as in the Lessee's judgment may be necessary or desirable for the operation of the Project. The Issuer acknowledges and agrees that not later than the execution and delivery of this Second Supplemental Lease, it will have acquired title to the machinery, equipment and other improvements listed on Exhibit "A" attached hereto. The parties hereto hereby acknowledge and agree that such items constitute part of the Project, legal title to which is held by the Issuer, and that such items are part of the Project subject to the Lease. The Issuer hereby ratifies and confirms all actions of, and assumes and adopts all contracts entered into by, the Lessee, as agent of the Issuer under Section 4.1 of the Original Lease, with respect to the Project prior to the date hereof. The Issuer makes no warranty or representation, either express or implied, as to the suitability or fitness for a particular purpose of the Project or any portion thereof, including but not limited to, the property described on Exhibit "A" attached hereto. Section 3.2. Agreement to Issue Series 2002 Bonds; Application of Series 2002 Bond Proceeds. In order to acquire the Project provided for in Section 3.1 hereof, the Issuer agrees that as soon as possible it will authorize, sell and cause to be delivered to the initial purchaser or purchasers thereof, the Series 2002 Bonds, bearing interest and maturing as set forth in Article III of the Original Indenture and Article II of the Second Supplemental Indenture, at a price to be approved by the Lessee. Upon receipt of the proceeds derived from the sale of the Series 2002 Bonds, the Issuer will deposit said proceeds received upon said sale in the Project Fund. ARTICLE IV. EFFECTIVE DATE OF THIS SECOND SUPPLEMENTAL LEASE; DURATION OF LEASE TERM; RENTAL PROVISIONS Section 4.1. Effective Date of this Second Supplemental Lease; Duration of Lease Term. This Second Supplemental Lease shall become effective upon its delivery and the leasehold interest created by this Second Supplemental Lease shall then begin, and, subject to the other provisions of the Original Lease, as amended (including particularly Articles X, XI and XII of the Original Lease), shall expire at midnight, January 1, 2023, or if at such time and on such date Payment in Full of the Bonds shall not have been made, then on such date as such payment shall have been made. Section 4.2. Delivery and Acceptance of Possession. The Issuer agrees to deliver to the Lessee sole and exclusive possession of the Project, or so much thereof as may exist on the effective date hereof (subject to the right of the Trustee to enter thereon for inspection and other purposes as set forth in Section 8.2 of the Original Lease) on the effective date of this Second Supplemental Lease and the Lessee agrees to accept possession of the Project upon such delivery; provided, however, that the Lessee shall be permitted full use and occupancy of the Project prior to any Completion Date. Section 4.3. Rents and Other Amounts Payable. Subject to Section 2.08 of the Original Indenture, on or before January 1 and July 1 in each year, commencing January 1, 2003, until Payment in Full of the Bonds, the Lessee shall pay or cause to be paid to the Trustee for the account of the Issuer as rentals for the Project a sum equal to the amount payable on such date as principal of and interest on the Bonds, including the Series 2000 Bonds, Series 2001 Bonds and the Series 2002 Bonds, as provided in the Indenture. Each rental payment under this Section shall be sufficient to pay the total amount of principal and interest payable on such semiannual interest payment date, and if at any semiannual interest payment date the balance in the Bond Fund is insufficient to make required payments of principal and interest on such date, the Lessee shall forthwith pay any such deficiency. Anything herein to the contrary notwithstanding, any amount at any time held by the Trustee in the Bond Fund shall be credited against the next succeeding rental payment and such credit shall reduce the payment to be then made by the Lessee; and further, if the amount held by the Trustee in the Bond Fund should be sufficient to pay at the times required the principal of and interest on all Bonds then remaining unpaid, the Lessee shall not be obligated to make any further rental payments under the provisions of this Section. The Lessee agrees to pay to the Trustee until Payment in Full of the Bonds (i) at least once a year an amount equal to the annual fee of the Trustee for the Ordinary Services of the Trustee rendered and its Ordinary Expenses incurred under the Indenture, (ii) the reasonable fees of Trustee's Counsel as provided in the Indenture, as and when the same become due, and (iii) the reasonable fees and charges of the Trustee for Extraordinary Services rendered by it and Extraordinary Expenses incurred under the Indenture, as and when the same become due; provided, that the Lessee may, without creating a default hereunder, withhold such payment to contest in good faith the necessity for any such Extraordinary Services and Extraordinary Expenses and the reasonableness of any such fees, charges or expenses. If the Lessee should fail to make any of the payments required in this Section, the item or installment so in default shall continue as an obligation of the Lessee until the same shall have been fully paid, and the Lessee agrees to pay the same with interest thereon, to the extent legally enforceable, at the Default Rate per annum until paid. The provisions of this Section shall be subject to the provisions of Section 9.6 of the Original Lease. Section 4.4. Place of Rental Payments. The rents provided for in the first paragraph of Section 4.3 hereof and the interest on delinquent rents shall be paid directly to the Trustee for the account of the Issuer and will be deposited in the Bond Fund, unless a home office payment agreement is in effect pursuant to the provisions of Section 2.08 of the Original Indenture. The other payments provided for in Section 4.3 hereof shall be paid directly to the Trustee for its own use or for disbursement to any other paying agent on the Bonds, as the case may be. Section 4.5. Obligations of Lessee Hereunder Absolute and Unconditional. Subject to the provisions of Section 9.6 of the Original Lease, the obligations of the Lessee to make the payments required in Section 4.3 hereof and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional. Until such time as Payment in Full of the Bonds shall have been made, the Lessee (i) will not suspend or discontinue any payments provided for in Section 4.3 hereof except to the extent the same have been prepaid, (ii) will perform and observe all of its other agreements contained in this Lease Agreement and (iii) except as provided in Sections 11.1 and 11.2 of the Original Lease, will not terminate the Lease Term for any cause, including, without limiting the generality of the foregoing, failure of the Issuer to complete the Project, failure of the Issuer's title in and to the Project or any part thereof, any acts or circumstances that may constitute failure of consideration, eviction or constructive eviction, destruction of or damage to the Project, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of Georgia or any political subdivision of either thereof or any failure of the Issuer to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with the Lease or the Indenture. Nothing contained in this Section shall be construed to release the Issuer from the performance of any of the agreements on its part herein contained; and if the Issuer should fail to perform any such agreement, the Lessee may institute such action against the Issuer as the Lessee may deem necessary to compel performance or recover its damages for nonperformance so long as such action shall not conflict with the agreements on the part of the Lessee contained in the preceding sentence. The Lessee may, however, at its own cost and expense and in its own name or in the name of the Issuer, prosecute or defend any action or proceeding or take any other action involving third persons which the Lessee deems reasonably necessary or in order to insure the acquisition, construction, installation and completion of the Project or to secure or protect its right of possession, occupancy and use of the Project hereunder, and in such event the Issuer hereby agrees to cooperate fully with the Lessee and to take all lawful action which is required to effect the substitution of the Lessee for the Issuer in any such action or proceeding if the Lessee shall so request. Section 4.6. Lessee's Performance under Indenture. The Lessee agrees, for the benefit of the owners from time to time of the Bonds, to do and perform all acts and things contemplated in the Indenture to be done or performed by it. ARTICLE V. MISCELLANEOUS Section 5.1. Original Lease, First Supplemental Lease and Second Supplemental Lease as One Document. As amended and supplemented by the First Supplemental Lease and as further amended and supplemented by the Second Supplemental Lease, the Original Lease is in all respects ratified and confirmed, and the Original Lease, the First Supplemental Lease and this Second Supplemental Lease shall be read, taken and construed as one and the same instrument. Section 5.2. Binding Effect. This Second Supplemental Lease shall inure to the benefit of and shall be binding upon the Issuer, the Lessee and their respective successors and assigns. Section 5.3. Severability. If any provision of this Second Supplemental Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. Section 5.4. Execution Counterparts. This Second Supplemental Lease may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 5.5. Captions. The captions and headings in this Second Supplemental Lease are for convenience only and in no way define, limit or describe the scope or intent of any provisions of this Second Supplemental Lease. Section 5.6. Recording of Lease. This Second Supplemental Lease and every assignment and modification hereof and thereof shall be recorded in the office of the Clerk of the Superior Court of Heard County, Georgia, or in such other office as may be at the time provided by law as the proper place for such recordation. Section 5.7. Law Governing Construction of Lease. This Second Supplemental Lease shall be governed by, and construed in accordance with, the laws of the State of Georgia. IN WITNESS WHEREOF, the Issuer and the Lessee have caused this Second Supplemental Lease to be executed in their respective names by their duly authorized officers, all as of the date first above written. DEVELOPMENT AUTHORITY OF HEARD COUNTY By:_____________________________________ Chairman As to the Issuer, signed sealed and delivered in the presence of: - -------------------------------- Witness - -------------------------------- Notary Public My commission expires:..... ---------------------- (Notarial Seal) SOUTHERN POWER COMPANY By:_______________________________________ Name: Wayne Boston Title: Assistant Secretary - -------------------------------- Notary Public My commission expires:_______ (NOTARIAL SEAL) EXHIBIT "A" to SECOND AMENDATORY AND SUPPLEMENTAL LEASE AGREEMENT Between Development Authority of Heard County and Southern Power Company dated as of December 1, 2002 LEASED EQUIPMENT DESCRIPTION The leased equipment consists of all machinery, equipment and related personal property from time to time located in the Building or on the Leased Land and tagged or otherwise identified to reflect such ownership. EX-99 4 exa2_am6.txt EXHIBIT A-2 Exhibit A-2 SECOND SUPPLEMENTAL INDENTURE OF TRUST between DEVELOPMENT AUTHORITY OF HEARD COUNTY and THE BANK OF NEW YORK, as Trustee Securing the issuance of Development Authority of Heard County Taxable Industrial Development Revenue Bonds (Plant Wansley Project), Series 2002. Dated as of December 1, 2002 This instrument was prepared by: Troutman Sanders LLP 600 Peachtree Street, N.E. Suite 5200 Atlanta, Georgia 30308 TABLE OF CONTENTS Page ARTICLE I. ADDITIONAL DEFINITIONS....................................4 ----------------------- Section 1.01 Definitions..................................4 Section 1.02 Additional Definitions.......................4 ARTICLE II. THE SERIES 2002 BONDS....................................4 ---------------------- Section 2.01 Issuance of Series 2002 Bonds................4 Section 2.02 Prepayment Dates and Prices..................5 Section 2.03 Form of Series 2002 Bonds....................5 Section 2.04 Authentication and Delivery of Series 2002 Bonds............................5 ARTICLE III. MISCELLANEOUS...........................................6 -------------- Section 3.01 Original Indenture, First Supplemental Indenture and Second Supplemental Indenture as One Document.....................................6 Section 3.02 Severability.................................6 Section 3.03 Captions.....................................6 Section 3.04 Counterparts.................................6 Section 3.05 Law Governing Indenture......................6 Section 3.06 Effective Date and Term......................6 SECOND SUPPLEMENTAL INDENTURE OF TRUST THIS SECOND SUPPLEMENTAL INDENTURE OF TRUST (the "Second Supplemental Indenture"), dated as of December 1, 2002, made and entered into by and between the DEVELOPMENT AUTHORITY OF HEARD COUNTY, a public body corporate and politic created and existing under the laws of the State of Georgia (the "Issuer"), and THE BANK OF NEW YORK, a state banking corporation duly organized and existing under and by virtue of the laws of New York, having power and authority to accept and execute trusts, and having its principal office in New York, New York, as trustee (the "Trustee"), RECITALS WHEREAS, the Issuer authorized its Taxable Industrial Development Revenue Bonds (Wansley Project) in the aggregate principal amount of not to exceed $445,000,000 (the "Bonds") pursuant to a Bond Resolution, adopted on November 21, 2000 (the "Original Resolution") and an Indenture of Trust, dated as of December 1, 2000 (the "Original Indenture"), between the Issuer and the Trustee; and WHEREAS, the Issuer issued a series of the Bonds in the aggregate principal amount of $125,000,000 (the "Series 2000 Bonds") and a series of the Bonds in the aggregate principal amount of $265,000,000 (the "Series 2001 Bonds") pursuant to the Original Indenture and a First Supplemental Indenture of Trust, dated as of December 1, 2001 (the "First Supplemental Indenture"), respectively, between the Issuer and the Trustee, for the purpose of financing a portion of the acquisition, construction and installation of the Project (as defined in the Original Resolution) pursuant to the Original Resolution; and WHEREAS, in order to finance additional costs of the Project, the Issuer proposes to issue a series of Additional Bonds which shall be equally and ratably secured hereunder with the Series 2000 Bonds and the Series 2001 Bonds in the aggregate principal amount of $42,000,000 (the "Series 2002 Bonds") pursuant to the Original Indenture, the First Supplemental Indenture and this Second Supplemental Indenture (the Original Indenture, as supplemented by the First Supplemental Indenture and this Second Supplemental Indenture, the "Indenture"); and WHEREAS, the execution and delivery of this Second Supplemental Indenture and the sale, issuance and delivery of the Series 2002 Bonds have been in all respects duly and validly authorized by resolutions duly adopted by the Issuer; and WHEREAS, the Issuer will receive rental payments and other payments from the Lessee, which revenues, together with all other rents, revenues and receipts and other payments to be received pursuant to the Lease Agreement, dated as of December 1, 2000 (the "Original Lease"), as amended and supplemented by the First Amendatory and Supplemental Lease Agreement, dated as of December 1, 2001 (the "First Supplemental Lease"), and the Second Amendatory and Supplemental Lease Agreement, dated as of December 1, 2002 (the "Second Supplemental Lease") (the Original Lease, as amended and supplemented by the First Supplemental Lease and the Second Supplemental Lease, the "Lease"), which shall be pledged together with the Lease (except for the Unassigned Rights) as security for the payment of the principal of and interest on the Bonds; and WHEREAS, the Lessee will execute and deliver a Guaranty Agreement, dated as of even date herewith, pursuant to which the Lessee, will guaranty to the Trustee, subject to the terms thereof, the full and prompt payment of the principal of and interest on the Series 2002 Bonds; and WHEREAS, all things necessary to make the Series 2002 Bonds, when authenticated by the Trustee and issued and delivered as in the Original Indenture, the First Supplemental Indenture and this Second Supplemental Indenture provided, the valid, binding and legal obligations of the Issuer, according to the import thereof, and to create a valid assignment and pledge of the rental payments and other payments derived from the Second Supplemental Lease to the payment of the principal of and interest on the Bonds and a valid assignment of all the right, title and interest of the Issuer (except for the Unassigned Rights) in the Lease, have been done and performed, and the execution and delivery of this Second Supplemental Indenture and the execution, issuance and delivery of the Series 2002 Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH: That in order to further secure the payment of the principal of and interest on the Bonds according to their tenor and effect, and the performance of all of the covenants and conditions contained in the Original Indenture, the First Supplemental Indenture, this Second Supplemental Indenture or in the Bonds, and for the purpose, among others, of further securing the performance and observance of all of the covenants and conditions contained in the Original Indenture and the First Supplemental Indenture, the Issuer, in consideration of the premises and of the purchase and acceptance of the Bonds by the owners thereof, and of the sum of One Dollar ($1.00), lawful money of the United States of America, to it duly paid by the Trustee, at or before the execution and delivery of these presents, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, in order to further secure the payment of the principal of and interest on the Bonds according to their tenor and effect and to insure the performance and observance by the Issuer of all the covenants expressed or implied herein and in the Bonds, has given, granted, pledged, assigned, conveyed and transferred and does by these presents give, grant, pledge, assign, convey and transfer to the Trustee, and to its successors in the trusts hereby created, and to them and their assigns forever, all of the Issuer's estate, right title, and interest in, to and under the Second Supplemental Lease, including the rental payments thereunder, as an additional part of the Trust Estate, rights and interest (the "Trust Estate"), and the Issuer and the Trustee DO HEREBY FURTHER COVENANT AND AGREE with each other and with the registered owner from time to time of the Bonds as follows: ARTICLE I......... ADDITIONAL DEFINITIONS Section 1.01......Definitions. All capitalized terms and words used in this Second Supplemental Indenture and not otherwise defined herein shall have the meanings set forth, respectively, in Section 1.01 of the Original Indenture or Article I of the First Supplemental Indenture unless the context or use clearly indicates another or different meaning or intent. Section 1.02......Additional Definitions. The following words and phrases shall, when used in this Second Supplemental Indenture, have the meaning set forth below unless the context or use clearly indicates otherwise: "Second Supplemental Indenture" means this Second Supplemental Indenture of Trust. "Second Supplemental Lease" means the Second Amendatory and Supplemental Lease Agreement, dated as of December 1, 2002, between the Issuer and the Lessee. "Series 2002 Bond Purchase Agreement" means the agreement, dated December 1, 2002, by and among the Lessee, the Issuer and the Purchaser pursuant to which the Issuer has agreed to sell, and the Purchaser has agreed to purchase, the Series 2002 Bonds, in accordance with the provisions thereof. "Series 2002 Bonds" means the Development Authority of Heard County Taxable Industrial Development Revenue Bonds (Wansley Project), Series 2002 issued under the Original Indenture, as supplemented by the First Supplemental Indenture and this Second Supplemental Indenture, in the aggregate principal amount of $42,000,000. "Series 2002 Guaranty" means the agreement, dated December 1, 2002, by and between Southern Power Company (the "Guarantor"), and the Trustee pursuant to which the Guarantor will guaranty to the Trustee, subject to the terms thereof, the full and prompt payment of the principal of and interest on the Series 2002 Bonds. ARTICLE II........ THE SERIES 2002 BONDS Section 2.01......Issuance of Series 2002 Bonds. The Series 2002 Bonds (i) shall be designated "Development Authority of Heard County Taxable Industrial Development Revenue Bonds (Wansley Project), Series 2002," (ii) shall be issuable in an aggregate principal amount of $42,000,000 as one or more fully registered Bonds in the denomination of $100,000 or any integral multiple thereof or such other denomination as shall permit the issuance of the Series 2002 Bonds in the amount authorized herein; (iii) shall be dated in the manner set forth in Section 2.02 of the Original Indenture, (iv) shall be numbered from R-1 consecutively upwards in order of authentication according to the records of the Trustee and (v) shall bear interest at the rate of five percent (5.00%) per annum (computed on the basis of a 360-day year, 30-day month) from the Interest Payment Date next preceding the date of authentication of such Bond to which interest has been paid or provided for, unless: (1) the date of authentication of such Bond is an Interest Payment Date to which interest has been paid or provided for, then from the date of authentication thereof, or (2) no interest has been paid on such Bond, in which case from the date of authentication and delivery of such Bond or (3) such authentication date shall be after any Record Date and before the next succeeding Interest Payment Date in which case interest shall be paid from the next succeeding Interest Payment Date. Interest due on any Series 2002 Bond on any Interest Payment Date shall be paid to the registered owner of such Series 2002 Bond as shown on the registration books kept by the Registrar on the Record Date, first interest payable on January 1, 2003, and semiannually thereafter on January 1 and July 1 of each year until maturity or earlier date of prepayment, and shall mature on January 1, 2023. Section 2.02......Prepayment Dates and Prices. The Series 2002 Bonds are subject to prepayment prior to maturity by the Issuer at any time, in whole or in part, at a prepayment price equal to 100% of the principal amount to be so prepaid plus accrued interest thereon to the prepayment date. Section 2.03......Form of Series 2002 Bonds. The Series 2002 Bonds shall be in substantially the form set forth in Exhibit "A" hereto. Section 2.04......Authentication and Delivery of Series 2002 Bonds. Immediately following the execution and delivery of this Second Supplemental Indenture, the Issuer will execute and deliver the Series 2002 Bonds to the Trustee, together with an order signed by the Chairman or Vice Chairman of the Issuer calling for the authentication and delivery of such Series 2002 Bond, and the Trustee in accordance with such order, shall authenticate and deliver said Series 2002 Bond as in this Second Supplemental Indenture provided. Prior to the authentication and delivery by the Trustee of the Series 2002 Bonds, there shall be filed with the Trustee: A certificate executed by an officer, chairman of the board, president or vice president of the general partner of the Lessee (i) approving the terms, conditions, manner of issuance, purchase price, delivery and contemplated disposition of the proceeds of the sale of the Series 2002 Bonds and (ii) certifying that no Event of Default has occurred and is continuing under the Second Supplemental Lease or, to the best of such person's knowledge, this Second Supplemental Indenture. 1. A copy, duly certified by the Secretary of the Issuer, of the resolution by the Issuer authorizing the issuance of the Series 2002 Bonds and the execution, delivery and performance of this Second Supplemental Indenture and the Second Supplemental Lease. 2. An original executed counterpart of this Second Supplemental Indenture, the Second Supplemental Lease, the Series 2002 Guaranty and the Series 2002 Bond Purchase Agreement. 3. Copy of the Financing Statement filed to perfect the security interests created herein. 4. A written request, order and authorization to the Trustee on behalf of the Issuer and signed by its Chairman or Vice Chairman to authenticate and deliver a fully registered bond or bonds of a specified denomination or denominations to the purchaser named in the Series 2002 Bond Purchase Agreement in exchange for the consideration described therein. 5. An opinion of a firm of nationally recognized bond attorneys satisfactory to the Trustee to the effect that (i) the issuance of the Series 2002 Bonds has been duly authorized and (ii) the Series 2002 Bonds constitute valid and binding obligations of the Issuer entitled to the benefits of and secured by the Indenture. The proceeds of the sale of the Series 2002 Bonds, if any, shall be deposited into the Project Fund. ARTICLE III....... MISCELLANEOUS Section 3.01......Original Indenture, First Supplemental Indenture and Second Supplemental Indenture as One Document..........As supplemented by this Second Supplemental Indenture, the Original Indenture and the First Supplemental Indenture are in all respects ratified and confirmed, and the Original Indenture, First Supplemental Indenture and this Second Supplemental Indenture shall be read, taken and construed as one and the same instrument. Section 3.02......Severability. If any provision of this Second Supplemental Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions, or in all cases because it conflicts with any other provision or provisions hereof or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative, or unenforceable to any extent whatever. Section 3.03......Captions. The captions or headings in this Second Supplemental Indenture are for the convenience of reference only and in no way define, limit or describe the scope or intent of any provisions or sections of this Second Supplemental Indenture. Section 3.04......Counterparts. This Second Supplemental Indenture may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 3.05......Law Governing Indenture. The effect and meaning of this Second Supplemental Indenture and the rights of all parties hereunder shall be governed by, and construed according to, the laws of the State of Georgia. Section 3.06......Effective Date and Term. This Second Supplemental Indenture shall become effective upon the execution and delivery hereof by the Issuer and the Trustee, and shall continue in full force and effect until payment in full of the Bonds. IN WITNESS WHEREOF, the Issuer has caused these presents to be signed in its name and behalf by its Chairman and its corporate seal to be hereunto affixed and attested by its Secretary, and to evidence its acceptance of the trusts hereby created, the Trustee has caused these presents to be signed in its name and behalf and its official seal to be hereunto affixed and attested by its duly authorized officers, all as of the date first above written. (CORPORATE SEAL) DEVELOPMENT AUTHORITY OF HEARD COUNTY Attest: ____________________________ By:______________________________________ Secretary Chairman (CORPORATE SEAL) THE BANK OF NEW YORK, as Trustee By:___________________________________ Title: EXHIBIT A (FORM OF SERIES 2002 BOND) EX-99 5 exf1_am6.txt EXHIBIT F Exhibit F-1 Troutman Sanders LLP 600 Peachtree Street Atlanta, GA 30308 December 16, 2002 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Statement on Form U-1 of The Southern Company and Southern Power Company (File No. 70-9701) Ladies and Gentlemen: We are familiar with the statement on Form U-1, as amended, referred to above relating to the proposal by The Southern Company ("Southern") and Southern Power Company ("Southern Power") to request the release of jurisdiction over "sale/leaseback" activities. We are of the opinion that Southern and Southern Power are validly organized and duly existing as corporations under the laws of the State of Delaware and in the event that the proposed transactions are consummated in accordance with such statement on Form U-1 and the Securities and Exchange Commission's order: (a) all state laws applicable to the proposed transactions by Southern Power will have been complied with; and (b) the consummation of the proposed transactions will not violate the legal rights of the holders of any securities issued by Southern Power or any associate company thereof. We hereby consent to the use of this opinion in connection with the above-referenced statement on Form U-1. Very truly yours, /s/Troutman Sanders LLP -----END PRIVACY-ENHANCED MESSAGE-----