-----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, KlD4aeCkId7Du9jorMOriSQhgwmdqJo/HNlHTZ0ksUvBcz2MFEO5Z1zQ1keh7RCW /pmN0CQzRJ54/KUrvsLqAw== 0000092122-96-000079.txt : 19960701 0000092122-96-000079.hdr.sgml : 19960701 ACCESSION NUMBER: 0000092122-96-000079 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960628 SROS: NONE 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: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03526 FILM NUMBER: 96588222 BUSINESS ADDRESS: STREET 1: 64 PERIMETER CENTER EAST CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 770-393-06 MAIL ADDRESS: STREET 1: 64 PERIMETER CENTER EAST CITY: ATLANTA STATE: GA ZIP: 30346 11-K 1 FORM 11-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 11-K [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-3526 A. Full title of the plan: THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: THE SOUTHERN COMPANY 270 Peachtree Street, NW Atlanta, Georgia 30303 THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN FORM 11-K DECEMBER 31, 1995 TABLE OF CONTENTS
age No. Exhibits 3 Report of Independent Public Accountants 4 Statement of Net Assets Available for Benefits, With Fund Information-- December 31, 1995 5 Statement of Net Assets Available for Benefits, With Fund Information-- December 31, 1994 7 Statement of Changes in Net Assets Available for Benefits, With Fund Information-- for the year ended December 31, 1995 8 Statement of Changes in Net Assets Available for Benefits, With Fund Information-- for the year ended December 31, 1994 10 Notes to Financial Statements and Schedules 11 Schedule I - Item 27a - Schedule of Assets Held for Investment Purposes-- December 31, 1995 17 Schedule II - Item 27d - Schedule of Reportable Transactions--for the year ended December 31, 1995 20 Signature 21 Consent of Independent Public Accountants 22 2
EXHIBITS A - Amended and Restated Plan Document for The Southern Company Employee Savings Plan effective July 3, 1995 and First and Second Amendment thereto. (Designated in Form 10-K for the year ended December 31, 1995, File No. 1-3526 as Exhibit 10(a) 63.) B - Copies of Internal Revenue Service determination letters dated March 5, 1996 and June 10, 1996. C - Trust Agreement between Southern Company Services, Inc. and Merrill Lynch Trust Company of Florida. 3 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Savings Plan Committee of The Southern Company Employee Savings Plan: We have audited the accompanying statements of net assets available for benefits, with fund information of THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN (the "Plan") as of December 31, 1995 and 1994, and the related statements of changes in net assets available for benefits, with fund information for the years then ended. These financial statements and the schedules referred to below are the responsibility of the Savings Plan Committee in its capacity as administrator of the Plan (the "Administrator"). Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Administrator, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1995 and 1994, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules, as listed in the accompanying table of contents, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The fund information in the statements of net assets available for benefits and the statements of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Atlanta, Georgia May 2, 1996 4 Item 1. THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION DECEMBER 31, 1995 Page 1 of 2
Fund Information (Note 1) ---------------------------------------------------------------------- Participant Directed Portion ---------------------------------------------------------------------- Retirement Preservation Fully Managed Equity Index Core Fixed Special Value Total Fund Fund Fund Income Fund Fund ------------- ------------- ------------- ------------- ----------- ------------- Cash $ 487,655 $ 24,767 $ 31,765 $ 20,408 $ 381 $ - ------------- ------------- ------------- ------------ ----------- ----------- Investments, at fair value (Schedule I and Notes 2 and 3): Temporary investments 3,714,290 182,521 234,408 150,398 306,100 - Treasury securities 22,259,990 - 21,324,149 - 935,841 - Agency securities 14,036,000 - 14,036,000 - - - Corporate bonds 42,847,517 - 42,447,865 - 399,652 - Common stock--excluding common stock of The Southern Company 60,123,400 - 60,123,400 - - - Common stock--The Southern Company 1,674,952,587 - - - - - Common/collective trusts 197,436,229 108,267,348 - 89,168,881 - - Registered investment companies 12,206,266 - - - - 5,276,559 Loans due from participants 86,855,919 - - - - - -------------- ------------ ------------ ----------- ---------- ----------- Total investments 2,114,432,198 108,449,869 138,165,822 89,319,279 1,641,593 5,276,559 -------------- ------------ ------------ ----------- ----------- ----------- Receivables: Company contributions 1,778,109 - - - - - Participant contributions 2,968,214 258,088 371,656 370,387 9,474 31,376 Interest and dividends 1,143,875 - 1,117,600 - 26,275 - Receivable for securities sold 2,073,337 222,818 54,063 69,702 - - -------------- ------------ ------------ ----------- ----------- ----------- Total receivables 7,963,535 480,906 1,543,319 440,089 35,749 31,376 -------------- ------------ ------------ ----------- ----------- ----------- NET ASSETS AVAILABLE FOR BENEFITS $2,122,883,388 $108,955,542 $139,740,906 $89,779,776 $1,677,723 $5,307,935 ============== ============ ============ =========== ========== ========== The accompanying notes are an integral part of this statement.
5
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION DECEMBER 31, 1995 Page 2 of 2 Fund Information (Note 1) Non-Participant Participant Directed Portion Directed Portion Global International Participants' The Southern Company Stock Allocation Fund Equity Fund Loan Fund Fund --------------- ------------- ------------- ----------------------------- ASSETS: Cash $ - $ - $ - $ 205,046 $ 205,288 ----------- ----------- ------------ ------------- ------------- Investments, at fair value (Schedule I and Notes 2 and 3): Temporary investments - - - 1,328,004 1,512,859 Treasury securities - - - - - Agency securities - - - - - Corporate bonds - - - - - Common stock--excluding common stock of The Southern Company - - - - - Common stock--The Southern Company - - - 775,349,606 899,602,981 Common/collective trusts - - - - - Registered investment companies 5,217,404 1,712,303 - - - Loans due from participants - - 86,855,919 - - ----------- ----------- ------------ ------------- ------------- Total investments 5,217,404 1,712,303 86,855,919 776,677,610 901,115,840 ----------- ----------- ------------ ------------- ------------- Receivables: Company contributions - - - - 1,778,109 Participant contributions 28,319 8,749 - 1,890,165 - Interest and dividends - - - - - Receivable for securities sold - - - 1,726,754 - ----------- ----------- ------------ ------------- ------------- Total receivables 28,319 8,749 - 3,616,919 1,778,109 ----------- ----------- ------------ ------------- ------------- NET ASSETS AVAILABLE FOR BENEFITS $5,245,723 $1,721,052 $86,855,919 $780,499,575 $903,099,237 ========== ========== =========== ============ ============ The accompanying notes are an integral part of this statement.
6 THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION DECEMBER 31, 1994
Fund Information (Note 1) Non-Participant Participant Directed Portion Directed Portion Fixed Income Equity S&P 500 Participants' The Southern Company Total Fund Fund Index Fund Loan Fund Stock Fund ---------------- ------------- -------- ----------- ------------ ------------------- ASSETS: Investments, at fair value (Schedule I and Notes 2 and 3): Temporary investments $ 51,602,378 $ 37,764,434 $ 6,121,923 $ 832,652 $ - $ 4,775,531 $ 2,107,838 Certificates of deposit 60,500,000 60,500,000 - - - - - Common stock--excluding common stock of The Southern Company 104,715,606 - 104,715,606 - - - - Common stock--The Southern Company 1,299,493,706 - - - - 603,212,501 696,281,205 Mutual fund equity investments 54,285,339 - - 54,285,339 - - - Investments, at contract value: Guaranteed investment contracts 1,700,296 1,700,296 - - - - - Loans due from participants 78,091,627 - - - 78,091,627 - - -------------- ------------ ------------ ----------- ----------- ------------ ---------- Total investments 1,650,388,952 99,964,730 110,837,529 55,117,991 78,091,627 607,988,032 698,389,043 Interest and dividends receivable 1,278,263 1,088,687 148,303 3,300 - 21,671 16,302 Other current assets 387,814 - 281,814 - - - 106,000 -------------- ----------- ------------ ----------- ----------- ------------ ---------- Total Assets 1,652,055,029 101,053,417 111,267,646 55,121,291 78,091,627 608,009,703 698,511,345 -------------- ------------ ------------ ----------- ----------- ------------ ------------ LIABILITIES: Liabilities for securities purchased 1,246,481 - 769,261 - - 477,220 - -------------- ------------ ------------ ----------- ----------- ----------- ------------ NET ASSETS AVAILABLE FOR BENEFITS $1,650,808,548 $101,053,417 $110,498,385 $55,121,291 $78,091,627 $607,532,483 $698,511,345 ============== ============ ============ =========== =========== ============ ============ The accompanying notes are an integral part of this statement.
7
Item 2. THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1995 Page 1 of 2 Fund Information (Note 1) Participant Directed Portion Retirement Fixed Income S&P 500 Index Preservation Fully Managed Equity Index Total Fund Equity Fund Fund Fund Fund Fund -------------- ------------ ----------- -------------- ------------- ------------- ---------- INVESTMENT INCOME: Interest and dividends $ 95,448,680 $ 3,081,391 $ 958,642 $ 161,018 $ 3,285,268 $ 45,741 $ 43,575 Net appreciation in fair value of investments (Note 3) 363,409,909 27,780 16,884,915 11,099,259 - 12,809,460 10,600,954 ------------- ----------- ------------ ------------ ------------- ------------ ------------- Net investment income 458,858,589 3,109,171 17,843,557 11,260,277 3,285,268 12,855,201 10,644,529 CONTRIBUTIONS (Note 4): Participants' 74,617,433 3,331,270 4,639,393 3,891,748 3,536,517 5,162,698 4,685,949 Company 45,004,423 - - - - - - DISTRIBUTIONS TO PARTICIPANTS (106,405,605) (5,639,596) (4,859,229) (2,066,425) (4,226,528) (2,094,987) (1,688,906) NEW LOANS ISSUED - (1,191,759) (1,573,138) (1,068,899) (1,590,916) (1,874,875) (1,152,809) LOAN PRINCIPAL PAYMENTS - 1,005,855 1,291,985 1,086,338 955,267 1,427,474 1,172,144 NET TRANSFERS INTO FUNDS - (101,668,358) (127,840,953) (68,224,330) 106,995,934 124,265,395 76,118,869 -------------- ------------ ------------ ------------ ------------- ------------- ------------- CHANGE IN NET ASSETS AVAILABLE FOR BENEFITS DURING YEAR 472,074,840 (101,053,417) (110,498,385) (55,121,291) 108,955,542 139,740,906 89,779,776 NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1994 1,650,808,548 101,053,417 110,498,385 55,121,291 - - - -------------- ------------ ------------ ------------ ------------- ----------- ------------- NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1995 $2,122,883,388 $ - $ - $ - $108,955,542 $139,740,906 $ 89,779,776 ============== ============ ============ ============ ============ ============ ============= The accompanying notes are an integral part of this statement.
8
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1995 Page 2 of 2 Fund Information (Note 1) Non-Participant Participant Directed Portion Directed Portion Core Fixed Special Global Allocation International Participants' The Southern Company Income Fund Value Fund Fund Equity Fund Loan Fund Stock Fund ----------- ---------- ----------------- ----------- --------- -------------------- INVESTMENT INCOME: Interest and dividends $ 43 $ 85,504 $ 323,719 $ - $ 5,832,640 $ 38,506,594 $ 43,124,545 Net appreciation (depreciation) in fair value of investments (Note 3) 53,862 88,755 (99,269) 43,445 - 138,245,963 173,654,785 ---------- ---------- ----------- ---------- ------------ ------------- ------------- Net investment income 53,905 174,259 224,450 43,445 5,832,640 176,752,557 216,779,330 CONTRIBUTIONS (Note 4): Participants' 62,846 181,885 176,878 60,812 - 48,887,437 - Company - - - - - - 45,004,423 DISTRIBUTIONS TO PARTICIPANTS (4,486) (7,799) (977) (49) (339,101) (35,383,111) (50,094,411) NEW LOANS ISSUED (6,375) (30,665) (41,822) (6,480) 35,836,262 (24,750,061) (2,548,463) LOAN PRINCIPAL PAYMENTS 15,490 52,218 52,181 20,887 (26,732,870) 16,642,634 3,010,397 NET TRANSFERS INTO FUNDS 1,556,343 4,938,037 4,835,013 1,602,437 (5,832,639) (9,182,364) (7,563,384) ----------- ---------- ----------- ---------- ------------ ----------- ---------- CHANGE IN NET ASSETS AVAILABLE FOR BENEFITS DURING YEAR 1,677,723 5,307,935 5,245,723 1,721,052 8,764,292 172,967,092 204,587,892 NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1994 - - - - 78,091,627 607,532,483 698,511,345 ---------- --------- ----------- ---------- ------------ ------------- ------------- NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1995 $1,677,723 $5,307,935 $5,245,723 $1,721,052 $86,855,919 $780,499,575 $903,099,237 ========== ========== ========== ========== =========== ============ ============ The accompanying notes are an integral part of this statement.
9
THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1994 Fund Information (Note 1) Non-Participant Participant Directed Portion Directed Portion Fixed Income Equity S&P 500 Participants' The Southern Company Total Fund Fund Index Fund Loan Fund Stock Fund INVESTMENT INCOME: Interest and dividends $ 86,486,040 $ 4,517,561 $ 1,250,458 $ 1,453,443 $ 5,160,542 $ 34,007,672 $ 40,096,364 Net (depreciation) appreciation in fair value of investments (Note 3) (117,589,549) (58,474) 5,293,424 (743,473) - (54,682,308) (67,398,718) -------------- ----------- ----------- ---------- ----------- ------------ ------------ Net investment income (31,103,509) 4,459,087 6,543,882 709,970 5,160,542 (20,674,636) (27,302,354) CONTRIBUTIONS (Note 4): Participants' 70,615,207 6,766,645 9,280,520 7,553,630 - 47,014,412 - Company 42,806,039 - - - - - 42,806,039 DISTRIBUTIONS TO PARTICIPANT (116,228,235) (10,486,684) (6,855,204) (3,425,344) (2,427,995) (37,367,800) (55,665,208) NEW LOANS ISSUED - (2,734,073) (3,567,316) (1,784,289) 31,822,210 (18,485,350) (5,251,182) LOAN PRINCIPAL PAYMENTS - 2,122,958 2,689,242 2,122,176 (28,099,577) 14,733,206 6,431,995 NET TRANSFERS INTO FUNDS - (3,921,496) (9,826,110) 1,503,771 (5,160,542) 16,222,442 1,181,935 -------------- ------------ ----------- ----------- ----------- ------------ ------------ CHANGE IN NET ASSETS AVAILABLE FOR BENEFITS DURING YEAR (33,910,498) (3,793,563) (1,734,986) 6,679,914 1,294,638 1,442,274 (37,798,775) NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1993 1,684,719,046 104,846,980 112,233,371 48,441,377 76,796,989 606,090,209 736,310,120 -------------- ------------ ------------ ----------- ----------- ------------ ------------ NET ASSETS AVAILABLE FOR BENEFITS AT DECEMBER 31, 1994 $1,650,808,548 $101,053,417 $110,498,385 $55,121,291 $78,091,627 $607,532,483 $698,511,345 ============== ============ ============ =========== =========== ============ ============ The accompanying notes are an integral part of this statement.
10 THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN NOTES TO FINANCIAL STATEMENTS AND SCHEDULES DECEMBER 31, 1995 and 1994 1. Description of the Plan: The following is a brief description of The Southern Company Employee Savings Plan (the "Plan"), formerly the Employee Savings Plan for The Southern Company System, and the administration thereof and is provided for general information purposes only. The Plan includes employees, certain former employees, and retirees of ten subsidiaries of The Southern Company: Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Communications Services, Inc., Southern Company Services, Inc., Southern Development and Investment Group, Inc., Southern Electric International, Inc., and Southern Nuclear Operating Company, Inc. (the "Employing Companies"). Participants should refer to the plan document or the summary plan description for a more complete description of the Plan's provisions. The original Plan effective March 1, 1976 is a defined contribution plan established by The Southern Company System (the "Company") for the primary purposes of creating added employee interest in the affairs of the Company and supplementing retirement and death benefits of employees. Under the Plan, amounts deducted from the compensation or deferred from compensation by an employee (a "Participant") are contributed to the Plan on the Participant's behalf and are supplemented by contributions of the Employing Companies. The Plan was amended and restated effective as of July 3, 1995 in order to incorporate a variety of plan design and other changes. This amendment and restatement shall not be applicable to former Participants or Beneficiaries of former Participants whose participation in the Plan terminated prior to July 3, 1995. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The responsibility for operation and administration of the Plan is vested in The Southern Company Employee Savings Plan Committee (the "Committee"), which consist of the individuals serving in the positions of Director, System Compensation and Benefits of The Southern Company; Vice-President, Human Resources of The Southern Company; and Comptroller of The Southern Company or any other position or positions that succeed to the duties of the foregoing positions. However, the Plan allows a Participant to exercise control over the assets in his account, with the exception of The Southern Company matching contributions, and is intended to qualify as a plan described in Section 404(c) of ERISA and Federal Regulation 2550.404(c)-1. The Board of Directors of Southern Company Services, Inc. (the "Board") has appointed a trustee for the Plan and has appointed outside investment managers to manage the portfolio and investment options in which a Participant may invest his account. The Board has the responsibility of appointing and removing the trustee. The trustee is authorized to purchase and sell securities subject to the funding policy provided by the Pension Fund Investment Review Committee of the Company. Effective July 3, 1995, the trustee and recordkeeping functions of the Plan were transferred to Merrill Lynch Trust Company of Florida (the "Trustee") and Merrill Lynch, Pierce, Fenner & Smith, Inc. (the "Recordkeeper"), respectively. The Recordkeeper is responsible for maintaining appropriate records of investment transactions, participant account balances, and, under the direction of the Committee, for distributions from Participants' accounts. 11 Participation Generally, all regular employees of the Employing Companies are eligible to participate in the Plan provided that they have completed at least one year of service. This eligibility requirement complies with the provisions of the Internal Revenue Code of 1986 (the "Code") and ERISA, as amended. Subject to the limitations of the Code, a Participant may contribute into his investment fund any whole percentage which is not less than 1% nor more than 16% of his compensation, as defined in the Plan ("Voluntary Participant Contribution"). In addition, a Participant may elect to have his compensation, as defined in the Plan, reduced by a whole percentage which is not less than 1% nor more than 16% of his compensation, such amount to be contributed on his behalf to his account under the Plan ("Elective Employer Contribution"). A Participant may not contribute or have contributed on his behalf in total more than 16% of his compensation as defined in the Plan. Participants may invest in one or more of the investment funds, provided such investments are made in one-percent increments totaling, but not exceeding 100%. A Participant may prospectively change the percentage of his compensation that he has authorized as the Elective Employer Contribution to be made on his behalf or his Voluntary Participant Contribution to another permissible percentage in accordance with procedures established by the Committee. Such election shall be effective as soon as practicable after it is made. The Employing Companies currently contribute on behalf of each of the Participants in their employ an amount equal to 75% of (a) the Elective Employer Contribution made on a Participant's behalf, plus (b) his Voluntary Participant Contribution, to the extent such contributions, when combined, do not exceed 6% of his compensation, as defined in the Plan ("Employer Matching Contribution"). All Employer Matching Contributions are invested in The Southern Company Stock Fund. Elective Employer Contributions for Participants who are defined as "highly compensated employees" under Section 414(q) of the Code are subject to additional limitations designed to prohibit discrimination in favor of the "highly compensated employees." Certain limitations also apply to Voluntary Participant Contributions and Employer Matching Contributions allocated to highly compensated employees. Loans to Participants Plan Participants also have the right to borrow a portion of their account balances under the terms of the Plan. Under the terms of the Plan, all loans are considered to be earmarked investments of the Participant's account, and any repayment of principal and interest is reinvested in accordance with the Participant's investment direction in effect on the date of such repayments. The Committee may direct the Trustee to make a loan or loans from the Plan to any Participant subject to certain limitations. All loans bear a rate of interest which remains fixed over the term of the loan and may be secured only by a Participant's account balance. The repayment of such loans is made through payroll deductions. 12 Account Distributions Upon separation from service with the Company, the total value of a Participant's account will be available to him or his Beneficiary, in the event of his death. At retirement, a Participant may elect a lump-sum payment or up to 20 annual installments, provided he does not extend installments beyond his life expectancy. Under certain conditions of financial emergency, the Committee may accelerate the payment time of a portion or all of the remaining installments. However, a Participant may also elect to leave all of his funds in the Plan until mandatory distributions begin at age 70 1/2. Distributions made because of disability, death, or termination of employment are made only as single lump-sum distributions. Upon termination of employment for any reason other than retirement, death, or total and permanent disability, the value of a Participant's account will be distributed to him in a single lump sum as soon as practical if one of the following occurs: The vested amount in the account is not more than $3,500; or The Participant elects in writing to receive a distribution of his account. If the value of the account is greater than $3,500, the Participant may defer the distribution of his account until not later than April 1 of the calendar year following the calendar year in which he reaches age 70 1/2. If the distribution is being made after a Participant's death, and he has not named a Beneficiary or if that beneficiary has predeceased him, his account will be distributed, in preferential order to the following: his surviving spouse, his surviving children (equally), his surviving parents (equally), his surviving brothers and sisters (equally), or his executors or administrators. If the Participant has been married for at least one year, his Beneficiary will be his spouse--unless his spouse consents in writing not to be his Beneficiary and such written consent is witnessed by a notary public. The Plan allows Participants to make routine withdrawals from their accounts in the following order: after-tax contributions, earnings from after-tax contributions, and up to 50 percent of employer matching funds. This type of withdrawal does not require any hardship qualification. In order to withdraw before-tax contributions, the participant must establish that a hardship situation exists. The Committee will determine if a withdrawal is for immediate and heavy financial need. Early withdrawals can be made for hardship cases, such as pending eviction from a principal residence, certain medical expenses, college tuition, or the down payment on the Participant's principal residence. Vesting Participants are immediately vested in their Elective Employer Contributions, Voluntary Participant Contributions, and Employer Matching Contributions, plus actual earnings thereon. Participants As of December 31, 1995 and 1994, 25,303 and 25,446 employees, respectively, were participating in the Plan. Participants' Accounts Individual accounts are maintained for each of the Plan's Participants to reflect the particular Participant's contributions and related employer contributions, as well as the Participant's share of the Plan's income and any related administrative expenses. 13 The Plan assigns units to its Participants, effective in 1995, with the change from monthly to daily valuation of Participant accounts. At December 31, 1995, 192,126,465 units were assigned to Plan Participants. Unit values for each investment fund were as follows at December 31, 1995: Retirement Preservation Fund $ 1.00 Fully Managed Fund 11.00 Equity Index Fund 40.49 Core Fixed Income Fund 10.45 Special Value Fund 17.10 Global Allocation Fund 13.88 International Equity Fund 11.13 The Southern Company Stock Fund 24.63 Plan Termination Although the Company has not expressed any intent to terminate the Plan, the Company has the right to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, each Participant's fully vested account balance shall be distributed to the Participant in a non-discriminatory manner, as soon as practicable after such termination. 2. Investment Options: During 1994 and the first six months of 1995, the Plan had four investment options available. Each investment fund had specific guidelines and limitations as to the type of securities eligible for investment. The primary types of securities eligible for investment by each fund were as follows: (1) fixed income obligations for the Fixed Income Fund, (2) common or capital stocks or securities convertible into common or capital stocks of corporations other than The Southern Company or its subsidiaries for the Equity Fund, (3) common stock of The Southern Company for The Southern Company Stock Fund, and (4) common stock selected from time to time to comprise Standard and Poor's Composite Index of 500 Stocks for the S&P 500 Index Fund. In addition, monies pending investment held by each of the funds described above were temporarily invested in short-term, interest-bearing obligations. On July 3, 1995, the trustee and recordkeeping functions of the Plan were transferred to Merrill Lynch Trust Company of Florida and Merrill Lynch, Pierce, Fenner & Smith, Inc., respectively. The Plan now offers eight investment options. Participants may direct their investments into one or more of the following funds: (1) Retirement Preservation Fund investing in a common/collective trust which invests primarily in a broadly diversified portfolio of guaranteed investments contracts and in U.S. government securities, (2) Fully Managed Fund investing in stocks, bonds, and cash equivalents, (3) Equity Index Fund investing in a common/collective trust which invests seeking to approximate the total return of the Standard & Poor's 500 Composite Stock Index, (4) Core Fixed Income Fund investing in all sectors of the U.S. domestic bond market, (5) Special Value Fund investing in a mutual fund which invests seeking long-term growth of capital by investing in a diversified portfolio of securities, (6) Global Allocation Fund investing in a mutual fund which invests seeking high return from a global portfolio of U.S. and foreign stocks and bonds and cash equivalents, (7) International Equity Fund investing in a mutual fund which invests seeking capital appreciation through investment in a diversified portfolio of primarily equity securities of issuers located in countries other than the United States, and (8) The Southern Company Stock Fund investing in common stock of The Southern Company. The Company match will continue to be non-participant directed and will be invested in The Southern Company Stock Fund. Investment management and administrative fees for the funds listed as items (1), (2), (3), and (8) above and certain other plan and trust expenses are paid by the Employing Companies. Investment management and administrative fees for the funds listed as items (4), (5), (6), and (7) above are paid from the particular investment fund to which they relate. The Plan's brokerage fees are included in the cost of the investments or netted against the sales proceeds. The objectives of the respective funds are not necessarily an indicator of 14 actual performance. Investments in common/collective trusts are stated at the fair value of the underlying assets held by the fund except for benefit- responsive investment contracts included in the Retirement Preservation Fund which are carried at contract value (cost plus accrued interest). 3. Accounting Policies: Basis of Accounting The accompanying financial statements have been prepared on the accrual basis of accounting. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported activity during the reporting period. Actual results could differ from those estimates. Presentation Certain prior year amounts have been reclassified to conform with current presentation. Investments Investments are stated at fair value as determined by the trustee from quoted market price information. In 1994, investment contracts were reported at contract value. The net appreciation (depreciation) in fair value of investments in the accompanying statements of changes in net assets available for benefits reflects the net difference between the market value and the cost of investments bought during the year and the net difference between market value and the beginning of the year market value of assets held, sold, or distributed. The fair market values of individual assets which represent 5% or more of the plan's net assets as of December 31, 1995 and 1994 are as follows:
1995 1994 The Southern Company common stock $1,674,952,587 $1,299,493,706 Merrill Lynch Retirement Preservation Trust 108,267,348 -
4. Contributions: Contributions to the Plan by the Employing Companies and their respective Participants for the years ended December 31, 1995 and 1994, are set forth below:
1995 Contributions -------------------------------------------------------- Company Participants' Total -------- ------------ ----- Alabama Power Company ...................................... $11,609,336 $19,483,958 $31,093,294 Georgia Power Company....................................... 18,817,029 30,684,608 49,501,637 Gulf Power Company.......................................... 2,164,999 3,947,473 6,112,472 Mississippi Power Company................................... 2,218,419 3,802,242 6,020,661 Savannah Electric and Power Company......................... 885,183 1,521,768 2,406,951 Southern Communications Services, Inc....................... 86,313 142,663 228,976 Southern Company Services, Inc.............................. 5,874,317 9,457,752 15,332,069 Southern Development and Investment Group, Inc.............. 66,384 100,953 167,337 Southern Electric International, Inc........................ 602,820 992,185 1,595,005 Southern Nuclear Operating Company, Inc..................... 2,679,623 4,483,831 7,163,454 ----------- ----------- ------------ $45,004,423 $74,617,433 $119,621,856 =========== =========== ============
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1994 Contributions ------------------------------------------------------- Company Participants' Total ------- ------------ ----- Alabama Power Company....................................... $11,131,568 $18,538,528 $29,670,096 Georgia Power Company....................................... 18,472,108 29,904,712 48,376,820 Gulf Power Company.......................................... 2,072,711 3,754,217 5,826,928 Mississippi Power Company................................... 2,257,013 3,884,010 6,141,023 Savannah Electric and Power Company......................... 853,518 1,468,600 2,322,118 Southern Company Services, Inc.............................. 5,059,619 8,160,072 13,219,691 Southern Electric International, Inc........................ 375,550 603,218 978,768 Southern Nuclear Operating Company, Inc..................... 2,583,952 4,301,850 6,885,802 ----------- ----------- ------------ $42,806,039 $70,615,207 $113,421,246 =========== =========== ============
5. Tax Status: The Plan received a determination letter dated June 10, 1996 from the Internal Revenue Service which states that the Plan, as amended through March 4, 1996, is in compliance with Section 401(a) and applicable subsections of Section 410(b) of the Code as of that date. In the opinion of the Company's management, the Plan is currently operating in compliance with applicable provisions of the Code. Therefore, the Plan administrator believes that the Plan was qualified and the related trust was tax-exempt as of December 31, 1995 and 1994; accordingly, no provision for federal income taxes has been made in the accompanying financial statements. Employer contributions and income of the Plan are not taxable to Participants until withdrawals or distributions are made. 6. Reconciliation to the Form 5500: As of December 31, 1995 and 1994, the Plan had approximately $5,833,206 and $23,819,529, respectively, of pending distributions to Participants who elected to withdraw from the Plan. These amounts are recorded as a liability in the Plan's Form 5500; however, these amounts are not recorded as a liability in the accompanying statements of net assets available for benefits in accordance with generally accepted accounting principles. The following table reconciles net assets available for benefits for the years ended December 31, 1995 and 1994 per the financial statements to the Form 5500 to be filed by the Company:
Net Assets Available Benefits Distributions for Benefits Payable to Participants 1995 1994 ------- --------------- ---- ---- Per financial statements $ - $106,405,605 $2,122,883,388 $1,650,808,548 Accrued benefit payments 5,833,206 5,833,206 (5,833,206) (23,819,529) Reversal of 1994 accrual for benefit payments - (23,819,529) - - ----------- ------------ ------------- --------------- Per Form 5500 $5,833,206 $88,419,282 $2,117,050,182 $1,626,989,019 ========== =========== ============== ==============
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Schedule I Page 1 of 3 THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1995 Description of Investment Including Maturity Date, Rate of Interest, Identity of Issuer, Borrower Collateral, Par or Maturity Value, (a) (b) Lessor, or Similar Party (c) Number of Shares (d)Cost (e) Current Value ------------------------------ ------------------------------------- ---- ------------- RETIREMENT PRESERVATION FUND: Temporary Investment: * Merrill Lynch Trust Company, Merrill Lynch CMA Money Fund par $1 182,521 shares $ 182,521 $ 182,521 Common/Collective Trust: * Merrill Lynch Trust Company, Merrill Lynch Retirement Preservation Trust Fund par $1 108,267,348 shares 108,267,348 108,267,348 ----------- ----------- Total Retirement Preservation Fund 108,449,869 108,449,869 ----------- ----------- FULLY MANAGED FUND: Temporary Investment: * Merrill Lynch Trust Company, Merrill Lynch CMA Money Fund par $1 234,408 shares 234,408 234,408 ----------- ----------- Treasury Securities: United States Treasury Bond NR, 6.25%, due 08/15/23 3,041,563 3,086,730 United States Treasury Note NR, 5.75%, due 08/15/03 17,195,871 18,237,419 ------------ ----------- Treasury Securities 20,237,434 21,324,149 ----------- ----------- Agency Security: Federal Home Loan Mortgage Corp. Disc Note, 0%, due 01/02/96 14,027,033 14,036,000 ------------ ---------- Corporate Bonds: Anadarko Petroleum Corp Notes BBB+, 5.875% ,due 10/15/03 3,800,360 3,909,560 Bank Hawaii Subordinated Note A-, 6.875%, due 06/01/03 5,025,000 5,160,450 Bankers Trust NY Corp Sub Deb FLT Rate Note AA+, FLT%, due 03/19/03 4,659,510 4,878,200 Cardinal Health Inc Notes. A-, 6.500%, due 02/15/04 1,317,940 1,317,485 Carnival Corporation Notes A-, 6.150%, due 10/01/03 2,951,790 2,950,020 Chemical Banking Corp Subordinated Note A-, 6.500%, due 01/15/09 1,996,160 2,009,640 Chrysler Financial Corp. Notes A-, 5.625%, due 01/15/99 4,859,950 4,975,050 Enron Corporation Senior Subordinated Note BBB, 6.750%, due 07/01/05 3,966,680 4,087,880 NM General Motors Acceptance BE Semi-Pay A-, 6.625%, due 09/19/02 3,996,400 4,097,760 Hertz Corporation Senior Notes A, 6.375%, due 10/15/05 1,004,610 992,750 Nabisco Incorporated Notes BBB, 6.700%, due 06/15/02 4,961,500 5,084,450 Philadelphia Electric Co First and Refunding Mtg BBB+, 5.625%, due 11/01/01 960,280 973,740 Tenneco Incorporated Notes BBB-, 6.500%, due 12/15/05 1,986,200 2,010,880 ---------- ---------- Corporate Bonds 41,486,380 42,447,865 ----------- ---------- Common Stocks: American International Group Incorporated 40,000 shares 2,487,606 3,700,000 Archer Daniels Midland 200,000 shares 3,485,935 3,600,000 Carnival Corporation Cl A 172,000 shares 3,885,270 4,192,500 Columbia/HCA Healthcare Corp 90,000 shares 4,017,682 4,567,500 Federal National Mortgage Association 20,000 shares 1,632,998 2,477,500 General Electric 56,500 shares 2,168,588 4,068,000 General Motors Corp 87,400 shares 4,269,310 4,621,275 Glaxo PLC Sponsored American Depository Receipts 170,200 shares 4,130,843 4,786,875 Hanson PLC Sponsored American Depository Receipts 200,000 shares 3,286,390 3,050,000 Merck & Company Inc 50,000 shares 2,349,148 3,281,250 NationsBank Corporation 54.000 shares 3,029,640 3,759,750 Pfizer Inc 40,000 shares 1,701,777 2,520,000 St Paul Companies PV1 50 70,000 shares 3,469,211 3,893,750 Wal-Mart Stores Inc 170,000 shares 4,278,484 3,782,500 Williams Companies Del 60,000 shares 2,099,701 2,632,500 YPF Sociedad Anon American Depository Receipts 240,000 shares 4,700,777 5,190,000 ----------- -------- Common Stocks 50,993,360 60,123,400 ----------- ----------- Total Fully Managed Fund 126,978,615 138,165,822 ----------- ----------- * Represents a party-in-interest to the Plan. The accompanying notes are an integral part of this schedule.
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Schedule I Page 2 of 3 THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1995 Description of Investment Including Maturity Date, Rate of Interest, Identity of Issuer, Borrower Collaterial, Par or Maturity Value, (a) (b) Lessor, or Similar Party (c) Number of Shares (d)Cost (e) Current Value EQUITY INDEX FUND: Temporary Investment: * Merrill Lynch Trust Company, Merrill Lynch CMA Money Fund par $1 150,398 shares $ 150,398 $ 150,398 Common/Collective Trust: * Merrill Lynch Trust Company, Merrill Lynch Equity Index Trust -- Tier III par $1 2,202,245 shares 78,959,395 89,168,881 ---------- ---------- Total Equity Index Fund 79,109,793 89,319,279 ---------- ---------- CORE FIXED INCOME FUND: Temporary Investments: * Merrill Lynch Trust Company, Merrill Lynch CMA Money Fund par $1 2,956 shares 2,956 2,956 * Merrill Lynch Trust Company, Merrill Lynch Institutional Fund par $1 303,144 shares 303,144 303,144 --------- ---------- Temporary Investments 306,100 306,100 --------- ---------- Treasury Securities: United States, US Treasury Bond NR 6.875%, due 08/15/25 109,687 112,781 United States, US Treasury Note NR 6.250%, due 02/15/03 408,624 417,312 United States, US Treasury Note NR 5.75% , due 10/31/00 401,000 405,748 --------- ---------- Treasury Securities 919,311 935,841 --------- ---------- Corporate Bond: Public Service Electric & Gas Co., First Refunding Mortgage Bonds A-, 6.125%, due 08/01/02 392,944 399,652 --------- ---------- Total Core Fixed Income Fund 1,618,355 1,641,593 --------- ---------- SPECIAL VALUE FUND: Investment in Registered Securities: * Merrill Lynch Asset Management, Merrill Lynch Special Value Fund, Inc. -- Class A par $0.10 308,571 shares 5,184,255 5,276,559 --------- ---------- GLOBAL ALLOCATION FUND: Investment in Registered Securities: * Merrill Lynch Asset Management, Merrill Lynch Global Allocation Fund, Inc. -- Class A par $0.10 375,894 shares 5,316,181 5,217,404 --------- ---------- INTERNATIONAL EQUITY FUND: Investment in Registered Securities: * Merrill Lynch Asset Management, Merrill Lynch International Equity Fund -- Class A par $0.10 153,845 shares 1,668,766 1,712,303 --------- ---------- LOANS DUE FROM PARTICIPANTS (interest rates vary from 6.0% to 11.5%) 86,855,919 86,855,919 ---------- ---------- THE SOUTHERN COMPANY STOCK FUND--PARTICIPANT DIRECTED PORTION: Temporary Investment: * Merrill Lynch Trust Company, Merrill Lynch CMA Money Fund par $1 1,328,004 shares 1,328,004 1,328,004 Common Stock: * The Southern Company, The Southern Company Common Stock par $5 31,486,278 shares 504,056,585 775,349,606 ----------- ----------- Total Southern Company Stock Fund -- Participant Directed Portion 505,384,589 776,677,610 ----------- ----------- *Represents a party-in-interest to the Plan. The accompanying notes are an integral part of this schedule.
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Schedule I Page 3 of 3 THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1995 Description of Investment Including Maturity Date, Rate of Interest, Identity of Issuer, Borrower (c) Collateral, Par or Maturity Value (a) (b) Lessor, or Similar Party Number of Shares (d) Cost (e) Current Value ------------------------- --------------------------------- ---- ------------- THE SOUTHERN COMPANY STOCK FUND-- NON-PARTICIPANT DIRECTED PORTION: Temporary Investment: * Merrill Lynch Trust Company, Merrill Lynch CMA Money Fund par $1 1,512,859 shares $ 1,512,859 $ 1,512,859 Common Stock: * The Southern Company, The Southern Company Common Stock par $5 36,532,101 shares 543,776,314 899,602,981 ------------ ------------ Total Southern Company Stock Fund-- Non-Participant Directed Portion 545,289,173 901,115,840 ------------ ------------ TOTAL INVESTMENT OF ALL FUNDS $1,465,855,515 $2,114,432,198 ============== ============== (NOTE) The last sale price (New York Stock Exchange composite transactions) for The Southern Company common stock on June 24, 1996 was $23.25 as compared to a price of $24.625 on December 31, 1995. * Represents a party-in-interest to the Plan. The accompanying notes are an integral part of this schedule.
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Schedule II THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN Item 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1995 (h) Current (b) Description of asset value of (include interest (g) Cost asset on (i) Net gain (a) Identity of rate amd maturity (c)Purchase (d) Selling (e)Lease (f) Expense of transaction or party involved in case of a loan) price price rental incurred asset date (loss) -------------- ----------------- -------- ------ ------ --------- ---- ---------- ------- Merrill Lynch Merrill Lynch Trust Company Retirement of Florida Preservation Trust 283 transactions $123,748,074 328 transactions $15,453,382 $15,453,382 $15,453,382 $ -0- Merrill Lynch Merrill Lynch Equity Trust Company Index Trust of Florida 210 transactions 84,116,094 285 transactions 5,515,441 5,124,016 5,515,441 391,425 The Southern Common Stock Company 366 transactions 176,226,915 $29,792 417 transactions 104,404,383 75,216,590 104,404,383 9,187,793 78 transactions 31,625,306 50,413,673 8,788,367 U. S. Treasury Bill 4 transactions 108,048,580 9 transactions 108,330,140 108,048,580 108,330,140 281,560 Federal Home 22 transactions 291,850,793 Loan Bank 22 transactions 291,985,000 291,850,793 291,985,000 134,207 Federal Home 52 transactions 628,708,568 Loan Mortgage 55 transactions 614,960,700 614,681,535 614,960,700 279,165 Federal Farm 2 transactions 44,805,055 Credit Bank 2 transactions 45,020,000 44,805,055 45,020,000 214,945 CP Assoc. Corp. NA 16 transactions 88,654,921 16 transactions 88,676,000 88,654,921 88,676,000 21,079 Wachovia Bank of Wachovia Bank Georgia, N.A. Diversified Trust Fund Short-Term Investment Fund Collective Investment, Variable Rate, payable upon demand 284 transactions 308,832,751 182 transactions 459,888,825 459,888,825 459,888,825 -0- The accompanying notes are an integral part of this schedule.
20 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, The Southern Company Employee Savings Plan Committee has duly caused this annual report to be signed by the undersigned thereunto duly authorized. THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN /s/ C. Alan Martin C. Alan Martin, Chairman Savings Plan Committee June 24, 1996 21 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference of our report dated May 2, 1996, included in this annual report of The Southern Company Employee Savings Plan on Form 11-K for the year ended December 31, 1995, into the Plan's previously filed Registration Statement No. 33-23152. /s/ Arthur Andersen LLP Arthur Andersen LLP Atlanta, Georgia June 24, 1996 22 Exhibit B EX-99 2 EXHIBIT B INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY DISTRICT DIRECTOR P.O. BOX 1055 ATLANTA, GA 30370-0000 Employer Identification Number: Date: March 5, 1996 63-0274273 File Folder Number: 580002166 SOUTHERN COMPANY SERVICES, INC. Person to Contact: 64 PERIMETER CENTER EAST GARY W. FOOTE ATLANTA, GA 30346 Contact Telephone Number: (404) 331-0912 Plan Name: THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN Plan Number: 002 Dear Applicant: We have made a favorable determination on your plan, identified above, based on the information supplied. Please keep this letter in your permanent records. Continued qualification of the plan under its present form will depend on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax Regulations.) We will review the status of the plan in operation periodically. The enclosed document explains the significance of this favorable determination letter, points out some features that may affect the qualified status of your employee retirement plan, and provides information on the reporting requirements for your plan. It also describes some events that automatically nullify it. It is very important that you read the publication. This letter relates only to the status of your plan under the Internal Revenue Code. It is not a determination regarding the effect of other federal or local statutes. This determination is subject to your adoption of the proposed amendments submitted in your letter dated MARCH 1, 1996. The proposed amendments should be adopted on or before the date prescribed by the regulations under Code section 401(b). This determination letter is applicable for the amendment(s) adopted on DECEMBER 22, 1994. This plan has been mandatorily disaggregated, permissively aggregated, or restructured to satisfy the nondiscrimination requirements. This letter is issued under Rev. Proc. 93-39 and considers the amendments required by the Tax Reform Act of 1986 except as otherwise specified in this letter. - 2 - SOUTHERN COMPANY SERVICES, INC. This plan satisfies the nondiscriminatory current availability requirements of section 1.401(a)(4)-4(b) of the regulations with respect to those benefits, rights, and features that are currently available to all employees in the plan's coverage group. For this purpose, the plan's coverage group consists of those employees treated as currently benefiting for purposes of demonstrating that the plan satisfies the minimum coverage requirements of section 410(b) of the Code. This letter may not be relied upon with respect to whether the plan satisfies the qualification requirements as amended by the Uruguay Round Agreements Act, Pub. L. 103-465. We have sent a copy of this letter to your representative as indicated in the power of attorney. If you have questions concerning this matter, please contact the person whose name and telephone number are shown above. Sincerely yours, District Director Enclosures Publication 794 INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY DISTRICT DIRECTOR P.O. BOX 1055 ATLANTA, GA 30370-0000 Employer Identification Number: Date: June 10, 1996 63-0274273 File Folder Number: 580002166 SOUTHERN COMPANY SERVICES, INC. Person to Contact: 64 PERIMETER CENTER EAST EP/EO CUSTOMER SERVICE UNIT ATLANTA, GA 30346 Contact Telephone Number: (410) 962-6058 Plan Name: THE SOUTHERN COMPANY EMPLOYEE SAVINGS PLAN Plan Number: 002 Dear Applicant: We have made a favorable determination on your plan, identified above, based on the information supplied. Please keep this letter in your permanent records. Continued qualification of the plan under its present form will depend on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax Regulations.) We will review the status of the plan in operation periodically. The enclosed document explains the significance of this favorable determination letter, points out some features that may affect the qualified status of your employee retirement plan, and provides information on the reporting requirements for your plan. It also describes some events that automatically nullify it. It is very important that you read the publication. This letter relates only to the status of your plan under the Internal Revenue Code. It is not a determination regarding the effect of other federal or local statutes. This determination is subject to your adoption of the proposed amendments submitted in your letter dated 5/28/96. The proposed amendments should be adopted on or before the date prescribed by the regulations under Code section 401(b). This determination letter is applicable for the amendment(s) adopted on 6/27/95. This determination letter is also applicable for the amendment(s) adopted on 2/12/96 & 3/04/96. This plan has been mandatorily disaggregated, permissively aggregated, or restructured to satisfy the nondiscrimination requirements. This letter is issued under Rev. Proc. 93-39 and considers the amendments required by the Tax Reform Act of 1986 except as otherwise specified in this letter. -2- SOUTHERN COMPANY SERVICES, INC. This plan satisfies the nondiscriminatory current availability requirements of section 1.401(a)(4)-4(b) of the regulations with respect to those benefits, rights, and features that are currently available to all employees in the plan's coverage group. For this purpose, the plan's coverage group consists of those employees treated as currently benefiting for purposes of demonstrating that the plan satisfies the minimum coverage requirements of section 410(b) of the Code. This letter may not be relied upon with respect to whether the plan satisfies the qualification requirements as amended by the Uruguay Round Agreements Act, Pub. L. 103-465. We have sent a copy of this letter to your representative as indicated in the power of attorney. If you have questions concerning this matter, please contact the person whose name and telephone number are shown above. Sincerely yours, District Director Enclosures: Publication 794 EX-99 3 EXHIBIT C Exhibit C TRUST AGREEMENT between Merrill Lynch Trust Company of Florida, as the Trustee and Southern Company Services, Inc., as the Employer Trust Agreement entered into as of July 3, 1995 by and between the above named employer (the "Employer") and Merrill Lynch Trust Company of Florida, a Florida corporation (the "Trustee"), with respect to a trust ("Trust") forming part of the Southern Company Employee Savings Plan (the "Plan"). The Employer and the Trustee hereby agree as follows: ARTICLE I STATUS OF TRUST AND APPOINTMENT AND ACCEPTANCE OF TRUSTEE 1.01 Status of Trust. The Trust is intended to be a qualified trust under section 40 1 (a) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), and exempt from taxation pursuant to section 501(a) of the Code. This Trust is an amendment and restatement of that certain trust agreement for the Plan between Southern Company Services, Inc. and Wachovia Bank of Georgia, N.A. effective as of January 1, 1992. 1.02 Appointment of Trustee. The Employer represents that all necessary action has been taken for the appointment of the Trustee as trustee of the Trust and that the Trust Agreement constitutes a legal, valid and binding obligation of the Employer. 1.03 Acceptance of Appointment. The Trustee accepts its appointment as trustee of the Trust. 1.04 Title of Trust. The Trust shall be known as the Southern Company Employee Savings Plan Trust. 1.05 Effectiveness. This Trust Agreement shall not become effective until executed and delivered by both the Employer and the Trustee. ARTICLE 11 ADMINISTRATIVE AND INVESTMENT FIDUCIARIES 2.01 Named Administrative and Investment Fiduciaries. For purposes of this Trust Agreement, the term "Named Administrative Fiduciary" refers to the committee or its designee(s) named or provided for in the Plan as responsible for the administration and operation of the Plan, and the term "Named Investment Fiduciary" refers to the committee or its designee(s) provided for in the Plan as responsible for the investment and management of Plan assets to the extent provided for in this Trust Agreement, The Named Administrative Fiduciary and the Named Investment Fiduciary may be the same person. If any such person is not named or provided for in the Plan, or if so named or provided for, is not then serving, the Employer shall be the Named Administrative Fiduciary or the Named Investment Fiduciary or both, as the case may be. 2.02 Identification of Named Fiduciaries and Designees. The Named Administrative Fiduciary and the Named Investment Fiduciary under the Plan shall each be identified to the Trustee in writing by the Employer, and specimen signatures of each, or of each member thereof, as appropriate, shall be provided to the Trustee by the Employer. The Employer shall promptly give written notice to the Trustee of a change in the identity either of the Named Administrative Fiduciary or the Named Investment Fiduciary, or any member thereof, as appropriate, and until such notice is received by the Trustee, the Trustee shall be fully protected in assuming that the identity of the Named Administrative Fiduciary or Named Investment Fiduciary, and the members thereof, as appropriate, is unchanged. Each person authorized in accordance with the Plan to give a direction to the Trustee on behalf of the Named Administrative Fiduciary or the Named Investment Fiduciary shall be identified to the Trustee by written notice from the Employer or the Named Administrative Fiduciary or the Named Investment Fiduciary, as the case may be, and such notice shall contain a specimen of the signature. The Trustee shall be entitled to rely upon each such written notice as evidence of the identity and authority of the persons appointed until a written cancellation of the appointment, or the written appointment of a successor, is received by the Trustee from the Employer, the Named Administrative Fiduciary or the Named Investment Fiduciary. as the case may be. ARTICLE III RECEIPTS AND TRUST FUND 3.01 Receipt by Trustee. The Trustee shall receive in cash or other assets acceptable to the Trustee all contributions paid or delivered to it which are allocable under the Plan and to the Trust and all transfers paid or delivered under the Plan to the Trust from a predecessor trustee or another trust (including a trust forming part of another plan qualified under section 401(a) of the Code), provided that the Trustee shall not be obligated to receive any such contribution or transfer unless prior thereto or coincident therewith, as the Trustee may specify, the Trustee has received such reconciliation, allocation, investment or other information concerning, or such direction, contribution or representation with respect to, the contribution or transfer or the source thereof as the Trustee may require, The Trustee shall have no duty or authority to (a) require any contributions or transfers to be made under the Plan or to the Trustee, (b) compute any amount to be contributed or transferred under the Plan to the Trustee, or (c) determine whether amounts received by the Trustee comply with the Plan. 3.02 Trust Fund. For purposes of this Trust Agreement, the "Trust Fund" consists of all money and other property received by the Trustee pursuant to Section 3.01 hereof, increased by any income or gains on or increment in such assets and decreased by any investment loss or expense, benefit or disbursement paid pursuant to this Trust Agreement. The Trustee shall hold the Trust Fund, without distinction between principal and income, as a nondiscretionary trustee pursuant to the terms of this Trust Agreement. Assets of the Trust may, in the Trustee's discretion, be held in an account with an affiliate of the Trustee. ARTICLE IV PAYMENTS, ADMINISTRATIVE DIRECTIONS AND EXPENSES 4.01 Payments by Trustee. Payments of money or property from the Trust Fund shall be made by the Trustee upon direction from the Named Administrative Fiduciary or its designee. Payments by the Trustee shall be transmitted to the Named Administrative Fiduciary or its designee for delivery to the proper payees or to payee addresses supplied by the Named Administrative Fiduciary or its 2 designee, and the Trustee's obligation to make such payments shall be satisfied upon such transmittal. The Trustee shall have no obligation to determine the identity of persons entitled to payments under the Plan or their addresses. 4.02 Named Administrative Fiduciary's Directions. Directions from or on behalf of the Named Administrative Fiduciary or its designee shall be communicated to the Trustee or the Trustee's designee only in a manner and in accordance with procedures acceptable to the Trustee. The Trustee's designee shall not, however, be empowered to implement any such directions except in accordance with procedures acceptable to the Trustee. The Trustee shall have no liability for following any such directions or failing to act in the absence of any such directions. The Trustee shall have no liability for the acts or omissions of any person making or failing to make any direction under the Plan or this Trust Agreement nor any duty or obligation to review any such direction, act or omission. 4.03 Disputed Payments. If a dispute arises over the propriety of the Trustees making any payment from the Trust Fund, the Trustee may withhold the payment until the dispute has been resolved by a court of competent jurisdiction or settled by the parties to the dispute. The Trustee may consult legal counsel, which counsel is in good standing in the state in which counsel is admitted to the practice of law, and shall be fully protected in acting upon the advice of counsel. 4.04 Trustee's Compensation and Expenses. To the extent not previously paid by the Employer, the Trustee shall withdraw from the Trust Fund such amounts as are necessary to (a) pay the Trustee reasonable compensation for its services under this Trust Agreement in accordance with the Trustee's fee schedule in effect and applicable at the time such compensation becomes payable, and (b) pay or reimburse the Trustee for all reasonable expenses incurred by the Trustee in connection with or relating to the performance of its duties under this Trust Agreement or its status as Trustee, including reasonable attorneys fees. Until paid by the Employer or charged against and withdrawn from the Trust Fund, as the case may be, the Trustee's compensation and expenses shall be a lien upon the Trust Fund. The Trustee is authorized to charge the Trust Fund for and withdraw from the Trust Fund, without direction from the Named Administrative Fiduciary or any other person, the amount of any such fees or expenses which the Employer has not elected to pay and the amount of any such fees or expenses which the Employer has so elected to pay but which remain unpaid for a period of 60 days after presentation of a statement for such amount to the Employer. Trust Fund assets shall be applied to pay such fees and expenses in the following priority by asset category to the extent thereof held at the time of withdrawal in the Trust Fund subfund or account to which the fee or expense is allocated: (i) uninvested cash balances; (ii) shares of any money market fund or funds held in the Trust Fund; and (iii) any other Trust Fund assets. The Trustee is authorized to allocate its fees and expenses among these subfunds or accounts to which the fees or expenses pertains in such manner as the Trustee deems appropriate under the circumstances unless prior to such allocation the Employer or the Named Administrative Fiduciary specifies the manner in which the allocation is to be made. The Trustee is also authorized but not required to sell any shares or other assets referred to above to the extent necessary for the purpose. 4.05 Taxes. The Trustee is authorized, with or without direction from the Named Administrative Fiduciary or any other person, to withdraw from the Trust Fund and pay any federal, state or local taxes, charges or assessments of any kind levied or assessed against the Trust or assets thereof. Until paid, such taxes shall be a lien against the Trust Fund. The Trustee shall give notice to the Named Administrative Fiduciary of its receipt of a demand for any such taxes, charges or assessments. The Trustee shall not be personally liable for any such taxes, charges or assessments. 4.06 Expenses of Administration. Reasonable expenses incurred by the Employer, the Named Administrative Fiduciary, the Named Investment Fiduciary, any Investment Manager designated pursuant to Section 5.02 or any other persons 3 designated to act on behalf of the Employer, the Named Administrative Fiduciary or the Named Investment Fiduciary, including reimbursement for reasonable expenses incurred in the performance of their respective duties, shall be the obligation of the Employer or other person specified in the Plan. Such expenses, however, may be paid from the Trust Fund upon the written direction to the Trustee of the Named Administrative Fiduciary. 4.07 Restriction on Alienation. Except as provided in Section 4.08 or under section 401(a)(13) of the Code, the interest of any Plan participant or beneficiary in the Trust Fund shall not be subject to the claims of such person's creditors and may not be assigned, sold, transferred, alienated or encumbered. Any attempt to do so shall be void-, and the Trustee shall disregard any attempt. Trust assets shall not in any manner be liable for or subject to debts, contracts, liabilities, engagement or torts of any Plan participant or beneficiary, and benefits shall not be considered an asset of any such a person in the event of the person's insolvency or bankruptcy. 4.08 Payment on Court Order. The Trustee is authorized to make any payments directed by court order in any action in which the Trustee is a party or pursuant to a "qualified domestic relations order" under section 414(p) of the Code; provided that the Trustee shall not make such payment if the Trustee is indemnified and held harmless by the Employer in a manner satisfactory to the Trustee against all consequences of such failure to pay. The Trustee is not obligated to defend actions in which the Trustee is named but shall notify the Employer or Named Administrative Fiduciary of any such action and may tender defense of the action to the Employer, the Named Administrative Fiduciary or the participant or beneficiary whose interest is affected. The Trustee may in its discretion defend any action in which the Trustee is named and any expenses, including reasonable attorneys fees, incurred by the Trustee in that connection shall be paid or reimbursed in accordance with Section 4.04 hereof. ARTICLE V INVESTMENTS 5.01 Investment Management. The Named Investment Fiduciary shall manage the investment of the Trust Fund except insofar as (a) a person (an "Investment Manager") who meets the requirements of section 3(38) of the Employee Retirement Income Security Act of 1974, as amended from time to time ("ERISA"), has authority to manage Trust assets as referred to in Section 5.02 hereof or (b) the Plan provides for participant or beneficiary direction of the investment of assets allocable under the Plan to the accounts of such participants and beneficiaries and the Trustee notifies the Employer that such directions will be acceptable. In the latter situation, a list of the participants and beneficiaries and such information concerning them as the Trustee may specify shall be provided by the Employer or the Named Administrative Fiduciary to the Trustee and/or such person(s) as are necessary for the implementation of the directions in accordance with the procedure acceptable to the Trustee. Except as required by ERISA, the Trustee shall invest the Trust Fund as directed by the Named Investment Fiduciary, an Investment Manager or a Plan participant or beneficiary, as the case may be, and the Trustee shall have no discretionary control over, nor any other discretion regarding, the investment or reinvestment of any asset of the Trust. The Trustee may limit the categories of assets in which the Trust Fund may be invested. It is understood that the Trustee may, from time to time, have on hand funds which are received as contributions or transfers to the Trust which are awaiting investment or funds from the sale of Trust assets which are awaiting reinvestment. Absent receipt by the Trustee of a direction from the proper person for the investment or reinvestment of such funds or otherwise prior to the application of funds in implementation of such a direction, the Trustee shall in accordance with the Trustee's normal procedures in this regard cause 4 such funds to be invested in shares of the money market fund acceptable to the Trustee as the Employer or Named Investment Fiduciary may in writing to the Trustee specify for this purpose from time to time. Any such fund may be sponsored, managed or distributed by an affiliate of the Trustee. The Employer or the Named Investment Fiduciary, as the case may be, hereby acknowledges that prior to any such specification it has read or will have read the then current prospectus for the specified fund. 5.02 Investment Managers. If so allowed pursuant to the Plan, the Employer or the Named Investment Fiduciary may appoint one or more Investment Managers, who may be an affiliate of the Trustee, to direct the Trustee in the investment of all or a specified portion of the assets of the Trust. Any such Investment Manager shall be directed by the Employer or the Named Investment Fiduciary, as the case may be, to act in accordance with the procedures referred to in Section 5.04. The Named Investment Fiduciary shall notify the Trustee in writing before the effectiveness of the appointment or removal of any Investment Manager. If there is more than one Investment Manager whose appointment is effective under the Plan at any one time, the Trustee shall, upon written instructions from the Employer or the Named Investment Fiduciary, establish separate funds for control by each such Investment Manager. The funds shall consist of those Trust assets designated by the Employer or the Named Investment Fiduciary. 5.03 Direction of Voting and Other Rights. Unless an Investment Manager, as described in Section 5.02, has been appointed by the Employer or by the Named Investment Fiduciary and the voting and other rights regarding those assets or securities that have been designated for control by the Investment Manager have been specifically delegated to and assumed by the Investment Manager, the voting and other rights in securities or other assets held in the Trust shall be exercised by the Trustee as directed by the Named Investment Fiduciary or other person who at the time has the right as referred to in Section 5.01 hereof to direct the investment or reinvestment of the security or other asset involved, provided that notwithstanding any provision of the Plan to the contrary, (a) except as provided in clause (b) of this Section, such voting and other rights in any such security or other asset selected by the Employer or the Named Investment Fiduciary shall be exercised by the Named Investment Fiduciary and (b) such voting and other rights in any "employer security" with respect to the Plan within the meaning of Section 407(d)(1) of ERISA ("Employer Securities") which is held in an account under the Plan over which a Plan participant or beneficiary has control as to specific assets to be held therein or which is held in an account which consists solely or primarily of Employer Securities shall be exercised by the participants or beneficiaries having interests in that account. Notwithstanding any provision hereof or of the Plan to the contrary, (i) in the event a Plan participant or beneficiary or an Investment Manager with the right to direct a voting or other decision with respect to any security or other asset held in the Trust does not communicate any decision on the matter to the Trustee or the Trustee's designee by the time prescribed by the Trustee or the Trustee's designee for that purpose or if the Trustee notifies the Named Investment Fiduciary either that it does not have precise information as to the securities or other assets involved allocated on the applicable record date to the accounts of all participants and beneficiaries or that time constraints make it unlikely that participant, beneficiary or Investment Manager direction, as the case may be, can be received on a timely basis, the decision shall be the responsibility of the Named Investment Fiduciary and shall be communicated to the Trustee on a timely basis, and (ii) in the event the Named Investment Fiduciary with any right under the Plan or hereunder to direct a voting or other decision with respect to any security or other asset held in the Trust, including any such right under clause (a) or clause (i) of this Section, does not communicate any decision on the matter to the Trustee or the Trustee's designee by the time prescribed by the Trustee for that purpose, the Trustee may obtain advice from a bank, insurance company, investment adviser or other investment professional (including any affiliate of the Trustee) or retain an Investment Manager with full discretion to make the decision. The Employer will reimburse the Trustee for the reasonable fees and expenses incurred in obtaining this advice if the voting or other decision relates to a contested proxy matter, a tender or merger offer, or other decision which requires substantial analysis to determine whether the economic 5 consequence of the decision will be material to the Plan. Except as required by ERISA, the Trustee shall (a) follow all directions above-referred to in this Section and (b) shall have no duty to exercise voting or other rights relating to any such security or other asset. 5.04 Investment Directions. Directions for the investment or reinvestment of Trust assets or of a type referred to in Section 5.03 from the Employer, the Named Investment Fiduciary, an Investment Manager or a Plan participant or beneficiary, as the case may be, shall, in a manner and in accordance with procedures acceptable to the Trustee, be communicated to and implemented by, as the case may be, the Trustee, the Trustee's designee or, with the Trustee's consent, broker/dealer designated for the purpose by the Employer or the Named Investment Fiduciary. Communication of any such direction to such a designee or broker/dealer shall conclusively be deemed an authorization to the designee or broker/dealer to implement the direction even though coming from a person other than the Trustee. The Trustee shall have no liability for its or any other person's following such directions or failing to act in the absence of any such directions. The Trustee shall have no liability for the acts or omissions of any person directing the investment or reinvestment of Trust Fund assets or making or failing to make any direction referred to in Section 5.03. Neither shall the Trustee have any duty or obligation to review any such investment or other direction, act or omission or, except upon receipt of a proper direction, to invest or otherwise manage any asset of the Trust which is subject to the control of any such person or to exercise any voting or other right referred to in Section 5.03. 5.05 Communication of Proxy and Other Materials. The Employer or Named Administrative Fiduciary shall establish a procedure acceptable to the Trustee for the timely dissemination to each person entitled to direct the Trustee or its designee as to a voting or other decision called for thereby or referred to therein of all proxy and other materials bearing on the decision. In the case of Employer Securities, at such time as proxy or other materials bearing thereon are disseminated generally to owners of Employer Securities in accordance with applicable law, the Employer shall cause a copy of such proxy or other materials to be delivered directly to the Trustee and, thereafter, shall promptly deliver to the Trustee such number of additional copies of the proxy or other materials as the Trustee may request. 5.06 Common and Collective Trust Funds. Any person authorized to direct the investment of Trust assets may, if the Trustee and the Named Investment Fiduciary so permit, direct the Trustee to invest such assets in a common or collective trust maintained by the Trustee for the investment of assets of qualified trusts under section 40 1 (a) of the Code, individual retirement accounts under section 408(a) of the Code and plans or governmental units described in section 8 18(a)(6) of the Code. The documents governing any such common or collective trust fund maintained by the Trustee, and in which Trust assets have been invested, are hereby incorporated into this Trust Agreement by reference. ARTICLE VI RESPONSIBILITIES AND INDEMNITY 6.01 Relationship of Fiduciaries. Each fiduciary of the Plan and this Trust shall be solely responsible for its own acts or omissions. The Trustee shall have no duty to question any other Plan fiduciary's performance of fiduciary duties allocated to such other fiduciary pursuant to the Plan. The Trustee shall not be responsible for the breach of responsibility by any other Plan fiduciary except as provided for in ERISA. 6 6.02 Benefit of Participants. Each fiduciary shall, within the meaning of the Code and ERISA, discharge its duties with respect to the Trust solely in the interest of participants in the Plan and their beneficiaries and for the exclusive purpose of providing benefits to such participants and beneficiaries and defraying reasonable expenses of administering the Plan. 6.03 Status of Trustee. The Trustee acknowledges its status as a "fiduciary" of the Plan within the meaning of ERISA. 6.04 Location of Indicia of Ownership. Except as permitted by ERISA, the Trustee shall not maintain the indicia of ownership of any assets of the Trust outside the jurisdiction of the district courts of the United States. 6.05 Trustee's Reliance. The Trustee shall have no duty to inquire whether directions by the Employer, the Named Administrative Fiduciary, the Named Investment Fiduciary or any other person conform to the Plan, and the Trustee shall be fully protected in relying on any such direction communicated in accordance with procedures acceptable to the Trustee from any person who the Trustee reasonably believes is a proper person to give the direction. The Trustee shall have no liability to any participant, any beneficiary or any other person for payments made, any failure to make payments, or any discontinuance of payments, on direction of the Named Administrative Fiduciary, the Named Investment Fiduciary or any designee of either of them or for any failure to make payments in the absence of directions from the Named Administrative Fiduciary or any person responsible for or purporting to be responsible for directing the investment of Trust assets. The Trustee shall have no obligation to request proper directions from any person. The Trustee may request instructions from the Named Administrative Fiduciary or the Named Investment Fiduciary and shall have no duty to act or liability for failure to act if such instructions are not forthcoming. The Trustee shall have no responsibility to determine whether the Trust Fund is sufficient to meet the liabilities under the Plan, and shall not be liable for payments or Plan liabilities in excess of the Trust Fund. 6.06 Indemnification. Except as prohibited by ERISA, the Employer indemnities the Trustee against, and shall hold the Trustee harmless from, any and all loss, claims, liabilities and expenses, including reasonable attorneys' fees, imposed upon the Trustee or incurred by the Trustee as a result of any acts taken, or any failure to act, in accordance with directions given pursuant to and in accordance with the terms of the Trust from the Named Administrative Fiduciary, Named Investment Fiduciary, Investment Manager (other than an Investment Manager which is an affiliate of the Trustee) or any other person specified in Article IV or V hereof acting under the control or acting at the direction of the Named Administrative Fiduciary, the Named Investment Fiduciary or an Investment Manager (other than an Investment Manager which is an affiliate of the Trustee), or any permitted designee of any such person. 6.07 Protection of Designees. To the extent that any designee of the Trustee is performing a function of the Trustee under this Trust Agreement, the designee shall have the benefit of all of the applicable limitations on the scope of the Trustee's duties and liabilities, all applicable rights of indemnification granted hereunder to the Trustee and all other applicable protections of any nature afforded to the Trustee. 7 ARTICLE VII POWERS OF TRUSTEE 7.01 Nondiscretionary Investment Powers. At the direction of the person authorized to direct such action as referred to in Article V hereof, but limited to those assets or categories of assets acceptable to the Trustee as referred to in Section 5.01, the Trustee, or the Trustee's designee or a broker/dealer as referred to in Section 5.04, is authorized and empowered: (a) To invest and reinvest the Trust Fund, together with the income therefrom, in common stock, preferred stock,convertible preferred stock, bonds, debentures, convertible debentures and bonds, mortgages, notes, commercial paper and other evidences of indebtedness (including those issued by the Trustee), shares of mutual funds (which funds may be sponsored, managed or offered by an affiliate of the Trustee), guaranteed investment contracts, bank investment contracts, other securities, policies of life insurance, annuity contracts, options, options to buy or sell securities or other assets, and all other property of any type (personal, real or mixed, and tangible or intangible); (b) To deposit or invest all or any part of the assets of the Trust in savings accounts or certificates of deposit or other deposits in a bank or savings and loan association or other depository institution, including the Trustee or any of its affiliates, provided with respect to such deposits with the Trustee or an affiliate the deposits bear a reasonable interest rate; (c) To hold, manage, improve, repair and control all property, real or personal, forming part of the Trust Fund; to sell, convey, transfer, exchange, partition, lease for any term, even extending beyond the duration of this Trust, and otherwise dispose of the same from time to time; (d) To have, respecting securities, all the rights, powers and privileges of an owner, including the power to give proxies, pay assessments and other sums deemed by the Trustee necessary for the protection of the Trust Fund; to vote any corporate stock either in person or by proxy, with or without power of substitution, for any purpose; to participate in voting trusts, pooling agreements, foreclosures, reorganizations, consolidations, mergers and liquidations, and in connection therewith to deposit securities with or transfer title to any protective or other committee; to exercise or sell stock subscriptions or conversion rights-, and, regardless of any limitation elsewhere in this instrument relative to investments by the Trustee, to accept and retain as an investment any securities or other property received through the exercise of any Of the foregoing powers; (e) Subject to Section 5.01 hereof, to hold in cash, without liability for interest, such portion of the Trust Fund which it is directed to so hold pending investments, or payment of expenses, or the distribution of benefits, (f) To take such actions as may be necessary or desirable to protect the Trust from loss due to the default on mortgages held in the Trust including the appointment of agents or trustees in such other jurisdictions as may seem desirable, to transfer property to such agents or trustees, to grant to such agents such powers as are necessary or desirable to protect the Trust Fund, to direct such agent or trustee, or to delegate such power to direct, and to remove such agent or trustee; 8 (g) To settle, compromise or abandon all claims and demands in favor of or against the Trust Fund; (h) To invest in any common or collective trust fund of the type referred to in Section 5.06 hereof maintained by the Trustee; (i) To exercise all of the further rights, powers, options and privileges granted, provided for, or vested in trustees generally under the laws of the state in which the Trustee is incorporated as set forth above, so that the powers conferred upon the Trustee herein shall not be in limitation of any authority conferred by law, but shall be in addition thereto; (j) To borrow money from any source and to execute promissory notes, mortgages or other obligations and to pledge or mortgage any trust assets as security, subject to applicable requirements of the Code and ERISA-, and (k) To maintain accounts at, execute transactions through, and lend on an adequately secured basis stocks, bonds or other securities to, any brokerage or other firm, including any firm which is an affiliate of the Trustee. 7.02 Additional Powers of Trustee. To the extent necessary or which it deems appropriate to implement its powers under Section 7.01 or otherwise to fulfill any of its duties and responsibilities as trustee of the Trust Fund, the Trustee shall have the following additional powers and authority: (a) to register securities, or any other property, in its name or in the name of any nominee, including the name of any affiliate or the nominee name designated by any affiliate, with or without indication of the capacity in which property shall be held, or to hold securities in bearer form and to deposit any securities or other property in a depository or clearing corporation; (b) to designate and engage the services of, and to delegate powers and responsibilities to, such agents. representatives, advisers, counsel and accountants as the Trustee considers necessary or appropriate, any of whom may be an affiliate of the Trustee or a person who renders services to such an affiliate, and, as a part of its expenses under this Trust Agreement, to pay their reasonable expenses and compensation; (c) to make, execute and deliver, as Trustee, any and all deeds, leases, mortgages, conveyances, waivers, releases or other instruments in writing necessary or appropriate for the accomplishment of any of the powers listed in this Trust Agreement; and (d) generally to do all other acts which the Trustee deems necessary or appropriate for the protection of the Trust Fund. ARTICLE VIII RECORDS, ACCOUNTINGS AND VALUATIONS 8.01 Records. The Trustee shall maintain or cause to be maintained accurate records and accounts of all Trust transactions and assets. The records 9 and accounts shall be available at reasonable times during normal business hours for inspection or audit by the Named Administrative Fiduciary and the Named Investment Fiduciary or any person designated for the purpose by either of them. 8.02 Accountings. Within 60 days following the close of each fiscal year of the Plan or the effective date of the removal or resignation of the Trustee, the Trustee shall file with the Named Administrative Fiduciary a written accounting setting forth all transactions since the end of the period covered by the last previous accounting. The accounting shall include a listing of the assets of the Trust showing the value of such assets at the close of the period covered by the accounting. On direction of the Named Administrative Fiduciary, and if previously agreed to by the Trustee, the Trustee shall submit to the Named Administrative Fiduciary interim valuations, reports or other information pertaining to the Trust. The Named Administrative Fiduciary may approve the accounting by written approval delivered to the Trustee or by failure to deliver written objections to the Trustee within 60 days after receipt of the accounting. Any such approval shall be binding on the Employer, the Named Administrative Fiduciary, the Named Investment Fiduciary and, to the extent permitted by ERISA, all other persons. 8.03 Valuation. The assets of the Trust shall be valued as of each valuation date under the Plan -at fair market value as determined by the Trustee based upon such sources of information as it may deem reliable, including, but not limited to, stock market quotations, statistical evaluation services, newspapers of general circulation, financial publications, advice from investment counselors or brokerage firms, or any combination of sources, The reasonable costs incurred in establishing values of the Trust Fund shall be a charge against the Trust Fund, unless paid by the Employer. When the Trustee is unable to arrive at a value based upon information from independent sources, it may rely upon information from the Employer, Named Administrative Fiduciary, Named Investment Fiduciary, appraisers, or other sources, and shall not incur any liability for inaccurate valuation based in good faith upon such information. ARTICLE IX RESIGNATION AND REMOVAL OF TRUSTEE 9.01 Resignation. The Trustee may resign at any time upon at least 60 days' written notice to the Employer. 9.02 Removal. The Employer may remove the Trustee upon at least 60 days' written notice to the Trustee. 9.03 Appointment of a Successor. Upon resignation or removal of the Trustee, the Employer shall appoint a successor trustee. Upon failure of the Employer to appoint, or the failure of the effectiveness of the appointment by the Employer of, a successor trustee by the effective date of the resignation or removal, the Trustee may apply to any court of competent jurisdiction for the appointment of a successor. Promptly after receipt by the Trustee of notice of the effectiveness of the appointment of the successor trustee, the Trustee shall deliver to the successor trustee such records as may be reasonably requested to enable the successor trustee to properly administer the Trust Fund and all property of the Trust after deducting therefrom such amounts as the Trustee deems necessary to provide for expenses, taxes, compensation or other amounts due to or by the Trustee pursuant to Sections 4.04 or 5.03 hereof not paid by the Employer prior to the delivery. 10 9.04 Settlement of Account. Upon resignation or removal of the Trustee, the Trustee shall have the right to a settlement of its account, which settlement shall be made, at the Trustee's option, either by an agreement of settlement between the Trustee and the Employer or by a judicial settlement in an action instituted by the Trustee. The Employer shall bear the cost of any such judicial settlement, including reasonable attorneys fees. 9.05 Expenses and Compensation. The Trustee shall not be obligated to transfer Trust assets until the Trustee is provided assurance by the Employer satisfactory to the Trustee that all fees and expenses reasonably anticipated will be paid. 9.06 Termination of Responsibility and Liability. Upon settlement of the account and transfer of the Trust Fund to the successor trustee, all rights and privileges under this Trust Agreement shall vest in the successor trustee and all responsibility and liability of the Trustee with respect to the Trust and assets thereof shall, except as otherwise required by ERISA, terminate subject only to the requirement that the Trustee execute all necessary documents to transfer the Trust assets to the successor trustee. ARTICLE X AMENDMENT AND TERMINATION 10.01 Amendment. The Employer reserves the right to amend this Trust Agreement, provided that no amendment of this Trust Agreement or the Plan shall be effective which would (a) cause any assets of the Trust Fund to be used for, or diverted to, purposes other than the exclusive benefit of Plan participants or their beneficiaries other than an amendment permissible under the Code and ERISA, or (b) affect the rights, duties, responsibilities, obligations or liabilities of the Trustee without the Trustee's written consent. The Employer shall amend this Trust Agreement as requested by the Trustee to reflect changes in law which counsel for the Trustee advises the Trustee require such changes. Amendments to the Trust Agreement or a certified copy of the amendments shall be delivered to the Trustee promptly after adoption, and if practicable under the circumstances, any proposed amendment under consideration by the Employer shall be communicated to the Trustee to permit the Trustee to review and comment thereon in due course before the Employer acts on the proposed amendment. 10.02 Termination. The Trust may be terminated by the Employer upon at least 60 days' written notice to the Trustee. Upon such termination, and subject to Section I 1.0 I hereof, the Trust Fund shall be distributed as directed by the Named Administrative Fiduciary ARTICLE XI MISCELLANEOUS 11.01 Exclusive Benefit Rule. Except as provided in Section 11.02, or as otherwise permitted as required by ERISA or the Code, no asset of this Trust shall be used for, or diverted to, purposes other than the exclusive benefit of Plan participants or their beneficiaries or for the reasonable expenses of administering the Plan and Trust until all liabilities for benefits due Plan participants or their beneficiaries have been satisfied. 11.02 Refunds to Employer. The Trustee shall, upon the written direction of the Named Administrative Fiduciary which shall include a 11 certification that such action is proper under the Plan, ERISA and the Code specifying any relevant sections thereof, return to the Employer any amount referred to in section 403(c)(2) of ERISA. 11.03 Authorized Action. Any action to be taken under this Trust Agreement by an Employer or other person which is: (a) a corporation shall be taken by the board of directors of the corporation or any person or persons duly empowered by the board of directors to take the action involved, (b) a partnership shall be taken by an authorized general partner of the partnership, and (c) a sole proprietorship by the sole proprietor. 11.04 Text of Plan. The Employer represents that prior to the execution of this Trust Agreement by both parties it delivered to the Trustee the text of the Plan as in effect as of the date of this Trust Agreement. The Employer shall deliver to the Trustee promptly after adoption thereof a certified copy of each other amendment of the Plan. 11.05 Conflict with Plan. The rights. duties, responsibilities, obligations and liabilities of the Trustee are as set forth in this Trust Agreement, and no provision of the Plan or any other document shall be deemed to affect such rights, duties, responsibilities, obligations and liabilities. If there is a conflict between provisions of the Plan and this Trust Agreement with respect to any subject involving the Trustee, including but not limited to the responsibility, authority or powers of the Trustee, the provisions of this Trust Agreement shall be controlling. 11.06 Failure to Maintain Qualification. If the Trust fails to qualify as a qualified trust under section 401(a) of the Code, or loses its status as such a qualified trust, the Employer shall immediately so notify the Trustee, and the Trustee shall, without further notice or direction, remove the Trust assets from any common or collective trust fund maintained by the Trustee for investments by qualified trusts. 11.07 Governing Law and Construction. This Trust Agreement and the Trust shall be construed, administered and governed under ERISA and other pertinent federal law, and to the extent that federal law is inapplicable, under the laws of the state in which the Trustee is incorporated as set forth above. If any provision of this Trust Agreement is susceptible to more than one interpretation, the interpretation to be given is that which is consistent with the Trust being a qualified trust under section 401(a) of the Code. If any provision of this Trust Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions shall continue to be fully effective to the extent possible under the circumstances. 11.08 Successors and Assigns. This Trust Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns 11.09 Gender. As used in this Trust Agreement, the masculine gender shall include the feminine and the neuter genders and the singular shall include the plural and the plural the singular as the context requires. 11.10 Headings. Headings and subheadings in this Trust Agreement are for convenience of reference only and are not to be considered in the construction of the provisions of the Trust Agreement. 11.11 Counterparts. This Trust Agreement may be executed in several counterparts, each of which shall be deemed an original, and these counterparts shall constitute one and the same instrument which may be sufficiently evidenced by any one counterpart. 12 IN WITNESS WHEREOF, the Employer and the Trustee have executed this Trust Agreement each by action of a duly authorized person. SOUTHERN COMPANY SERVICES, INC. By: ------------------------ Name: ---------------------- Title:---------------------- --------------------------- Trustee By:------------------------- Name:----------------------- Title:---------------------- -----END PRIVACY-ENHANCED MESSAGE-----