Exhibit B.8
Southern Energy, Inc.
000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
December 17, 1998
Southern Energy Finance Company, Inc.
000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Credit Suisse First Boston
as Collateral Agent on behalf of the Lenders under the Loan Agreement and the
Purchasers under the Note Purchase Agreements referred to below 00 Xxxxxxx
Xxxxxx 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000-0000
RE: Term Loan Agreement among Southern Energy Finance Company, Inc. ("SE
Finance"), as Borrower, the several Lenders parties thereto, Credit
Suisse First Boston and Xxxxxx Brothers Inc., as Co-Arrangers, Xxxxxx
Commercial Paper Inc., as Syndication Agent and Credit Suisse First
Boston, as Administrative Agent, dated as of December 17, 1998 (the
"Loan Agreement") and the various Note Purchase Agreements each dated
as of December 17, 1998 between SE Finance and each of the Purchasers
party thereto (the "Note Purchase Agreements")
Ladies and Gentlemen:
Please be advised that Southern Energy, Inc. ("SEI") is, as of the date
hereof, a wholly-owned subsidiary of The Southern Company and the direct owner
of all the outstanding stock of SE Finance. This letter is being delivered to
you to satisfy the conditions set forth in Section 4.1 (a) (iv) of the Loan
Agreement and in Section 4.10(d) of each of the Note Purchase Agreements and
constitutes the "Keep Well Agreement" described therein. Except as otherwise
specified, capitalized terms used but not defined herein have the same meanings
as set forth in the Loan Agreement.
In consideration of the Lenders making the Loans to SE Finance and the
Purchasers acquiring the Senior Notes from SE Finance, which SEI agrees will be
of direct or indirect benefit to SEI, and other good and valuable consideration,
SEI, intending to be legally bound, hereby covenants and agrees that SEI will
make payments on behalf of SE Finance, as a contribution to its capital, in the
amount of any shortfall in:
(a) the repayments due the Lenders under Schedule 2.3 to the Loan
Agreement, together with interest on the outstanding balance of the
Loans, and
(b) the redemptions of principal due the Purchasers under Schedule 8.1
to each of the Note Purchase Agreements, together with interest on the
outstanding principal amount of the Senior Notes,
to the extent such shortfall is attributable to a reduction for any reason,
including, without limitation, a change in law or regulation or an amendment to
the Allocation Agreement or procedures thereunder, in the payments under the
Allocation Agreement to SE Finance below those specified in Schedule II to the
Loan Agreement and in Schedule C to each of the Note Purchase Agreements;
provided, however, notwithstanding anything to the contrary herein, no payments
will be required to the extent that such shortfall is caused by (i) with
reference to SE Clairton (a) a decrease in production and/or sale from the
Partnership's financial projection dated on or about June 1, 1997 of coke and
related coke products at any of coke batteries B, 13 and 14 (and, therefore, a
decrease in Section 29 tax credits available to SE Clairton) or (b) dissolution
and liquidation of the Partnership for any reason, including, without
limitation, the withdrawal of USX Corporation from the Partnership; or (ii) with
reference to the EPZ Lease Transaction or the EDON Lease Transaction (a) an
early termination of any lease or sublease for any reason, or (b) the receipt of
any SLV Payment, indemnity payment or other payment under any of the Lease
Documents which has the effect of increasing the taxable income of EPZ Lease,
Inc. or Dutch Gas Lease, Inc.
SEI further agrees that any payments required of it under this Keep
Well Agreement will be made by it to the Collateral Agent as directed for the
account of SE Finance for application to amounts payable by SE Finance to the
Lenders under the Loan Agreement and to the holders from time to time of the
Senior Notes under each of the Note Purchase Agreements by wire transfer of
immediately available funds unless otherwise directed in writing by SE Finance
and the Collateral Agent.
SEI acknowledges and agrees that the occurrence of any one or more of
the following shall not alter or impair the liability of SEI hereunder:
(1) any amendment or modification of any provision of any of
the Loan Documents or the Note Purchase Documents (other than to
Schedule 2.3 of the Loan Agreement or Schedule 8.1 to each of the Note
Purchase Agreements) or any assignment or transfer of any Loan or
Senior Note, including without limitation the renewal or extension of
the time of payment of any of the Loans or Senior Notes or the granting
of time in respect of such payment thereof, or of any furnishing or
acceptance of any guarantee or any additional security or any release
of any security or guarantee so furnished or accepted for any of the
Loans or the Senior Notes.
(2) any waiver, consent, extension, granting of time,
forbearance, indulgence or other action or inaction under or in respect
of any of the Loan Documents or the Note Purchase Documents, or any
exercise or non-exercise of any right, remedy or power in respect
hereof or thereof;
(3) any bankruptcy, receivership, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or similar
proceedings with respect to SE Finance or any of its Subsidiaries; or
(4) the occurrence of any Default or Event of Default under,
or any misrepresentation in, any of the Loan Documents or the Note
Purchase Documents.
SEI hereby unconditionally waives any requirement that the Collateral
Agent, any Lender or any holder of a Senior Note exhaust any right, power or
remedy against SE Finance under any of the Loan Documents or the Note Purchase
Documents or any other agreement or instrument referred to herein or therein, or
against any other Person under any guarantee of, or security for, any of the
obligations of SE Finance in respect of the Loans or the Senior Notes.
Inasmuch as any payments made by SEI under this Keep Well Agreement
will be contributions to the capital of SE Finance, SEI confirms and agrees that
it will not have any subrogation or other rights to reimbursement hereunder or
under the Loans or the Senior Notes. SEI agrees that its obligations hereunder
shall be automatically reinstated if and to the extent that for any reason any
payment (including payment in full) by SE Finance is rescinded or must be
otherwise restored by any Lender or any holder of a Senior Note, whether as a
result of any proceedings in bankruptcy or reorganization or otherwise, all as
though such amount had not been paid.
SEI represents that (a) it is duly organized, validly existing and in
good standing under the laws of the State of Delaware, (b) it has the corporate
power and authority, and the legal right, to own its property and to conduct the
business in which it is currently engaged, (c) to its knowledge, it is in
compliance with all Requirements of Law except to the extent that the failure to
comply would not, in the aggregate, have a Material Adverse Effect, (d) it has
the corporate power and authority to make, execute and deliver this Keep Well
Agreement, (e) it has taken all corporate action necessary to authorize the
execution, delivery and performance of this Keep Well Agreement and has duly
executed and delivered this Keep Well Agreement, (f) no consent or authorization
of, approval by, filing with, notice to or other act by or in respect of, any
Governmental Authority or other Person is required in connection with the
execution, delivery, performance, validity or enforceability of this Keep Well
Agreement which has not already been obtained, (g) this Keep Well Agreement is a
legal, valid and binding obligation of SEI, enforceable against SEI in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and to the effect of
general equitable principles, (h) the execution, delivery and performance by SEI
of this Keep Well Agreement will not violate the Certificate of Incorporation or
By-laws of SEI or any law or regulation or determination of any court or
arbitrator applicable to SEI, (i) SEI is not subject to any pending, or to its
knowledge, threatened litigation or arbitration proceeding that, if determined
adversely, would have a material adverse effect on its ability to perform under
the Keep Well Agreement, and (j) the execution, delivery and performance by SEI
of the Keep Well Agreement will not constitute a default under any material
contract or agreement to which SEI is a party.
SEI hereby irrevocably and unconditionally (a) submits for itself and
its property in any legal action or proceeding relating to this Keep Well
Agreement, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the Courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof; (b) consents that any such
action or proceeding may be brought in such courts and waives any objection that
it may now or hereafter have to the venue of any such action or proceeding in
any such court or that such action or proceeding was brought in an inconvenient
court and agrees not to plead or claim the same; (c) agrees that service of
process in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to SEI at its address set forth at the beginning hereof
to the attention of President or at such other address as SEI shall have
specified to the Collateral Agent in writing; (d) agrees that nothing herein
shall affect the right to effect service of process in any other manner
permitted by law or shall limit the right to xxx in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
paragraph any special, exemplary, punitive or consequential damages, other than,
in the case of punitive damages, with respect to any Lender or Purchaser which
engages in willful misconduct.
No failure to exercise nor any delay in exercising any right hereunder
shall operate as a waiver thereof nor shall any exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies provided herein are cumulative and not exclusive of any
other remedies provided by law.
This Keep Well Agreement may be modified or amended only with the
written consent of the Collateral Agent (acting at the direction of the Lenders
and the holders from time to time of the Senior Notes pursuant to the Collateral
Agency Agreement).
This Keep Well Agreement shall be governed by and construed in
accordance with the law of the State of New York and may be enforced only by SE
Finance, the Collateral Agent, the Lenders and the holders from time to time of
the Senior Notes.
The express statements and agreements made by SEI in this Keep Well
Agreement constitute the sole and exclusive statements and agreements of SEI
with respect to the subject matter of this Keep Well Agreement, the Loan
Documents or the Note Purchase Documents, and there are no representations,
warranties, statements, covenants or agreements made by SEI, express or implied,
except as expressly set forth herein. Without limiting the generality of the
preceding sentence, nothing contained in this Keep Well Agreement shall
constitute a guarantee by SEI of any of the obligations of SE Finance under any
of the Loan Documents or Note Purchase Documents. This Keep Well Agreement is
intended to be solely for the benefit of SE Finance, the Collateral Agent, the
Lenders and the holders from time to time of the Senior Notes and is not
intended to and shall not confer any rights or benefits on any other party.
SOUTHERN ENERGY, INC.
By:
Title:
