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EXHIBIT 10.1
FORM OF
MASTER SEPARATION AND DISTRIBUTION AGREEMENT
BETWEEN
THE SOUTHERN COMPANY
AND
SOUTHERN ENERGY, INC.
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TABLE OF CONTENTS
RECITALS..........................................................................................................1
ARTICLE I SEPARATION.............................................................................................2
Section 1.1 Separation Date...................................................................................2
Section 1.2 Closing of Transactions...........................................................................2
Section 1.3 Exchange of Secretary's Certificates..............................................................2
ARTICLE II DOCUMENTS AND ITEMS TO BE DELIVERED ON THE SEPARATION DATE............................................2
Section 2.1 Documents to Be Delivered By Southern.............................................................2
Section 2.2 Documents to Be Delivered By Southern Energy......................................................3
ARTICLE III THE IPO AND ACTIONS PENDING THE IPO..................................................................3
Section 3.1 Transactions Prior to the IPO.....................................................................3
Section 3.2 Use of Proceeds...................................................................................4
Section 3.3 Cooperation.......................................................................................4
Section 3.4 Conditions Precedent to Consummation of the IPO...................................................4
ARTICLE IV THE DISTRIBUTION......................................................................................5
Section 4.1 The Distribution..................................................................................5
Section 4.2 Actions Prior To The Distribution.................................................................6
Section 4.3 Sole Discretion of Southern.......................................................................6
Section 4.4 Conditions To Distribution........................................................................7
Section 4.5 Fractional Shares.................................................................................7
ARTICLE V COVENANTS AND OTHER MATTERS............................................................................8
Section 5.1 Other Agreements..................................................................................8
Section 5.2 Further Instruments...............................................................................8
Section 5.3 Agreement For Exchange of Information.............................................................8
Section 5.4 Auditors and Audits; Annual and Quarterly Statements and Accounting..............................10
Section 5.5 Consistency with Past Practices..................................................................12
Section 5.6 Payment of Expenses..............................................................................12
Section 5.7 Dispute Resolution...............................................................................12
Section 5.8 Governmental Approvals...........................................................................13
Section 5.9 Regulatory Proceedings...........................................................................13
Section 5.10 Regulatory Effect of Distribution................................................................13
Section 5.11 HoldCo Transaction...............................................................................14
Section 5.12 Plant Xxxxxxxx Transaction.......................................................................14
Section 5.13 Continuance of Southern Credit Support...........................................................14
Section 5.14 Mobile Facility..................................................................................15
Section 5.15 Assignment of Agreements.........................................................................15
Section 5.16 Southern Energy Board Representation.............................................................15
ARTICLE VI MISCELLANEOUS........................................................................................16
Section 6.1 LIMITATION OF LIABILITY..........................................................................16
Section 6.2 Entire Agreement.................................................................................16
Section 6.3 Governing Law....................................................................................16
Section 6.4 Termination......................................................................................16
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Section 6.5 Notices..........................................................................................16
Section 6.6 Counterparts.....................................................................................17
Section 6.7 Binding Effect; Assignment.......................................................................17
Section 6.8 Severability.....................................................................................17
Section 6.9 Failure or Indulgence Not Waiver; Remedies Cumulative............................................17
Section 6.10 Amendment.......................................................................................17
Section 6.11 Authority.......................................................................................17
Section 6.12 Interpretation..................................................................................17
Section 6.13 Conflicting Agreements..........................................................................18
ARTICLE VII DEFINITIONS.........................................................................................18
Section 7.1 Affiliated Company...............................................................................18
Section 7.2 Ancillary Agreements.............................................................................18
Section 7.3 Business Day.....................................................................................18
Section 7.4 Code.............................................................................................18
Section 7.5 Commission.......................................................................................18
Section 7.6 Disputes.........................................................................................18
Section 7.7 Distribution.....................................................................................18
Section 7.8 Distribution Agent...............................................................................18
Section 7.9 Distribution Date................................................................................18
Section 7.10 Exchange Act....................................................................................18
Section 7.11 Governmental Approvals..........................................................................19
Section 7.12 Governmental Authority..........................................................................19
Section 7.13 HoldCo Transaction..............................................................................19
Section 7.14 Information.....................................................................................19
Section 7.15 IPO.............................................................................................19
Section 7.16 IPO Closing Date................................................................................19
Section 7.17 IPO Registration Statement......................................................................19
Section 7.18 NYSE............................................................................................19
Section 7.19 Person..........................................................................................19
Section 7.20 Plant Xxxxxxxx..................................................................................19
Section 7.21 Plant Xxxxxxxx Transaction......................................................................19
Section 7.22 Record Date.....................................................................................20
Section 7.23 SE Finance......................................................................................20
Section 7.24 SE Capital Funding..............................................................................20
Section 7.25 Separation......................................................................................20
Section 7.26 Separation Date.................................................................................20
Section 7.27 Southern Business...............................................................................20
Section 7.28 Southern Energy Business........................................................................20
Section 7.29 Southern Energy Group...........................................................................20
Section 7.30 Southern Energy Auditors........................................................................20
Section 7.31 Southern Group..................................................................................20
Section 7.32 Southern's Auditors.............................................................................20
Section 7.33 Subsidiary......................................................................................20
Section 7.34 Xxxxxxxx Xxxxxxx................................................................................21
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Section 7.35 Underwriters...................................................................................21
Section 7.36 Underwriting Agreement.........................................................................21
Schedule 5.11 HoldCoTransaction..............................................................................23
Schedule 5.12 Plant Xxxxxxxx Transaction.....................................................................25
Schedule 5.15 Transferred Agreements.........................................................................26
Schedule 7.1 Southern Energy Affiliated Companies...........................................................27
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MASTER SEPARATION AND DISTRIBUTION AGREEMENT
THIS MASTER SEPARATION AND DISTRIBUTION AGREEMENT (this "Agreement") is
entered into on [____________, 2000], between The Southern Company ("Southern"),
a Delaware corporation, and Southern Energy, Inc. ("Southern Energy"), a
Delaware corporation. Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in Article VII hereof.
RECITALS
WHEREAS, the Boards of Directors of Southern and Southern Energy have
each determined that it would be appropriate and desirable for Southern to
separate the Southern Energy Group from the Southern Group (the "Separation"),
and, in connection with the Separation, for Southern to acquire certain entities
currently associated with the Southern Energy Business from Southern Energy, and
for Southern Energy to acquire certain assets from Southern; and
WHEREAS, Southern and Southern Energy currently contemplate that, in
connection with the Separation, Southern Energy will make an initial public
offering ("IPO") of an amount of its common stock pursuant to a registration
statement on Form S-1 pursuant to the Securities Act of 1933, as amended (the
"IPO Registration Statement"), that will reduce Southern's ownership of Southern
Energy by less than 20%; and
WHEREAS, Southern and Southern Energy further currently contemplate
that, in connection with the Separation, (a) Southern Energy will transfer two
of its wholly-owned Subsidiaries, SE Finance and SE Capital Funding, to Southern
(the "HoldCo Transaction"), and Southern will assume certain liabilities in
connection therewith, and (b) Southern will transfer that certain electric
generating facility and related assets known between the parties hereto as Plant
Xxxxxxxx and located in Xxxxxxx County, Georgia ("Plant Xxxxxxxx") to Southern
Energy for a purchase price equal to the book value of such assets on the date
of transfer (the "Plant Xxxxxxxx Transaction"); and
WHEREAS, Southern currently contemplates that, within twelve months
following the IPO, Southern will distribute to the holders of its common stock,
by means of a pro rata distribution, all of the shares of Southern Energy common
stock then owned by Southern (the "Distribution"); and
WHEREAS, Southern and Southern Energy intend that the Distribution will
qualify as a tax-free distribution under Section 355 of the Internal Revenue
Code of 1986, as amended (the "Code"), and that this Agreement is intended to
be, and is hereby adopted as, a plan of reorganization under Section 368 of the
Code; and
WHEREAS, the parties intend in this Agreement, including the Exhibits
and Schedules hereto, to set forth the principal arrangements between them
regarding the Separation.
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NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE I
SEPARATION
Section 1.1. Separation Date. Unless otherwise provided in this
Agreement, or in any agreement to be executed in connection with this Agreement,
the effective time and date of each undertaking or agreement in connection with
the Separation shall be [12:01 a.m., Eastern Time, July 1, 2000] or such other
date as may be fixed by Southern (the "Separation Date").
Section 1.2. Closing of Transactions. Unless otherwise provided herein,
the closing of the transactions contemplated in Article II shall occur by the
lodging of each of the executed agreements, instruments or other documents to be
executed pursuant to this Agreement with Xxxxxxxx Xxxxxxx LLP, 000 Xxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, to be held in escrow for delivery as
provided in Section 1.3 of this Agreement.
Section 1.3. Exchange of Secretary's Certificates. Upon receipt of a
certificate of the Secretary or an Assistant Secretary of Southern in the form
attached to this Agreement as Exhibit A, Xxxxxxxx Xxxxxxx shall deliver to
Southern Energy on behalf of Southern all of the items required to be delivered
by Southern hereunder pursuant to Section 2.1 of this Agreement and each such
item shall be deemed to be delivered to Southern Energy as of the Separation
Date upon delivery of such certificate. Upon receipt of a certificate of the
Secretary or an Assistant Secretary of Southern Energy in the form attached to
this Agreement as Exhibit B, Xxxxxxxx Xxxxxxx shall deliver to Southern on
behalf of Southern Energy all of the items required to be delivered by Southern
Energy hereunder and each such item shall be deemed to be delivered to Southern
as of the Separation Date upon receipt of such certificate.
ARTICLE II
DOCUMENTS TO BE DELIVERED ON THE SEPARATION DATE
Section 2.1. Documents to Be Delivered By Southern. On the Separation
Date, Southern will deliver, or will cause its appropriate Subsidiaries to
deliver, to Southern Energy all of the following items and agreements
(collectively, together with all agreements and documents contemplated by this
Agreement and such other agreements, including any agreements or documents to be
delivered in connection with the Plant Xxxxxxxx Transaction, the "Ancillary
Agreements"):
(a) A duly executed Technology and Intellectual Property
Ownership and License Agreement substantially in the form attached
hereto as Exhibit C;
(b) A duly executed Employee Matters Agreement substantially
in the form attached hereto as Exhibit D;
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(c) A duly executed Tax Indemnification Agreement
substantially in the form attached hereto as Exhibit E;
(d) A duly executed Transitional Services Agreement
substantially in the form attached hereto as Exhibit F;
(e) A duly executed Confidential Disclosure Agreement
substantially in the form attached hereto as Exhibit G;
(f) A duly executed Indemnification and Insurance Matters
Agreement substantially in the form attached hereto as Exhibit H;
(g) Such other agreements, documents or instruments as the
parties may agree are necessary or desirable in order to achieve the
purposes hereof.
Section 2.2 Documents to Be Delivered by Southern Energy. As of the
Separation Date, in each case where Southern Energy or any of its Subsidiaries
is a party to any agreement or instrument referred to in Section 2.1, Southern
Energy will or will cause its appropriate Subsidiaries to deliver to Southern a
duly executed counterpart of such agreement or instrument.
ARTICLE III
THE IPO AND ACTIONS PENDING THE IPO
Section 3.1 Transactions Prior to the IPO. Subject to the conditions
specified in Section 3.4, Southern and Southern Energy shall use their
reasonable commercial efforts to consummate the IPO. Such efforts shall include,
but not necessarily be limited to, those specified in this Section 3.1:
(a) Registration Statement. Southern Energy shall file the IPO
Registration Statement, and such amendments or supplements thereto, as
may be necessary in order to cause the same to become and remain
effective as required by law or by the managing underwriters for the
IPO (the "Underwriters"), including, but not limited to, filing such
amendments to the IPO Registration Statement as may be required by the
underwriting agreement to be entered into among Southern Energy and the
Underwriters (the "Underwriting Agreement"), the Securities and
Exchange Commission (the "Commission") or federal, state or foreign
securities laws. Southern and Southern Energy shall also cooperate in
preparing, filing with the Commission and causing to become effective a
registration statement registering the common stock of Southern Energy
under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), and any registration statements or amendments thereof
which are required to reflect the establishment of, or amendments to,
any employee benefit and other plans necessary or appropriate in
connection with the IPO, the Separation, the Distribution or the other
transactions contemplated by this Agreement.
(b) Underwriting Agreement. Southern Energy shall enter into
the Underwriting Agreement, in form and substance reasonably
satisfactory to Southern Energy, and shall comply with its obligations
thereunder.
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(c) Other Matters. Southern and Southern Energy shall consult
with each other and the Underwriters regarding the timing, pricing and
other material matters with respect to the IPO.
(d) Blue Sky. Southern Energy shall use its reasonable
commercial efforts to take all such action as may be necessary or
appropriate under state securities and blue sky laws of the United
States (and any comparable laws under any foreign jurisdictions) in
connection with the IPO.
(e) NYSE Listing. Southern Energy shall prepare, file and use
reasonable commercial efforts to seek to make effective, an application
for listing of the common stock of Southern Energy issued in the IPO on
the New York Stock Exchange (the "NYSE"), subject to official notice of
issuance.
Section 3.2. Use of Proceeds. The proceeds of the IPO will be retained
by Southern Energy to be used for general corporate purposes.
Section 3.3 Cooperation. Southern Energy shall consult with, and
cooperate in all respects with, Southern in connection with the pricing of the
common stock of Southern Energy to be offered in the IPO and shall, at
Southern's direction, promptly take any and all actions necessary or desirable
to consummate the IPO as contemplated by the IPO Registration Statement and the
Underwriting Agreement.
Section 3.4 Conditions Precedent to Consummation of the IPO. As soon as
practicable after the Separation Date, the parties hereto shall use their
reasonable commercial efforts to satisfy the conditions listed below to the
consummation of the IPO. The obligations of the parties to use their reasonable
commercial efforts to consummate the IPO shall be conditioned on the
satisfaction, or waiver by Southern, of the following conditions:
(a) Registration Statement. The IPO Registration Statement
shall have been filed and declared effective by the Commission, and
there shall be no stop-order in effect with respect thereto.
(b) Blue Sky. The actions and filings with regard to state
securities and blue sky laws of the United States (and any comparable
laws under any foreign jurisdictions) described in Section 3.1(d) shall
have been taken and, where applicable, have become effective or been
accepted.
(c) NYSE Listing. The common stock of Southern Energy to be
issued in the IPO shall have been accepted for listing on the NYSE, on
official notice of issuance.
(d) Underwriting Agreement. Southern Energy shall have entered
into the Underwriting Agreement and all conditions to the obligations
of Southern Energy and the Underwriters shall have been satisfied or
waived.
(e) Common Stock Ownership. Southern shall be satisfied in its
sole discretion that it will own more than 80% of the outstanding
common stock of Southern Energy following the IPO. All other conditions
to permit the Distribution to qualify as a tax-free
(f) Governmental Approvals. Any material Governmental Approvals
necessary to consummate the IPO shall have been obtained and be in
full force and effect.
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distribution to Southern, Southern Energy and Southern's stockholders
shall, to the extent applicable as of the time of the IPO, be
satisfied, and there shall be no event or condition that is likely to
cause any of such conditions not to be satisfied as of the time of the
Distribution or thereafter.
(g) No Legal Restraints. No order, injunction or decree issued
by any court or agency of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Separation
or the IPO or any of the other transactions contemplated by this
Agreement shall be in effect.
(h) Separation. The Separation shall have become effective.
(i) Other Actions. Such other actions as the parties hereto
may, based upon the advice of counsel, reasonably request to be taken
prior to the IPO in order to assure the successful completion of the
IPO shall have been taken.
(j) No Termination. This Agreement shall not have been
terminated.
ARTICLE IV
THE DISTRIBUTION
Section 4.1 The Distribution.
(a) Delivery of Shares for Distribution. Subject to Section
4.4 hereof, on or prior to the date the Distribution is effective (the
"Distribution Date"), Southern will deliver to the distribution agent
to be appointed by Southern, or if no distribution agent is appointed,
then Southern (the "Distribution Agent"), to distribute to the
stockholders of Southern the shares of common stock of Southern Energy
held by Southern pursuant to the Distribution for the benefit of
holders of record of common stock of Southern on the Record Date, a
single stock certificate, endorsed by Southern in blank, representing
all of the outstanding shares of common stock of Southern Energy then
owned by Southern, and shall cause the transfer agent for the shares of
common stock of Southern to instruct the Distribution Agent to
distribute on the Distribution Date the appropriate number of such
shares of common stock of Southern Energy to each such holder or
designated transferee or transferees of such holder.
(b) Shares Received. Subject to Sections 4.4 and 4.5, each
holder of common stock of Southern on the Record Date (or such holder's
designated transferee or transferees) will be entitled to receive in
the Distribution a number of shares of common stock of Southern Energy
equal to the number of shares of common stock of Southern held by such
holder on the Record Date multiplied by a fraction the numerator of
which is the number of shares of common stock of Southern Energy
beneficially owned by Southern on the Record Date and the denominator
of which is the number of shares of common stock of Southern
outstanding on the Record Date.
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(c) Obligation to Provide Information. Southern Energy and
Southern, as the case may be, will provide to the Distribution Agent
all share certificates and any information required in order to
complete the Distribution on the basis specified above.
Section 4.2 Actions Prior To The Distribution.
(a) Information Statement. Southern and Southern Energy shall
prepare and mail, prior to the Distribution Date, to the holders of
common stock of Southern such information concerning Southern Energy
and the Distribution and such other matters as Southern shall
reasonably determine are necessary and as may be required by law.
Southern and Southern Energy will prepare, and Southern Energy will, to
the extent required under applicable law, file with the Commission any
such documentation which Southern and Southern Energy determines is
necessary or desirable to effectuate the Distribution, and Southern and
Southern Energy shall each use its reasonable commercial efforts to
obtain all necessary approvals from the Commission with respect thereto
as soon as practicable.
(b) Blue Sky. Southern and Southern Energy shall take all such
actions as may be necessary or appropriate under the securities or blue
sky laws of the United States (and any comparable laws under any
foreign jurisdiction) in connection with the Distribution.
(c) NYSE Listing. Southern Energy shall prepare and file, and
shall use its reasonable commercial efforts to have approved, an
application for the listing of the common stock of Southern Energy to
be distributed in the Distribution on the NYSE, subject to official
notice of distribution.
(d) Resignation of Directors and Officers. Immediately prior
to the Distribution, (i) each person who is an officer, director or
employee of any member of the Southern Group and an officer, director
or employee of any member of the Southern Energy Group immediately
prior to the Distribution (each a "Joint Employee") and who is to
continue as an officer, director or employee of any member of the
Southern Group after the Distribution shall resign from each of such
person's positions with each member of the Southern Energy Group, and
(ii) each such Joint Employee who is to continue as an officer,
director or employee of any member of the Southern Energy Group, after
the Distribution, shall resign from each of such person's positions
with each member of the Southern Group.
(e) Conditions. Southern and Southern Energy shall take all
reasonable steps necessary and appropriate to cause the conditions set
forth in Section 4.4 to be satisfied and to effect the Distribution on
the Distribution Date.
Section 4.3 Sole Discretion of Southern. Southern currently intends,
following the consummation of the IPO, to complete the Distribution within
twelve (12) months of the IPO Closing Date. Southern shall, in its sole and
absolute discretion, determine the date of the consummation of the Distribution
and all terms of the Distribution, including, without limitation, the form,
structure and terms of any transaction(s) and/or offering(s) to effect the
Distribution and the timing of and conditions to the consummation of the
Distribution. In addition, Southern may at any time and from time to time until
the completion of the Distribution decide to abandon the Distribution or modify
or change the terms of the Distribution, including, without limitation, by
accelerating or delaying the timing of the consummation of all or part of the
Distribution. Southern Energy shall cooperate with Southern in all respects to
accomplish the Distribution and shall, at Southern's direction, promptly take
any and all actions necessary or desirable to effect the Distribution,
including, without limitation, the registration under the Securities Act of the
common stock of Southern Energy on an appropriate registration form or forms to
be designated
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by Southern. Southern shall select any investment banker(s) and manager(s) in
connection with the Distribution, as well as any financial printer, solicitation
and/or exchange agent and outside counsel for Southern; provided, however, that
nothing herein shall prohibit Southern Energy from engaging (at its own expense)
its own financial, legal, accounting and other advisors in connection with the
Distribution.
Section 4.4 Conditions To Distribution. The following are conditions to
the consummation of the Distribution. The conditions are for the sole benefit of
Southern and shall not give rise to or create any duty on the part of Southern
or the Southern Board of Directors to waive or not waive any such condition.
(a) IRS Ruling. Southern shall have obtained a private letter
ruling from the Internal Revenue Service in form and substance
satisfactory to Southern (in its sole discretion), and such ruling
shall remain in effect as of the Distribution Date, to the effect that
(i) the distribution by Southern of all of its Southern Energy stock to
the stockholders of Southern will qualify as a reorganization under
Section 355 of the Code; and (ii) no gain or loss will be recognized by
(and no amount will otherwise be included in the income of) the
stockholders of Southern upon their receipt of Southern Energy common
stock pursuant to the Distribution.
(b) Governmental Approvals. Any material Governmental
Approvals necessary to consummate the Distribution, the HoldCo
Transaction and the Plant Xxxxxxxx Transaction shall have been obtained
and be in full force and effect;
(c) No Legal Restraints. No order, injunction or decree issued
by any court or agency of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the
Distribution shall be in effect and no other event outside the control
of Southern shall have occurred or failed to occur that prevents the
consummation of the Distribution; and
(d) No Material Adverse Effect. No other events or
developments shall have occurred subsequent to the IPO Closing Date
that, in the judgment of the Board of Directors of Southern, would
result in the Distribution having a material adverse effect on Southern
or on the stockholders of Southern.
Section 4.5 Fractional Shares. As soon as practicable after the
Distribution Date, Southern shall direct the Distribution Agent to determine the
number of whole shares and fractional shares of common stock of Southern Energy
allocable to each holder of record or beneficial owner of common stock of
Southern as of the Record Date, to aggregate all such fractional shares and sell
the whole shares obtained thereby at the direction of Southern, in open market
transactions, at then prevailing trading prices, and to cause to be distributed
to each such holder or for the benefit of each such beneficial owner to which a
fractional share shall be allocable such holder's or owner's ratable share of
the proceeds of such sale, after making appropriate deductions of the amount
required to be withheld for federal income tax purposes and after deducting an
amount equal to all brokerage charges, commissions and transfer taxes attributed
to such sale. Southern and the Distribution Agent shall use their reasonable
commercial efforts to aggregate the shares of common stock of Southern that may
be held by any
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beneficial owner thereof through more than one account in determining the
fractional share allocable to such beneficial owner.
ARTICLE V
COVENANTS AND OTHER MATTERS
Section 5.1 Other Agreements. In addition to the specific agreements,
documents and instruments annexed to this Agreement, Southern and Southern
Energy agree to execute or cause to be executed by the appropriate parties and
deliver, as appropriate, such other agreements, instruments and other documents
as may be necessary or desirable in order to effect the purposes of this
Agreement and the Ancillary Agreements.
Section 5.2 Further Instruments. At the request of Southern Energy and
without further consideration, Southern will execute and deliver, and will cause
its applicable Subsidiaries to execute and deliver, to Southern Energy and its
Subsidiaries such other instruments of transfer, conveyance, assignment,
substitution and confirmation and take such action as Southern Energy may
reasonably deem necessary or desirable in order more effectively to transfer,
convey and assign to Southern Energy and its Subsidiaries and confirm Southern
Energy's and its Subsidiaries' title to all of the assets, rights and other
things of value contemplated to be transferred to Southern Energy and its
Subsidiaries pursuant to this Agreement, the Ancillary Agreements, and any
documents referred to therein, to put Southern Energy and its Subsidiaries in
actual possession and operating control thereof and to permit Southern Energy
and its Subsidiaries to exercise all rights with respect thereto (including,
without limitation, rights under contracts and other arrangements as to which
the consent of any third party to the transfer thereof shall not have previously
been obtained). At the request of Southern and without further consideration,
Southern Energy will execute and deliver, and will cause its applicable
Subsidiaries to execute and deliver, to Southern and its Subsidiaries all
instruments, assumptions, novations, undertakings, substitutions or other
documents and take such other action as Southern may reasonably deem necessary
or desirable in order to have Southern Energy fully and unconditionally assume
and discharge the liabilities contemplated to be assumed by Southern Energy
under this Agreement or any document in connection herewith and to relieve the
Southern Group of any liability or obligation with respect thereto and evidence
the same to third parties. Neither Southern nor Southern Energy shall be
obligated, in connection with the foregoing, to expend money other than
reasonable out-of-pocket expenses, attorneys' fees and recording or similar
fees. Furthermore, each party, at the request of another party hereto, shall
execute and deliver such other instruments and do and perform such other acts
and things as may be necessary or desirable for effecting completely the
consummation of the transactions contemplated hereby.
Section 5.3 Agreement For Exchange of Information. Each of Southern and
Southern Energy agrees to provide, or cause to be provided, to each other, at
any time before or after the Distribution Date, as soon as reasonably
practicable after written request therefor, any Information in the possession or
under the control of such party that the requesting party reasonably needs (i)
to comply with reporting, disclosure, filing or other requirements imposed
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on the requesting party (including under applicable securities laws) by a
Governmental Authority having jurisdiction over the requesting party, (ii) for
use in any other judicial, regulatory, administrative or other proceeding or in
order to satisfy audit, accounting, claims, regulatory, litigation or other
similar requirements, (iii) to comply with its obligations under this Agreement
or any Ancillary Agreement or (iv) in connection with the ongoing businesses of
Southern or Southern Energy as it relates to the conduct of such businesses
prior to the Distribution Date, as the case may be; provided, however, that in
the event that any party determines that any such provision of Information could
be commercially detrimental, violate any law or agreement, or waive any
attorney-client privilege, the parties shall take all reasonable measures to
permit the compliance with such obligations in a manner that avoids any such
harm or consequence.
(a) Internal Accounting Controls; Financial Information. After the
Separation Date, (i) each party shall maintain in effect at its own cost and
expense adequate systems and controls for its business to the extent necessary
to enable the other party to satisfy its reporting, accounting, audit and other
obligations, and (ii) each party shall provide, or cause to be provided, to the
other party and its Subsidiaries in such form as such requesting party shall
request, at no charge to the requesting party, all financial and other data and
information as the requesting party determines necessary or advisable in order
to prepare its financial statements and reports or filings with any Governmental
Authority.
(b) Ownership of Information. Any Information owned by a party that is
provided to a requesting party pursuant to this Section 5.3 shall be deemed to
remain the property of the providing party. Unless specifically set forth
herein, nothing contained in this Agreement shall be construed as granting or
conferring rights of license or otherwise in any such Information.
(c) Record Retention. To facilitate the possible exchange of
Information pursuant to this Section 5.3 and other provisions of this Agreement
after the Distribution Date, each party agrees to use its reasonable commercial
efforts to retain all Information in its respective possession or control on the
Distribution Date substantially in accordance with its policies as in effect on
the Separation Date. However, except as set forth in the Tax Indemnification
Agreement, at any time after the Distribution Date, each party may amend their
respective record retention policies at such party's discretion; provided,
however, that if a party desires to effect the amendment within three (3) years
after the Distribution Date, the amending party must give thirty (30) days prior
written notice of such change in the policy to the other party to this
Agreement. No party will destroy, or permit any of its Subsidiaries to destroy,
any Information that exists on the Separation Date (other than Information that
is permitted to be destroyed under the current record retention policy of such
party) without first using its reasonable commercial efforts to notify the other
party of the proposed destruction and giving the other party the opportunity to
take possession of such Information prior to such destruction.
(d) Limitation of Liability. No party shall have any liability to any
other party in the event that any Information exchanged or provided pursuant to
this Section is found to be inaccurate, in the absence of willful misconduct by
the party providing such Information. No party shall have any liability to any
other party if any Information is destroyed or lost after reasonable commercial
efforts by such party to comply with the provisions of Section 5.4(c).
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(e) Other Agreements Providing For Exchange of Information. The rights
and obligations granted under this Section 5.3 are subject to any specific
limitations, qualifications or additional provisions on the sharing, exchange or
confidential treatment of Information set forth in this Agreement and any
Ancillary Agreement.
(f) Production of Witnesses; Records; Cooperation. After the
Distribution Date, except in the case of a legal or other proceeding by one
party against another party (which shall be governed by such discovery rules as
may be applicable under Section 5.7 or otherwise), each party hereto shall use
its reasonable commercial efforts to make available to each other party, upon
written request, the former, current and future directors, officers, employees,
other personnel and agents of such party as witnesses and any books, records or
other documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required in connection with
any legal, regulatory, administrative or other proceeding in which the
requesting party may from time to time be involved, regardless of whether such
legal, regulatory, administrative or other proceeding is a matter with respect
to which indemnification may be sought hereunder. The requesting party shall
bear all costs and expenses in connection therewith.
Section 5.4 Auditors and Audits; Annual and Quarterly Statements and
Accounting. Each party agrees that, for so long as Southern Energy remains a
Subsidiary of Southern, and with respect to any financial reporting period
during which Southern Energy was a Subsidiary of Southern:
(a) Selection of Auditors. Southern Energy shall not select a
different accounting firm than the firm selected by Southern to audit
its financial statements to serve as its independent certified public
accountants (the "Southern Energy Auditors") for purposes of providing
an opinion on its consolidated financial statements without Southern's
prior written consent (which shall not be unreasonably withheld).
(b) Date of Auditors' Opinion and Quarterly Reviews. Southern
Energy shall use its reasonable commercial efforts to enable the
Southern Energy Auditors to complete their audit such that they will
date their opinion on Southern Energy's audited annual financial
statements on the same date that Southern's independent certified
public accountants ("Southern's Auditors") date their opinion on
Southern's audited annual financial statements, and to enable Southern
to meet its timetable for the printing, filing and public dissemination
of Southern's annual financial statements. Southern Energy shall use
its reasonable commercial efforts to enable the Southern Energy
Auditors to complete their quarterly review procedures such that they
will provide clearance on Southern Energy's quarterly financial
statements on the same date that Southern's Auditors provide clearance
on Southern's quarterly financial statements.
(c) Annual and Quarterly Financial Statements. Southern Energy
shall provide to Southern on a timely basis all Information that
Southern reasonably requires to meet its schedule for the preparation,
printing, filing, and public dissemination of Southern's annual and
quarterly financial statements. Without limiting the generality of the
foregoing, Southern Energy will provide all required financial
Information with respect to
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Southern Energy and its Subsidiaries to the Southern Energy Auditors in
a sufficient and reasonable time and in sufficient detail to permit the
Southern Energy Auditors to take all steps and perform all reviews
necessary to provide sufficient assistance to Southern's Auditors with
respect to Information to be included or contained in Southern's annual
and quarterly financial statements. Similarly, Southern shall provide
to Southern Energy on a timely basis all Information that Southern
Energy reasonably requires to meet its schedule for the preparation,
printing, filing, and public dissemination of Southern Energy's annual
and quarterly financial statements. Without limiting the generality of
the foregoing, Southern will provide all required financial Information
with respect to Southern and its Subsidiaries to Southern's Auditors in
a sufficient and reasonable time and in sufficient detail to permit
Southern's Auditors to take all steps and perform all reviews necessary
to provide sufficient assistance to the Southern Energy Auditors with
respect to Information to be included or contained in Southern Energy's
annual and quarterly financial statements.
(d) Identity of Personnel Performing the Annual Audit and
Quarterly Reviews. Southern Energy shall authorize the Southern Energy
Auditors to make available to Southern's Auditors both the personnel
who performed or are performing the annual audits and quarterly reviews
of Southern Energy and work papers related to the annual audits and
quarterly reviews of Southern Energy, in all cases within a reasonable
time prior to the Southern Energy Auditors' opinion date, so that
Southern's Auditors are able to perform the procedures they consider
necessary to take responsibility for the work of the Southern Energy
Auditors as it relates to Southern's Auditors' report on Southern's
financial statements, all within sufficient time to enable Southern to
meet its timetable for the printing, filing and public dissemination of
Southern's annual and quarterly statements. Similarly, Southern shall
authorize Southern's Auditors to make available to the Southern Energy
Auditors both the personnel who performed or are performing the annual
audits and quarterly reviews of Southern and work papers related to the
annual audits and quarterly reviews of Southern, in all cases within a
reasonable time prior to Southern's Auditors' opinion date, so that the
Southern Energy Auditors are able to perform the procedures they
consider necessary to take responsibility for the work of Southern's
Auditors as it relates to the Southern Energy Auditors' report on
Southern Energy's statements, all within sufficient time to enable
Southern Energy to meet its timetable for the printing, filing and
public dissemination of Southern Energy's annual and quarterly
financial statements.
(e) Notice of Change in Accounting Principles. Southern Energy
shall give Southern as much prior notice as reasonably practical of any
proposed determination of, or any significant changes in, its
accounting estimates or accounting principles from those in effect on
the Separation Date. Southern Energy will consult with Southern and, if
requested by Southern, Southern Energy will consult with Southern's
Auditors with respect thereto. Southern shall give Southern Energy as
much prior notice as reasonably practical of any proposed determination
of, or any significant changes in, its accounting estimates or
accounting principles from those in effect on the Separation Date.
(f) Conflict with Third-Party Agreements. Nothing in Sections
5.3 and 5.4 shall require Southern Energy to violate any agreement with
any third parties regarding the
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confidentiality of confidential and proprietary information relating to
that third party or its business; provided, however, that in the event
that Southern Energy is required under Sections 5.3 and 5.4 to disclose
any such information, Southern Energy shall use all commercially
reasonable efforts to seek to obtain such customer's consent to the
disclosure of such information.
Section 5.5 Consistency with Past Practices. At all times Southern will
cause Southern Energy before the Separation Date to continue to conduct business
in the ordinary course, including but not limited to acquisitions, divestitures
and project financings, consistent with past practices.
Section 5.6 Payment of Expenses. Southern Energy shall pay all
underwriting fees (other than incentive fees), discounts and commissions
incurred in connection with the IPO. Except as otherwise provided in this
Agreement, the Ancillary Agreements or any other agreement between the parties
relating to the Separation, the IPO or the Distribution, all other out-of-pocket
costs and expenses of the parties hereto in connection with the preparation of
this Agreement and the Ancillary Agreements, the IPO (including underwriting
incentive fees) and the Distribution shall be paid by Southern. Notwithstanding
the foregoing, Southern Energy shall pay any internal fees, costs and expenses
incurred by Southern Energy in connection with the Separation, the IPO and the
Distribution.
Section 5.7 Dispute Resolution. Except as otherwise set forth in any
Ancillary Agreement, resolution of any and all disputes arising from or in
connection with this Agreement, whether based on contract, tort, or otherwise
(collectively, "Disputes"), shall be exclusively governed by and settled in
accordance with the provisions of this Section 5.7.
(a) Negotiation. The parties shall make a good faith attempt
to resolve any Dispute arising out of or relating to this Agreement
through negotiation. Within thirty (30) days after notice of a Dispute
is given by either party to the other party, each party shall select
one or more representatives who are vice presidents, senior vice
presidents or executive vice presidents of such party, which
representatives shall meet and make a good faith attempt to resolve
such Dispute and shall continue to negotiate in good faith in an effort
to resolve the Dispute or renegotiate the applicable section or
provision without the necessity of any formal proceedings. If such
representatives fail to resolve a Dispute within thirty (30) days after
the first meeting of the representatives, such Dispute shall be
referred to the chief executive officers of each of the parties for
resolution. During the course of negotiations under this Section
5.7(a), all reasonable requests made by one party to the other for
information, including requests for copies of relevant documents, will
be honored. The specific format for such negotiations will be left to
the discretion of the designated representatives but may include the
preparation of agreed upon statements of fact or written statements of
position furnished to the other party.
(b) Non-Binding Mediation. In the event that any Dispute
arising out of or related to this Agreement is not settled by the
parties within thirty (30) days after the referral of such Dispute to
the chief executive officers of the parties under Section 5.7(a), the
parties will attempt in good faith to resolve such Dispute by
non-binding mediation in accordance with the American Arbitration
Association Commercial Mediation Rules. The
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mediation shall be held within thirty (30) days of the end of such
thirty (30) day negotiation period of the chief executive officers.
Except as provided below in Section 5.7(c), no litigation for the
resolution of such dispute may be commenced until the parties try in
good faith to settle the dispute by such mediation in accordance with
such rules and either party has concluded in good faith that amicable
resolution through continued mediation of the matter does not appear
likely. The costs of mediation shall be shared equally by the parties
to the mediation. Any settlement reached by mediation shall be recorded
in writing, signed by the parties, and shall be binding on them.
(c) Proceedings. Nothing herein, however, shall prohibit
either party from initiating litigation or other judicial or
administrative proceedings if such party would be substantially harmed
by a failure to act during the time that such good faith efforts are
being made to resolve the Dispute through negotiation or mediation. In
the event that litigation is commenced under this Section 5.7(c), the
parties agree to continue to attempt to resolve any Dispute according
to the terms of Sections 5.7(a) and 5.7(b) during the course of such
litigation proceedings under this Section 5.7(c).
Section 5.8 Governmental Approvals. The parties acknowledge that
certain of the transactions contemplated by this Agreement and the Ancillary
Agreements are subject to certain conditions established by applicable
government regulations, orders, and approvals ("Existing Authority"). The
parties intend to implement this Agreement, the Ancillary Agreements and the
transactions contemplated thereby consistent with and to the extent permitted by
Existing Authority and to cooperate toward obtaining and maintaining in effect
such Governmental Approvals as may be required in order to implement this
Agreement and each of the Ancillary Agreements as fully as possible in
accordance with their respective terms. To the extent that any of the
transactions contemplated by this Agreement or any Ancillary Agreement require
any Governmental Approvals, the parties will use their reasonable commercial
efforts to obtain any such Governmental Approvals.
Section 5.9 Regulatory Proceedings. For a period of eighteen (18)
months after the Distribution Date, neither Southern Energy nor any Subsidiary
of Southern Energy will initiate, intervene in, or participate in any
proceedings or matter before the Federal Energy Regulatory Commission or any
agency or legislature of the States of Alabama, Florida, Georgia or Mississippi
which directly involves (1) corporate transactions or (2) the generation,
transmission, distribution, purchase or sale of electric power by Southern or
any of its Subsidiaries unless prior written consent is given by Southern,
except to the extent that any such proceedings or matters involve obligations
arising under this Agreement or any of the Ancillary Agreements, or to the
extent any such proceeding or matter directly involves a contract or agreement
for the purchase or sale of electricity or gas by Southern Energy or any
Subsidiary of Southern Energy, or to the extent any such proceeding before the
Federal Energy Regulatory Commission involves the transmission of electricity,
except for a proceeding to establish a regional transmission organization in
which Southern or any of its Subsidiaries is a participant.
Section 5.10 Regulatory Effect of Distribution. Southern and Southern
Energy intend that the Distribution will result in Southern Energy and its
Subsidiaries losing their status under the Public Utility Holding Company Act of
1935 ("PUHCA") as "affiliates" or "subsidiaries" of Southern or its
Subsidiaries. To the extent a doubt arises as to that legal effect, at the
request of either, Southern and Southern Energy shall cooperate in resolving
such doubt to achieve that mutual goal through reasonable changes in business
practices, cooperating towards regulatory or judicial filings or proceedings or
obtaining no-action letter relief. Without limiting the foregoing, in the event
Southern owns less than 20% of the outstanding common stock of Southern Energy
at any time while PUHCA continues to be in effect, Southern shall, at Southern's
Energy request, enter into voting trust agreements or voting covenants designed
to eliminate attribution of voting securities control to Southern to the extent
necessary to cause Southern Energy and its Subsidiaries to lose their status
under PUHCA as "affiliates" or "subsidiaries" of Southern or its Subsidiaries.
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Section 5.11 HoldCo Transaction. Prior to the Distribution Date and as
promptly as practicable following the receipt of all required Governmental
Approvals and any required consents or approvals of any lender to Southern or
Southern Energy or its Subsidiaries, (a) Southern Energy and Southern shall
cause SE Finance and SE Capital Funding to be transferred to Southern, in
substantially the manner set forth on Schedule 5.11(a) or in such other manner
as Southern and Southern Energy may agree, and each of Southern and Southern
Energy shall execute and deliver any and all instruments of transfer, stock
transfer powers or other agreements or documents and take such actions as may be
necessary to effectively transfer SE Finance and SE Capital Funding to Southern
in such manner, and to permit Southern and its Subsidiaries to exercise all
rights with respect thereto, and (b) Southern and Southern Energy shall execute
and deliver any and all such instruments of substitution and such other
instruments or agreements as shall be necessary for the obligations of Southern
Energy under the each of the agreements set forth on Schedule 5.11(b) (the
"Keepwell Agreements") to be substituted by Southern and for Southern Energy to
be unconditionally released therefrom, provided that Southern shall not be
required to grant or provide any cash or other consideration in connection with
any such assumption or substitution or assume or otherwise become liable for any
liabilities or obligations which exceed the liabilities or obligations of
Southern Energy under the Keepwell Agreements immediately prior to such
assumption.
Section 5.12. Plant Xxxxxxxx Transaction. Southern and Southern Energy
shall each execute and deliver such documents, agreements and instruments and
take such actions as may be necessary to effect the transactions contemplated in
connection with the Plant Xxxxxxxx Transaction, on substantially the terms
set forth in Schedule 5.12 attached hereto.
Section 5.13. Continuance of Southern Credit Support. Notwithstanding
any other provision of this Agreement or the provisions of any Ancillary
Agreement to the contrary, the parties hereby agree that (i) Southern shall
maintain in full force and effect each guarantee, letter of credit, keepwell or
support agreement or other credit support document, instrument or other similar
arrangement issued for the benefit of any Person in the Southern Energy Group by
or on behalf of Southern (the "Credit Support Arrangements") which is
outstanding as of the Separation Date, until such time as such Credit Support
Arrangement terminates in accordance with its terms or is otherwise released at
the request of Southern Energy; provided, that Southern Energy shall use
commercially reasonable efforts, at the request of Southern, to attempt to
release or replace any Credit Support Arrangement for which such replacement or
release is reasonable available; and (ii) after the IPO Closing Date and until
the Distribution Date, upon the request of Southern Energy, Southern shall issue
additional Credit Support Arrangements for the benefit of Southern Company
Energy Marketing L.P. ("SCEM"); provided, that Southern shall not be obligated
to issue any such additional Credit Support Arrangements to the extent that the
aggregate amount of all outstanding Credit Support Arrangements for the benefit
of SCEM would exceed $425,000,000; provided further, that Southern shall not be
required to provide any such additional Credit Support Arrangements on
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terms that are materially more burdensome to Southern than the terms of the
Credit Support Arrangements outstanding on the date of this Agreement; and
provided, further, that Southern may condition such additional Credit Support
Arrangements such that they may expire approximately six (6) months following
the Distribution. In consideration of Southern's provision of the Credit Support
Arrangements, Southern Energy shall pay to Southern, beginning on the
Distribution Date, a monthly fee in an amount equal to 1% per annum, payable in
arrears on the first day of each month on the average aggregate maximum
principal amount of all Credit Support Arrangements outstanding during such
month.
Section 5.14. Mobile Facility. Southern and Southern Energy shall
continue discussions following the Separation Date regarding the appropriate
ownership and operation of the Mobile, Alabama cogeneration facility, including
the possibility of an incentive-based operating agreement with a Southern Energy
Subsidiary.
Section 5.15 Assignment of Agreements. Effective as of the Separation
Date, Southern shall assign, transfer, convey and deliver to Southern Energy,
and agrees to cause its applicable Subsidiaries to assign, transfer, convey and
deliver to Southern Energy's applicable Subsidiaries, and Southern Energy hereby
accepts from Southern, and agrees to cause its applicable Subsidiaries to accept
from Southern's applicable Subsidiaries, all of Southern's and its applicable
Subsidiaries' respective right, title and interest in and to the documents and
agreements listed on Schedule 5.15 attached hereto (each an "Assigned
Agreement"). To the extent that Southern's or its applicable Subsidiaries'
respective right, title and interest in and to any Assigned Agreement may not be
assigned without the consent of another Person which consent has not been
obtained, this provision shall not constitute an agreement to assign the same if
an attempted assignment would constitute a breach thereof or be unlawful, and
Southern shall use its commercially reasonable efforts to obtain any such
required consent(s) by the Distribution Date. The parties agree that if any
consent to an assignment of any Assigned Agreement shall not be obtained or if
any attempted assignment would be ineffective or would impair Southern Energy's
or its applicable Subsidiaries' rights and obligations under such Assigned
Agreement, such that Southern Energy would not in effect acquire the benefit of
all such rights and obligations, Southern, to the maximum extent permitted by
law and such Assigned Agreement, shall enter into such reasonable arrangements
with Southern Energy as are necessary to provide Southern Energy or its
applicable Subsidiary with the benefits and obligations of such Assigned
Agreement from the Separation Date. The parties shall cooperate and shall each
use their commercially reasonable efforts after the Separation Date to obtain an
assignment of such Assigned Agreement to Southern Energy.
Section 5.16 Southern Energy Board Representation. At any time after
the Separation Date, if and for so long as Southern shall beneficially own
(within the meaning of Rule 13d-3 under the Exchange Act) shares of Southern
Energy common stock which at such time represent more than 25% of the
outstanding shares of Southern Energy common stock and less than 50% of such
outstanding shares, Southern shall be entitled to designate two of the nominees
of the Board of Directors of Southern Energy for election to such Board at each
annual meeting of Southern Energy's shareholders, provided that such number of
designees shall be reduced by the number of persons then serving on the Southern
Energy Board
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in any class of directors that is not up for election at such annual meeting who
are then also serving as officers or directors of Southern.
ARTICLE VI
MISCELLANEOUS
Section 6.1 LIMITATION OF LIABILITY. IN NO EVENT SHALL ANY MEMBER OF
THE SOUTHERN GROUP OR SOUTHERN ENERGY GROUP BE LIABLE TO ANY OTHER MEMBER OF THE
SOUTHERN GROUP OR SOUTHERN ENERGY GROUP FOR ANY SPECIAL, CONSEQUENTIAL,
INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON
ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS
AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EACH
PARTY'S INDEMNIFICATION OBLIGATIONS FOR LIABILITIES TO THIRD PARTIES AS SET
FORTH IN THE INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT.
Section 6.2 Entire Agreement. This Agreement, the other Ancillary
Agreements and the Exhibits and Schedules referenced or attached hereto and
thereto, constitutes the entire agreement between the parties with respect to
the subject matter hereof and shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof.
Section 6.3 Governing Law. This Agreement shall be governed and
construed and enforced in accordance with the laws of the State of Delaware as
to all matters regardless of the laws that might otherwise govern under the
principles of conflicts of laws applicable thereto.
Section 6.4 Termination. This Agreement and all Ancillary Agreements
may be terminated and the Distribution abandoned at any time prior to the IPO
Closing Date by and in the sole discretion of Southern without the approval of
Southern Energy. This Agreement may be terminated at any time after the IPO
Closing Date and before the Distribution Date by mutual consent of Southern and
Southern Energy. In the event of termination pursuant to this Section, no party
shall have any liability of any kind to the other party.
Section 6.5 Notices. Any notice, demand, offer, request or other
communication required or permitted to be given by either party pursuant to the
terms of this Agreement shall be in writing and shall be deemed effectively
given the earlier of (i) when received, (ii) when delivered personally, (iii)
one (1) business day after being delivered by facsimile (with receipt of
appropriate confirmation), (iv) one (1) business day after being deposited with
an overnight courier service or (v) four (4) days after being deposited in the
U.S. mail, First Class with postage prepaid, and addressed to the attention of
the party's General Counsel at the address of its principal executive office or
such other address as a party may request by notifying the other in writing.
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Section 6.6 Counterparts. This Agreement, including the Schedules and
Exhibits hereto and the other documents referred to herein, may be executed in
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement.
Section 6.7 Binding Effect; Assignment. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective legal
representatives and successors, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement. This Agreement may
not be assigned by any party hereto.
Section 6.8 Severability. If any term or other provision of this
Agreement or the Schedules or Exhibits attached hereto is determined by a
nonappealable decision by a court, administrative agency or arbitrator to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to either party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the fullest
extent possible.
Section 6.9 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of either party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement or the Schedules or Exhibits attached hereto are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
Section 6.10 Amendment. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to such agreement.
Section 6.11 Authority. Each of the parties hereto represents to the
other that (a) it has the corporate or other requisite power and authority to
execute, deliver and perform this Agreement, (b) the execution, delivery and
performance of this Agreement by it have been duly authorized by all necessary
corporate or other actions, (c) it has duly and validly executed and delivered
this Agreement, and (d) this Agreement is a legal, valid and binding obligation,
enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equity principles.
Section 6.12 Interpretation. The headings contained in this Agreement,
in any Exhibit or Schedule hereto and in the table of contents to this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Schedule or
Exhibit but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
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Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.
Section 6.13 Conflicting Agreements. In the event of conflict between
this Agreement and any Ancillary Agreement or other agreement executed in
connection herewith, the provisions of such other agreement shall prevail.
ARTICLE VII
DEFINITIONS
Section 7.1 Affiliated Company. "Affiliated Company" means, with
respect to Southern, any entity in which Southern holds a 50% or less ownership
interest and, with respect to Southern Energy, any entity in which Southern
Energy holds a 50% or less ownership interest and that is listed on Schedule 7.1
hereto. Schedule 7.1 may be amended from time to time after the date hereof upon
mutual written consent of the parties.
Section 7.2 Ancillary Agreements. "Ancillary Agreements" has the
meaning set forth in Section 2.1 hereof.
Section 7.3 Business Day. "Business Day" means a day other than a
Saturday, a Sunday or a day on which banking institutions located in the State
of Georgia are authorized or obligated by law or executive order to close.
Section 7.4 Code. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
Section 7.5 Commission. "Commission" means the Securities and Exchange
Commission.
Section 7.6 Disputes. "Disputes" has the meaning set forth in Section
5.9 hereof.
Section 7.7 Distribution. "Distribution" has the meaning set forth in
the Recitals hereof.
Section 7.8 Distribution Agent. "Distribution Agent" has the meaning
set forth in Section 4.1 hereof.
Section 7.9 Distribution Date. "Distribution Date" has the meaning set
forth in Section 4.1 hereof.
Section 7.10 Exchange Act. "Exchange Act" means the Securities and
Exchange Act of 1934, as amended.
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Section 7.11 Governmental Approvals. "Governmental Approvals" means any
notices, reports or other filings to be made, or any consents, registrations,
approvals, permits or authorizations to be obtained from, any Governmental
Authority.
Section 7.12 Governmental Authority. "Governmental Authority" shall
mean any federal, state, local, foreign or international court, government,
department, commission, board, bureau, agency, official or other regulatory,
administrative or governmental authority.
Section 7.13 HoldCo Transaction. "HoldCo Transaction" has the meaning
set forth in the Recitals hereof.
Section 7.14 Information. "Information" means information, whether or
not patentable or copyrightable, in written, oral, electronic or other tangible
or intangible forms, stored in any medium, including studies, reports, records,
books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.
Section 7.15 IPO. "IPO" has the meaning set forth in the Recitals
hereof.
Section 7.16 IPO Closing Date. "IPO Closing Date" means the date of the
closing of the IPO upon satisfaction of the conditions of Article II hereof,
which is currently scheduled to occur on or prior to [_________, 2000].
Section 7.17 IPO Registration Statement. "IPO Registration Statement"
means the registration statement on Form S-1 pursuant to the Securities Act of
1933, as amended, to be filed with the Commission registering the shares of
common stock of Southern Energy to be issued in the IPO, together with all
amendments thereto.
Section 7.18 NYSE. "NYSE" means the New York Stock Exchange.
Section 7.19 Person. "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.
Section 7.20 Plant Xxxxxxxx. "Plant Xxxxxxxx" has the meaning set forth
in the Recitals hereof.
Section 7.21 Plant Xxxxxxxx Transaction. "Plant Xxxxxxxx Transaction"
has the meaning set forth in the Recitals hereof.
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Section 7.22 Record Date. "Record Date" means the close of business on
the date to be determined by the Board of Directors of Southern as the record
date for determining the stockholders of Southern entitled to receive shares of
common stock of Southern Energy in the Distribution.
Section 7.23 SE Finance. "SE Finance" means SE Finance Capital
Corporation and its Subsidiaries and Affiliated Companies.
Section 7.24 SE Capital Funding. "SE Capital Funding" means Southern
Energy Capital Funding, Inc. and its Subsidiaries and Affiliated Companies.
Section 7.25 Separation. "Separation" has the meaning set forth in the
Recitals hereof.
Section 7.26 Separation Date. "Separation Date" has the meaning set
forth in Section 1.1 hereof.
Section 7.27 Southern Business. "Southern Business" means any business
of Southern and its Subsidiaries and Affiliated Companies other than (i) the
Southern Energy Business and, (ii) at any time after the Plant Xxxxxxxx
Transaction, Plant Xxxxxxxx.
Section 7.28 Southern Energy Business. "Southern Energy Business" means
(a) the business and operations of Southern Energy, Inc. and its Subsidiaries
and Affiliated Companies, and (b) except as otherwise expressly provided herein,
any terminated, divested or discontinued businesses or operations that at the
time of termination, divestiture or discontinuation primarily related to the
Southern Energy Business as then conducted; provided, that the Southern Energy
Business shall not include the business or operations of HoldCo, SE Finance, SE
Capital Funding or Southern Company Energy Solutions, Inc.
Section 7.29 Southern Energy Group. "Southern Energy Group" means
Southern Energy, each Subsidiary and Affiliated Company of Southern Energy
immediately after the Separation Date and each Person that becomes a Subsidiary
or Affiliate Company of Southern Energy after the Separation Date; provided that
the Southern Energy Group shall not include HoldCo, SE Finance, SE Capital
Funding or Southern Company Energy Solutions, Inc.
Section 7.30 Southern Energy Auditors. "Southern Energy Auditors" means
Southern Energy's independent certified public accountants.
Section 7.31 Southern Group. "Southern Group" means Southern, each
Subsidiary and Affiliated Company of Southern (other than any member of the
Southern Energy Group) immediately after the Separation Date and each Person
that becomes a Subsidiary or an Affiliated Company of Southern after the
Separation Date.
Section 7.32 Southern's Auditors. "Southern's Auditors" means
Southern's independent certified public accountants.
Section 7.33 Subsidiary. "Subsidiary" means with respect to any
specified Person, any corporation, any limited liability company, any
partnership or other legal entity of which such Person or its Subsidiaries owns,
directly or indirectly, more than 50% of the stock or other equity
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interest entitled to vote on the election of the members of the board of
directors or similar governing body. Unless context otherwise requires,
reference to Southern Energy and its Subsidiaries at any time following the
HoldCo Transaction shall not include the subsidiaries of Southern Energy that
will be transferred to Southern in connection with the HoldCo Transaction.
Section 7.34 Xxxxxxxx Xxxxxxx. "Xxxxxxxx Xxxxxxx" means Xxxxxxxx
Xxxxxxx LLP.
Section 7.35 Underwriters. "Underwriters" means the underwriters of the
IPO.
Section 7.36 Underwriting Agreement. "Underwriting Agreement" has the
meaning set forth in Section 3.1(a) hereof.
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WHEREFORE, the parties have signed this Master Separation and Distribution
Agreement effective as of the date first set forth above.
THE SOUTHERN COMPANY SOUTHERN ENERGY, INC.
By: By:
---------------------------- -----------------------------
Name: Name:
Title: Title:
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Schedule 5.11
HoldCo Transaction
(a) Description of HoldCo Transaction. SE Finance and SE Capital
Funding shall be transferred from Southern Energy to Southern in a manner and
in an order substantially similar to the following:
1. Southern Energy shall create a new wholly-owned subsidiary ("HoldCo").
2. Southern Energy then makes contribution to capital of HoldCo; such
contribution consists of 100% of the common stock of SE Finance and SE
Capital Funding.
3. Southern Company Energy Solutions, Inc. (wholly-owned subsidiary of
Southern) merges with and into HoldCo, with HoldCo as the surviving
corporation. After merger, Southern Energy owns 80% of the stock of
HoldCo and Southern owns 20% of the stock of HoldCo.
4. On or prior to the IPO Closing Date, subject to the receipt of
applicable regulatory and lender approvals and consents, Southern
Energy dividends its 80% interest in HoldCo up to Southern, such that
HoldCo thereby becomes a wholly-owned subsidiary of Southern. In the
event that the dividend occurs after the IPO Closing Date, a preferred
class of Southern Energy stock will be issued to Southern, with right
to receive the dividend of HoldCo shares.
(b) Credit Support to be Substituted for and Released. In connection
with the HoldCo Transaction, the following instruments will be substituted for
by Southern, and Southern Energy will be released from any liability
thereunder:
1. Keep Well Agreement dated December 17, 1998, from Southern Energy to
Southern Energy Finance Company, Inc. and Credit Suisse First Boston,
as agent for the lenders under the Term Loan Agreement and various Note
Purchase Agreements dated of even date therewith.
2. Keep Well Agreement dated November 17, 1999, as amended and restated as
of December 16, 1999, from Southern Energy to SE Finance Capital
Corporation and ING (U.S.) Capital L.L.C., as agent for the lenders
under the Amended and Restated Term Loan Agreement.
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Schedule 5.12
Plant Xxxxxxxx Transaction
PLANT XXXXXXXX TRANSACTION
PLANT XXXXXXXX
TERM SHEET
This Plant Xxxxxxxx Transaction Term Sheet ("Term Sheet") sets forth
key terms and conditions that are proposed to be incorporated into an Asset Sale
Agreement, a Construction, Operation and Maintenance Agreement, a Capacity
Purchase Agreement, and an Interconnection and Site Agreement (collectively the
"Agreements") to be entered into by and between Georgia Power Company ("Georgia
Power") and Southern Energy, Inc. ("Southern Energy" and collectively with
Georgia Power, the "Parties") related to the proposed transfer by Georgia Power
of its Plant Xxxxxxxx generating facility to Southern Energy or a subsidiary of
Southern Energy. This Term Sheet sets out key terms and conditions that the
Parties agree are to be included in any final, mutually executed agreements on
the subject transaction. This Term Sheet is not intended by the Parties to
itself create any binding contractual obligations on either party. Certain
additional material terms would have to be negotiated and agreed upon, and
final, written agreements executed by the parties, before Georgia Power or
Southern Energy would incur any contractual obligations to the other under the
terms of this Term Sheet.
ASSET SALE AGREEMENT.
- Transfer and Payment of Purchase Price. A day before
Southern's final separation and distribution of
Southern Energy stock, Georgia Power Company will
transfer Plant Xxxxxxxx to an LLC to be formed by
Southern Energy for net book value (assumed to be
about $262 million at April 1, 2001).
- Conditions. The transfer will be conditioned upon
obtaining all regulatory approvals necessary to
effectuate the transactions to be implemented under
the Asset Sale Agreement.
- Construction. Prior to the transfer, Georgia Power
will be required to finish construction and testing
of the first eight units in accordance with the
procurement contracts and Prudent Utility Practices.
If the transfer predates commercial operation of the
final two units (Nos. 9 and 10), Georgia Power will
complete construction and testing, and LLC will pay
actual construction costs on a monthly basis.
- Covenants. The ASA will contain standard affirmative
and negative covenants applicable to the period
prior to closing that will require Georgia Power to
operate and maintain the plant in the ordinary
course of business according to Prudent Utility
Practices and will prohibit Georgia Power from
making any adverse distinction between the plant and
other facilities it continues to own.
- First Offer. In the event the LLC desires to sell
the plant (or the owner of the LLC desires to sell
the LLC) to a third party that is not an affiliate
of Southern Energy, the LLC (or such parent company)
will offer Georgia Power the right to purchase the
plant (or LLC) with such offer setting out the key
terms and conditions proposed by the LLC for the
sale. If Georgia Power does not accept such offer
within 60 days, the LLC (or parent company) may
enter into an agreement to sell the plant (or LLC)
to a third party on terms no less favorable (from
the seller's perspective) than the terms offered to
Georgia Power at any time within the 12-month period
following the expiration of such 60-day period. In
the event the plant or LLC is being sold as part of
a portfolio, this provision will apply solely to the
plant or LLC and not to other assets or companies
included in such portfolio.
- Taxes. The LLC will be responsible for property
taxes associated with the ownership of the plant
after the closing.
- Environmental. Provisions reflecting the allocation
of environmental risks described below will be
included.
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CONSTRUCTION, OPERATION AND MAINTENANCE AGREEMENT.
- Construction. If the transfer predates commercial
operation of the final two units (Nos. 9 and 10),
Georgia Power will complete construction, and the
LLC will pay actual construction costs. Georgia
Power will consult and coordinate construction with
the LLC.
- Term. This agreement will become effective upon the
transfer of the facility to the LLC and will
terminate upon the expiration or termination of the
Capacity Purchase Agreement.
- Responsibility for Operations and Maintenance.
Georgia Power will operate and maintain the original
ten units for its own account pursuant to the
Capacity Purchase Agreement, as well as any other
units built at the facility after the closing (the
site is permitted for an additional six combustion
turbines, and common facilities have been sized
accordingly).
- Long Term Service Agreement. The Parties expect that
Georgia Power will enter into a long term service
agreement (the "LTSA") with the manufacturer of the
combustion turbines or other appropriate party to
provide for significant maintenance and spare parts
for the term of this agreement.
- New Units. This agreement will provide for the
proper allocation of O&M expenses and capital
additions to the original ten units and any new
units built by the LLC. The LLC will bear the costs
allocated to operating the new units.
- Access. The LLC will provide Georgia Power access to
the plant for the purpose of performing its
obligations under the O&M agreement. The LLC will
have free and unrestricted access to the plant.
- Operating Standard. Georgia Power will be required
to operate the plant in accordance with Prudent
Utility Practices, the Interconnection and Site
Agreement and the Capacity Purchase Agreement.
Georgia Power will operate the plant in a manner
consistent with its operation of its own units of
the same design.
- Employees. Georgia Power will provide and be solely
responsible for all personnel required to operate
and maintain the plant. All personnel will be
adequately trained by Georgia Power for their
respective positions.
- Environmental. Provisions reflecting the allocation
of environmental risks described below will be
included.
- Assignment. The LLC will be allowed to assign the O&M
Agreement without Georgia Power's consent to (i) a
purchaser, transferee or lessee of substantially all
of its rights and title to the plant, provided that
Southern Energy will remain responsible for providing
the credit support required under the Capacity
Purchase Agreement unless such purchaser, transferee
or lessee provides similar credit support, (ii) an
affiliate of Southern Energy, provided that Southern
Energy will remain responsible for providing the
credit support required under the Capacity Purchase
Agreement unless such affiliate provides similar
credit support, or (iii) a lender or trustee in
connection with financing or refinancing the plant
(including in connection with any remedies under
such financing or refinancing). An assignment made
under clause (i) or (ii) of the preceding sentence
will relieve the LLC of any further obligations to
Georgia Power arising after the date of the
assignment. Georgia Power will be allowed to assign
the O&M Agreement to any affiliate to which it
transfers it rights under the Capacity Purchase
Agreement. If such affiliate provides credit support
for its obligations to the LLC comparable in form and
amount to that required from the LLC, then such an
assignment by Georgia Power will relieve it of any
further obligations to the LLC arising after the date
of the assignment. No other assignment of this
agreement may be made without the other party's
written consent, which may be withheld in its sole
discretion.
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- Condition of Plant at Termination. Upon termination
of the O&M Agreement, Georgia Power will be required
to return the plant to the LLC in good operating
condition, usual wear and tear excepted.
CAPACITY PURCHASE AGREEMENT.
- Term. The term of this agreement will be 10 years.
The term will commence following the divestiture by
Southern Company of its ownership of Southern
Energy's common stock.
- Power Purchases and Fuel Supply. Georgia Power (or
the new sixth operating company) will dispatch and
be entitled to the entire output of the initial ten
units and will supply all fuel required by those
units during the term of the Capacity Purchase
Agreement at no cost to the LLC.
- Capacity Payments. Capacity payments will be made by
Georgia Power to the LLC on a monthly basis
beginning with the date on which the Capacity
Purchase Agreement becomes effective. If the
transfer predates completion of Units 9 or 10,
capacity payments for each of those units will
commence upon the later of (i) when that unit is
available for dispatch by Georgia Power or (ii) June
1, 2001.
- Operating Cost Responsibility. Georgia Power will
bear all costs associated with the operation or
maintenance of the plant. The LLC will reimburse
Georgia Power for any such costs that are
capitalized in accordance with generally accepted
accounting principles and consistent with Georgia
Power's standard accounting practices applicable to
like facilities, provided that Georgia Power will
not be reimbursed for costs that were characterized
by Georgia Power as items to be expensed in
preparing the recurring capital table projecting
capital costs for the plant through 2011 that
Georgia Power has provided to Southern Energy.
- Non-Routine Capital Expenses. Georgia Power may
incur capital expenses for the purpose of enhancing
the output of the plant or other non-routine capital
expenses only with the prior approval of the LLC.
Any such capital expense approved by the LLC will
cause the capacity charges for the affected units to
be increased by an amount necessary to recover that
capital and related expenses plus a return on
capital that reflects the LLC's cost of capital
based on a return on equity of 13.5% over the life
of the improvement through a levelized fixed rate
charge.
- Annual Budget. A capital budget for the first
calendar year during which the Capacity Purchase
Agreement will be in effect will be attached to the
agreement. At least 90 days prior to each subsequent
calendar year, Georgia Power will provide the LLC a
proposed capital budget for that contract year for
the review and approval of the LLC. Georgia Power
shall be permitted to include in the annual capital
budget routine capital expenses that are consistent
with Georgia Power's practices on the plants it owns
of similar design. If the parties cannot agree on a
capital budget for that calendar year at least 60
days prior to the start of such year, Georgia Power
shall make only those capital expenditures agreed to
by the LLC until the dispute has been resolved by
binding arbitration by a third party expert, which
will be done on an expedited basis in accordance
with specific procedures to be set forth in this
agreement.
- Force Majeure. During the suspension of performance
due to a Force Majeure event, Georgia Power will be
excused from making monthly capacity payments on a
daily pro-rated and a unit pro-rated basis. Force
Majeure events will not include (i) strikes by
employees of Georgia Power, of its affiliates or of
its onsite subcontractors; (ii) unavailability of
fuel, except where the unavailability is due to a
failure of the LLC's gas transportation facilities
for reasons beyond the control of Georgia Power as
operator; (iii) changes in market conditions that
affect the cost or price of energy or fuel; (iv)
loss of load or disruption of electricity markets;
or (v) difficulty or inability to make payments.
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- Forced Outages. For each year through 2004, if
Georgia Power has to pay replacement power costs to
its customers under its currently existing agreements
that reference the plant or specific units of the
plant (the "Georgia Power PPAs") as a result of
forced outages at any of the initial ten units, the
LLC will pay 75% of those costs. For each year after
2004, if Georgia Power has to pay replacement power
costs to its customers under either the Georgia Power
PPAs or any new agreements that reference the plant
or specific units of the plant as a result of forced
outages at any of the initial ten units, the LLC will
with respect to such year pay Georgia Power the
lesser of (i) 75% of the replacement power costs that
Georgia Power actually paid for such year under such
agreements, (ii) 75% of the replacement power costs
that Georgia Power would have paid for such year
under such agreements had the terms of those
agreements (including any new agreements) been the
same as the terms of the Georgia Power PPAs, or (iii)
75% of the average of the annual capacity payments to
be made by Georgia Power under the Capacity Purchase
Agreement for the years after 2004. Georgia Power
will not amend the provisions of the Georgia Power
PPAs addressing availability or liability for
replacement power costs or waive its rights with
respect thereto without the consent of the LLC.
Forced outages shall not include outages caused by
the unavailability of fuel, the quality of fuel, or
gross negligence or willful misconduct by the
operator. If Georgia Power is denied access to or
possession of the ten units for reasons other than
its breach (such as, for example, by order of a
bankruptcy court), the LLC will pay 100% of any such
replacement costs. Georgia Power will provide power
to its customers under the Georgia Power PPAs and
operate its system as if it owned 100% of the plant
and was itself responsible for 100% of such
replacement power costs.
- Credit Support. The LLC's payment obligations under
this agreement will be secured by a guarantee from
Southern Energy, a letter of credit or other
collateral acceptable to Georgia Power capped at
$52.5 million. In the event Southern Energy provides
a guarantee and Southern Energy's debt securities (i)
are rated below "Ba2" by Xxxxx'x, (ii) while rated
"Ba2" by Xxxxx'x are placed on review for possible
downgrade, (iii) are rated below "BB" by S&P, or (iv)
while rated "BB" by S&P are placed on creditwatch
with negative implications, then Southern Energy
will, upon Georgia Power's request, provide credit
support in the form of a letter of credit or other
collateral acceptable to Georgia Power capped at
$52.5 million in substitution for the Southern Energy
guarantee. If Southern Energy subsequently obtains at
least a "Ba2" rating from Xxxxx'x (without being on
review for negative downgrade) and at least a "BB"
rating from S&P (without being on creditwatch with
negative implications), then the alternative credit
support may be replaced by a guarantee from Southern
Energy (capped at $52.5 million). In the event the
plant or the LLC is sold to a third party, Southern
Energy will remain responsible for providing such
credit support unless the third party provides
similar credit support reasonably acceptable to
Georgia Power. If Georgia Power assigns this
agreement to an affiliate and such affiliate provides
credit support to the LLC comparable in form and
amount to that provided by the LLC as described
above, then Georgia Power will be relieved of its
obligations to the LLC from the date of such
assignment.
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- Environmental. Georgia Power will be required to
make O&M and capital expenditures to comply with
changes in environmental laws or regulations and use
commercially reasonable efforts to recover such
costs from purchasers under provisions in the
Georgia Power PPAs. The LLC will be responsible for
such O&M and capital expenditures to the extent such
expenses cannot be recovered from Georgia Power's
customers. Georgia Power may not amend any
pass-through provisions or waive its rights to pass
through such costs to its customers without the
LLC's prior consent.
- Assignment. This agreement will have the same
assignment provisions as are described under the O&M
Agreement above.
INTERCONNECTION AND SITE AGREEMENT.
- Interconnection Point. This agreement will specify
the point of physical interconnection between the
230KV line from the plant and the Center substation.
- Interconnection Service. Under this agreement,
Georgia Power and any successor will agree to
provide interconnection service to its transmission
system for all units at the plant for the life of
the plant.
- Construction. Georgia Power will be required to
finish construction and testing of the
interconnection facilities.
- Ownership and O&M. The interconnection facilities
will be owned, operated and maintained by the LLC.
- Assignment. This agreement will have the same
assignment provisions as are described under the O&M
Agreement above.
PLANT XXXXXXXX ENVIRONMENTAL PROVISIONS. These environmental liability
assumption and indemnification provisions may appear in a separate Plant
Xxxxxxxx agreement (as described above) or in a separate environmental matters
agreement.
- The LLC will be responsible for any incident
occurring prior to Georgia Power's acquisition of
the plant site.
- Georgia Power will be responsible for any incident
occurring during the period commencing on its
acquisition of the plant site through the date it
transfers the plant to the LLC.
- Georgia Power will indemnify the LLC for any costs
or liability related to environmental conditions
created by Georgia Power while it is operating the
plant. The LLC will indemnify Georgia Power for any
costs or liabilities related to environmental
conditions at the plant that do not arise out of
Georgia Power's actions as operator.
- Upon return of possession of the plant following the
ten-year O&M agreement, Southern Energy will be
responsible for any subsequent incidents.
- As set out above, the Capacity Purchase Agreement
will require Georgia Power to make O&M and capital
expenditures to comply with changes in environmental
laws or regulations and use reasonable commercial
efforts to recover such costs from purchasers under
provisions in the Georgia Power PPAs. The LLC will be
responsible for such O&M and capital expenditures to
the extent such expenses cannot be recovered from
Georgia Power's customers.
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Schedule 5.15
Transferred Agreements
34
Schedule 7.1
Southern Energy Affiliated Companies
Each Affiliated Company listed on Exhibit 21.1 to the in the final
prospectus filed by Southern Energy with the SEC pursuant to Rule 424(b) under
the Securities Act of 1933, as amended, in connection with the IPO; other than
SE Finance and SE Capital Funding.