FORM OF
TRANSITIONAL SERVICES AGREEMENT
BETWEEN
THE SOUTHERN COMPANY
AND
SOUTHERN ENERGY, INC.
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TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS.................................................................................. 1
1.1 Additional Services.............................................................................. 1
1.2 Ancillary Agreements............................................................................. 1
1.3 [intentionally omitted].......................................................................... 1
1.4 Confidential Disclosure Agreement................................................................ 1
1.5 Distribution Date................................................................................ 1
1.6 Engineering and Technical Services............................................................... 1
1.7 Impracticable.................................................................................... 1
1.8 Master Separation And Distribution Agreement..................................................... 1
1.9 Separation Date.................................................................................. 2
1.10 Service(s)...................................................................................... 2
1.11 Subsidiary...................................................................................... 2
1.12 Warranty........................................................................................ 2
ARTICLE 2 TRANSITION SERVICE SCHEDULES.................................................................. 2
ARTICLE 3 SERVICES..................................................................................... 3
3.1 Services Generally............................................................................... 3
3.2 Service Parameters............................................................................... 3
3.3 Impracticability................................................................................. 3
3.4 Additional Resources............................................................................. 3
3.5 Additional Services.............................................................................. 3
3.6 Further Obligations As To Services............................................................... 3
3.7 Service Representatives.......................................................................... 4
ARTICLE 4 TERM......................................................................................... 4
ARTICLE 5 COMPENSATION................................................................................. 5
5.1 Charges For Services............................................................................. 5
5.2 Payment Terms.................................................................................... 5
5.3 Performance Under Ancillary Agreements........................................................... 5
5.4 Error Correction; True-Ups; Accounting........................................................... 5
5.5 Pricing Adjustments.............................................................................. 6
ARTICLE 6 GENERAL OBLIGATIONS; STANDARD OF CARE........................................................ 6
6.1 Performance Metrics: Southern.................................................................... 6
6.2 DISCLAIMER OF WARRANTIES......................................................................... 6
6.3 Performance Metrics: Southern Energy............................................................. 6
6.4 Transitional Nature Of Services; Changes......................................................... 7
6.5 Responsibility For Errors; Delays................................................................ 7
6.6 Good Faith Cooperation; Consents................................................................. 7
ARTICLE 7 EARLY TERMINATION............................................................................ 7
7.1 Early Termination................................................................................ 7
7.2 Survival......................................................................................... 8
ARTICLE 8 RELATIONSHIP BETWEEN THE PARTIES............................................................. 8
ARTICLE 9 SUBCONTRACTORS............................................................................... 8
ARTICLE 10 INTELLECTUAL PROPERTY........................................................................ 9
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ARTICLE 11 ENGINEERING AND TECHNICAL SERVICES.......................................................... 10
11.1 Engineering and Technical Services.............................................................. 10
11.2 Professional Responsibility Regarding Engineering and Technical Services........................ 10
11.3 Applicable Laws and Regulations................................................................. 10
11.4 Insurance....................................................................................... 11
11.5 Reuse of Documents.............................................................................. 11
11.6 Non-Restrictive Relationship.................................................................... 11
ARTICLE 12 CONFIDENTIALITY............................................................................. 11
ARTICLE 13 LIMITATION OF LIABILITY..................................................................... 12
ARTICLE 14 FORCE MAJEURE............................................................................... 12
ARTICLE 15 DISPUTE RESOLUTION.......................................................................... 12
15.1 Mediation....................................................................................... 12
15.2 Arbitration..................................................................................... 13
15.3 Court Action.................................................................................... 13
15.4 Continuity Of Service And Performance........................................................... 13
ARTICLE 16 MISCELLANEOUS............................................................................... 14
16.1 Entire Agreement................................................................................ 14
16.2 Existing Services Agreement..................................................................... 14
16.3 Governing Law................................................................................... 14
16.4 Descriptive Headings............................................................................ 14
16.5 Notices......................................................................................... 14
16.6 Nonassignability; Third-Party Beneficiaries..................................................... 15
16.7 Severability.................................................................................... 15
16.8 Failure Or Indulgence Not Waiver; Remedies Cumulative........................................... 16
16.9 Amendment....................................................................................... 16
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TRANSITIONAL SERVICES AGREEMENT
THIS TRANSITIONAL SERVICES AGREEMENT (the "Agreement") dated as of
September 1, 2000, between The Southern Company, a Delaware corporation
("Southern"), having an office at 270 Peachtree Street, Atlanta, Georgia 30303
and Southern Energy, Inc., a Delaware corporation ("Southern Energy"; Southern
Energy and Southern each being referenced herein individually as a "Party," and
collectively as the "Parties"), having an office at 900 Ashwood Parkway, Suite
500, Atlanta, Georgia 30338.
ARTICLE 1
DEFINITIONS
For the purpose of this Agreement, the following capitalized terms
shall have the following meanings:
1.1 Additional Services. "Additional Services" shall have the
meaning set forth in Section 3.5.
1.2 Ancillary Agreements. "Ancillary Agreements" shall have the
meaning set forth in the Master Separation and Distribution Agreement.
1.3 [Intentionally omitted].
1.4 Confidential Disclosure Agreement. "Confidential Disclosure
Agreement" shall mean that certain Confidential Disclosure Agreement between
Southern and Southern Energy.
1.5 Distribution Date. "Distribution Date" shall have the meaning
set forth in the Master Separation and Distribution Agreement.
1.6 Engineering and Technical Services. "Engineering and Technical
Services" shall have the meaning set forth in Section 11.1.
1.7 Impracticable. "Impracticable" shall have the meaning set
forth in Section 3.3.
1.8 Master Separation And Distribution Agreement. "Master
Separation and Distribution Agreement" shall mean that certain Master
Separation and Distribution Agreement between Southern and Southern Energy.
1.9 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 action or agreement in connection with the
Separation shall be as of 12:01 a.m., Eastern Time, September 1, 2000 or such
other date as may be fixed by the Board of Directors of Southern (the
"Separation Date").
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1.10 Service(s). "Service(s)" shall have the meaning set forth in
Section 3.1 and includes the Engineering and Technical Services.
1.11 Subsidiary. "Subsidiary" of any Party means a corporation or
other organization whether incorporated or unincorporated of which at least a
majority of the securities or interests having by the terms thereof ordinary
voting power to elect at least a majority of the board of directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Party or by
any one or more of its Subsidiaries, or by such Party and one or more of its
Subsidiaries; provided, however, that no Party that is not directly or
indirectly wholly-owned by any other Party shall be a Subsidiary of such other
Party unless such other Party controls, or has the right, power or ability to
control, that Party. For purposes of this Agreement, Southern Energy shall be
deemed not to be a subsidiary of Southern.
1.12 Warranty. "Warranty" shall have the meaning set forth in
Section 11.2.1.
ARTICLE 2
TRANSITION SERVICE SCHEDULES
This Agreement will govern individual transitional services as
requested by Southern Energy and its Subsidiaries and provided by Southern and
its Subsidiaries, the details of which shall be set forth in the Transition
Service Schedules attached to this Agreement. Each Service shall be covered by
this Agreement upon execution of a transition service schedule in the form
attached hereto (each transition service schedule, a "Transition Service
Schedule").
The Parties shall set forth the terms for each Service on the
applicable Transitional Service Schedule, which may include, but are not
limited to, the time period during which the Service will be provided if
different from the term of this Agreement determined pursuant to Article 4
hereof, a summary of the Service to be provided; a description of the Service;
and the estimated charge(s), if applicable, for the Service and any other terms
applicable thereto on the Transition Service Schedule. Obligations under each
Transition Service Schedule shall be effective upon the later of the execution
of this Agreement or the execution of the respective Transition Services
Schedule. This Agreement shall be deemed to include all the Transition Service
Schedules wherever reference to it is made.
ARTICLE 3
SERVICES
3.1 Services Generally. Except as otherwise provided herein, for
the term determined pursuant to Article 4 hereof, Southern shall provide or
cause to be provided to Southern Energy the service(s) described in the
Transition Service Schedule(s) attached hereto, beginning on the Separation
Date (the "Effective Date"). The service(s) described
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on a single Transition Service Schedule shall be referred to herein as a
"Service." Collectively, the services described on all the Transition Service
Schedules (including Additional Services and Engineering and Technical
Services) shall be referred to herein as "Services."
3.2 Service Parameters. (i) Southern shall provide the Services
only to the extent and under the personnel availability conditions such
Services are being provided by Southern for Southern Energy immediately prior
to the Effective Date; and (ii) the Services will be available only for
purposes of conducting the business of Southern Energy substantially in the
manner it was conducted prior to the Effective Date.
3.3 Impracticability. Southern shall not be required to provide
any Service to the extent the performance of such Service becomes
"Impracticable" as a result of a cause or causes outside the reasonable control
of Southern, or to the extent the performance of such Services would require
Southern to violate any applicable laws, rules or regulations or would result
in the breach of any agreement or other applicable contract.
3.4 Additional Resources. In providing the Services, Southern
shall not be obligated to: (i) hire any additional employees; (ii) maintain the
employment of any specific employee; (iii) purchase, lease or license any
additional equipment or materials; or (iv) pay any costs related to the
transfer or conversion of Southern Energy's data to Southern Energy or any
alternate supplier of Services.
3.5 Additional Services. From time to time after the Effective
Date, the Parties may agree to identify additional Services that Southern will
provide to Southern Energy in accordance with the terms of this Agreement (the
"Additional Services"). In such event, the Parties shall execute additional
Transition Service Schedules for such Additional Services pursuant to Article
2. Except as set forth in Section 3.6, the Parties may agree in writing on
Additional Services during the term of this Agreement.
3.6 Further Obligations As To Services. Subject to the
provisions of Sections 3.2, 3.3 and 3.4 and otherwise except as set forth in
the next sentence, Southern shall perform, at a charge determined using the
principles for determining fees under Section 5.1, any Service that: (a) was
provided by Southern immediately prior to the Separation Date and which was
inadvertently or unintentionally omitted from the list of Services included in
Transition Service Schedules executed at the time of execution of this
Agreement, or (b) is essential to effectuate an orderly transition under the
Master Separation and Distribution Agreement unless such performance would
significantly disrupt Southern's operations or materially increase the scope of
its responsibility under this Agreement. If Southern reasonably believes the
performance of Services requested under subparagraphs (a) or (b) would
significantly disrupt its operations or materially increase the scope of its
responsibility under this Agreement, Southern and Southern Energy shall
negotiate in good faith to establish terms under which Southern can provide
such Services, but Southern shall not be obligated to provide such Services if,
following good faith negotiation, it is unable to reach agreement on such
terms.
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3.7 Service Representatives. The Parties shall each appoint a
representative with respect to each Service (each a "Service Representative"),
which Service Representative shall coordinate the requesting, coordination,
scheduling and delivery of such Service. Unless otherwise indicated on the
Transition Service Schedule for a Service, the Party's respective Service
Representatives for such Service shall be the persons set forth on Schedule 3.7
as being responsible for such Service and certain other related Services (each
such person being a "Senior Representative"). Each Senior Representative shall
additionally be responsible for the replacement or substitution, as necessary,
of any Service Representatives for such Senior Representative's assigned
Services, and shall coordinate any requests for changes in the scope of such
Services, or for the provision of any additional related Services, with such
Senior Representative's counterpart with the other Party. Either Party may
nominate a substitute Service Representative for itself with respect to a
Service at any time upon reasonable notice to the other Party. Any request for
a Service made by Southern Energy through any person other than Southern
Energy's Senior Representative or Service Representative with respect to such
Service shall not be binding upon Southern.
ARTICLE 4
TERM
The term of this Agreement shall commence on the Effective Date and
shall remain in effect until two (2) years after the Effective Date (the
"Expiration Date"), unless earlier terminated under Article 7. This Agreement
may be extended by the Parties in writing, either in whole or with respect to
one or more of the Services; provided, however, that such extension shall only
apply to the Services for which the Agreement was extended. At least six (6)
months prior to the Expiration Date, Southern Energy shall give Southern
written notice, in accordance with the provisions of Section 16.4, of Southern
Energy's request to extend the term of the Agreement in respect of any
Services. In addition, the Parties shall be deemed to have extended this
Agreement with respect to a specific Service if the Transition Service Schedule
for such Service specifies a completion or termination date beyond the
aforementioned Expiration Date. The Parties may agree on an earlier expiration
date respecting a specific Service by specifying such date on the Transition
Service Schedule for that Service. Services shall be provided up to and
including the date set forth in the applicable Transition Service Schedule,
subject to earlier termination as provided herein.
ARTICLE 5
COMPENSATION
5.1 Charges For Services. Charges for Services shall be based upon
the greater of (a) the full cost of providing the Services, including direct
costs and indirect costs, or (b) the market value of such Services. Southern
Energy shall pay Southern the charges, if any, set forth on the Transition
Service Schedules for each of the Services listed therein as adjusted, from
time to time, in accordance with the processes and procedures
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established under Section 5.4 and Section 5.5 hereof. The Parties shall use
good faith efforts to discuss any situation in which the actual charge for a
Service is reasonably expected to exceed the estimated charge, if any, set
forth on a Transition Service Schedule for a particular Service; provided,
however, that the incurrence of charges in excess of any such estimate on such
Transition Service Schedule shall not justify stopping the provision of, or
payment for, Services under this Agreement.
5.2 Payment Terms. Southern shall bill Southern Energy monthly for
all charges pursuant to this Agreement. Such bills shall be accompanied by
reasonable documentation or other reasonable explanation supporting such
charges. Southern Energy shall pay Southern for all Services provided hereunder
within thirty (30) days after receipt of an invoice therefor. Late payments
shall bear interest at the lesser of 18% per annum or the maximum rate allowed
by law.
5.3 Performance Under Ancillary Agreements. Notwithstanding
anything to the contrary contained herein, Southern Energy shall not be charged
under this Agreement for any obligations that are specifically required to be
performed under the Master Separation and Distribution Agreement or any other
Ancillary Agreement and any such other obligations shall be performed and
charged for (if applicable) in accordance with the terms of the Master
Separation and Distribution Agreement or such other Ancillary Agreement.
5.4 Error Correction; True-Ups; Accounting. The Parties shall
reasonably agree on a process and procedure for conducting internal audits and
making adjustments to charges as a result of the movement of employees and
functions between Parties, the discovery of errors or omissions in charges, as
well as a true-up of amounts owed. In no event shall such processes and
procedures extend beyond two (2) years after completion of a Service.
5.5 Pricing Adjustments. In the event of a tax or regulatory audit
adjustment relating to the pricing of any or all Services provided pursuant to
this Agreement in which it is determined by a taxing or regulatory authority
that any of the charges, individually or in combination, did not result in an
arm's-length payment, as determined under internationally accepted arm's-length
standards, then the Parties, including any Southern subcontractor providing
Services hereunder, may agree to make corresponding adjustments to the charges
in question for such period to the extent necessary to achieve arm's-length
pricing. Any adjustment made pursuant to this Section 5.5 at any time during
the term of this Agreement or after termination of this Agreement shall be
reflected in the Parties' legal books and records, and the resulting
underpayment or overpayment shall create, respectively, an obligation to be
paid in the manner specified in Section 5.2, or shall create a credit against
amounts owed under this Agreement.
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ARTICLE 6
GENERAL OBLIGATIONS; STANDARD OF CARE
6.1 Performance Metrics: Southern. Subject to Sections 3.2, 3.3,
3.4 and any other terms and conditions of this Agreement, Southern shall
perform its obligations hereunder in a commercially reasonable manner. Specific
performance metrics for Southern for a specific Service may be set forth in the
corresponding Transition Service Schedule. Where none is set forth, Southern
shall use reasonable efforts to provide Services in accordance with its
policies, procedures and practices in effect before the Effective Date and
shall exercise the same care and skill as it exercises in performing similar
services for itself.
6.2 DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE SET FORTH HEREIN
SOUTHERN MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT
LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO THE SERVICES OR OTHER DELIVERABLES PROVIDED
BY IT HEREUNDER.
6.3 Performance Metrics: Southern Energy. Specific performance
metrics for Southern Energy for a specific Service may be set forth in the
corresponding Transition Service Schedule. Where none is set forth, Southern
Energy shall use reasonable efforts, in connection with receiving Services, to
follow the policies, procedures and practices in effect before the Effective
Date including providing information and documentation sufficient for Southern
to perform the Services as they were performed before the Effective Date and
making available, as reasonably requested by Southern, sufficient resources and
timely decisions, approvals and acceptances in order that Southern may
accomplish its obligations hereunder in a timely manner.
6.4 Transitional Nature Of Services; Changes. The Parties
acknowledge the transitional nature of the Services and agree that Southern may
make changes from time to time in the manner of performing the Services if
Southern is making similar changes in performing similar services for itself
and its subsidiaries and if Southern furnishes to Southern Energy thirty (30)
days written notice regarding such changes.
6.5 Responsibility For Errors; Delays. Southern's sole
responsibility to Southern Energy:
(a) for errors or omissions in Services (except for Engineering
and Technical Services provided for in Article 11), shall be to furnish correct
information, payment and/or adjustment in the Services, at no additional cost
or expense to Southern Energy; provided, Southern Energy must promptly advise
Southern of any such error or omission of which it becomes aware after having
used reasonable efforts to detect any such errors or omissions in accordance
with the standard of care set forth in Section 6.3; and
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(b) for failure to deliver any Service because of
Impracticability, shall be to use reasonable efforts, subject to Sections 3.2,
3.3 and 3.4, to make the Services available and/or to resume performing the
Services as promptly as reasonably practicable.
6.6 Good Faith Cooperation; Consents. The Parties will use good
faith efforts to cooperate with each other in all matters relating to the
provision and receipt of Services. Such cooperation shall include exchanging
information, performing true-ups and adjustments, and obtaining all third party
consents, licenses, sublicenses or approvals necessary to permit each Party to
perform its obligations hereunder (including by way of example, not by way of
limitation, rights to use third party software needed for the performance of
Services). The costs of obtaining such third party consents, licenses,
sublicenses or approvals shall be borne by Southern Energy. Each Party will
maintain, in accordance with its standard document retention procedures,
documentation supporting the information relevant to cost calculations and
cooperate with each other in making such information available as needed in the
event of a tax audit, whether in the United States or any other country.
ARTICLE 7
EARLY TERMINATION
7.1 Early Termination. Southern Energy may terminate this
Agreement, either with respect to all or with respect to any one or more of the
Services provided to Southern Energy hereunder, for any reason or for no
reason, at any time upon one hundred eighty (180) days prior written notice to
Southern. Southern may terminate this Agreement if Southern Energy fails to pay
any amount which is due and payable in respect of any Service in accordance
with the provisions of Section 5.2 hereof, and Southern Energy does not cure
such breach within ten (10) days after being given notice of such breach. In
addition, subject to the provisions of Article 15 below, either Party may
terminate this Agreement with respect to a specific Service if the other Party
materially breaches a material provision with regard to that particular Service
(other than for nonpayment) and does not cure such breach (or does not take
reasonable steps required under the circumstances to cure such breach going
forward) within sixty (60) days after being given notice of the breach;
provided, however, that the non-terminating Party may request that the Parties
engage in a dispute resolution negotiation as specified in Article 15 below
prior to termination for breach.
7.2 Survival. Those Sections of this Agreement that, by their
nature, are intended to survive termination will survive in accordance with
their terms. Notwithstanding the foregoing, in the event of any termination
with respect to one or more, but less than all Services, this Agreement shall
continue in full force and effect with respect to any Services not terminated
hereby.
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ARTICLE 8
RELATIONSHIP BETWEEN THE PARTIES
The relationship between the Parties established under this Agreement
is that of independent contractors and neither Party is an employee, agent,
partner, or joint venturer of or with the other. Southern will be solely
responsible for the payment of any employment-related taxes, insurance premiums
or other employment benefits in respect of the performance of Services by
Southern personnel under this Agreement. Southern Energy agrees to grant
Southern personnel access to sites, systems and information (subject to the
provisions of confidentiality in Article 12 below) as necessary for Southern to
perform its obligations hereunder. Southern Energy shall inform Southern
personnel of, and Southern personnel agree to obey, any and all security
regulations and other published policies of Southern Energy.
ARTICLE 9
SUBCONTRACTORS
Southern may engage a "Subcontractor" to perform all or any portion of
Southern's duties under this Agreement, provided that any such Subcontractor
agrees in writing to be bound by confidentiality obligations at least as
protective as the terms of Article 13 regarding confidentiality below, and
provided further that Southern remains responsible for the performance of such
Subcontractor. As used in this Agreement, "Subcontractor" will mean any
individual, partnership, corporation, firm, association, unincorporated
organization, joint venture, trust or other entity engaged to perform
hereunder, other than Southern and its Subsidiaries.
ARTICLE 10
INTELLECTUAL PROPERTY
Except as otherwise set forth herein, the terms of the Technology and
Intellectual Property Ownership and License Agreement between the Parties, a
copy of which is attached as an exhibit to the Master Separation and
Distribution Agreement, shall govern the use and ownership of any Technology
(as defined therein) and any patents, trademarks, or other intellectual
property transferred, licensed used or created in connection with the Services
or otherwise under this Agreement.
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ARTICLE 11
ENGINEERING AND TECHNICAL SERVICES
11.1 Engineering and Technical Services. Pursuant to the terms of
this Agreement, Southern shall provide certain engineering, technical and
consulting Services to Southern Energy from time to time in connection with the
development, construction, ownership, maintenance and operation of electric
generating, transmission and distribution facilities, including, but not
limited to, technical and field services, engineering and generation technical
services, fuel procurement and related services and environmental services (the
"Engineering and Technical Services"); provided, however, that Southern shall
not be required to provide any Engineering and Technical Service if the
provision of such Engineering and Technical Service, in Southern's reasonable
discretion, would be in violation of Southern's fiduciary duties to its
shareholders or customers.
11.2 Professional Responsibility Regarding Engineering and
Technical Services.
11.2.1 Standard of Care/Warranty. In the performance of Engineering
and Technical Services under this Agreement, Southern shall exercise
due care to assure that the Services are provided in a workmanlike
manner, and that such Services meet the standards and specifications
set forth in the applicable Transitional Service Schedule. Southern
hereby warrants that all Engineering and Technical Services provided
hereunder will comply with the foregoing standard of care (the
"Warranty").
11.2.2 Warranty Cure. If Southern Energy discovers that any part of
the Engineering and Technical Services fail to meet the Warranty,
Southern Energy will notify Southern of such failure. Southern's sole
obligation for failing to meet the Warranty shall be to reperform the
Engineering and Technical Services thereunder at cost (direct cost
plus indirect costs) such that it fully complies with the Transitional
Service Schedule and applicable laws and regulations. Southern Energy
will bear all costs and expenses incurred by Southern in association
with curing any Warranted Engineering and Technical Services, except
where the failure to meet the Warranty with respect to any Engineering
and Technical Services is due to any willful misconduct on the part of
Southern or its employees, agents, contractors or subcontractors, in
which case such costs and expenses shall be borne by Southern.
Southern makes no other warranties with respect to its performance of
the Services, and Southern Energy agrees to accept such services
without further warranties of any nature.
11.3 Applicable Laws and Regulations. Southern shall comply with
all national, federal, provincial, state and local laws, decrees, regulations
and ordinances (including without limitation those of any local jurisdiction in
which Engineering and Technical Services are performed) including, without
limitation, those pertaining to the environment, health, safety, sanitary
facilities, waste disposal and other matters applicable to or affecting the
performance of Engineering and Technical Services that are published and in
effect at the time particular Engineering and Technical Services are
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rendered. Southern Energy shall inform Southern of, and Southern shall ensure
that its employees, agents and subcontractors comply with, site rules and
regulations while on the premises of any Southern Energy property or project.
11.4 Insurance. During the course of performance of any Engineering
and Technical Services following the Separation Date, Southern will obtain and
maintain in full force and effect insurance substantially in accordance with,
and meeting the requirements set forth in, Schedule 11.4 attached hereto.
Promptly after the execution hereof Southern shall furnish Southern Energy with
a written certificate from its insurers, addressed to Southern Energy,
indicating the existence of Southern's insurance coverage, the amount and
nature of such coverage, and the expiration date(s) of each policy. The
certificate also shall include a provision requiring Southern's insurers to
give Southern Energy at least thirty (30) days' written notice prior to the
cancellation, nonrenewal or material alteration of any policy.
11.5 Reuse of Documents. All documents, including drawings and
specifications, prepared and furnished by Southern to Southern Energy pursuant
to this Agreement shall be the property of Southern Energy; provided, however,
that such documents are not intended or represented to be suitable for reuse by
Southern Energy or others on any other project. Southern Energy may not reuse
or adapt such documents on or for other projects without the written consent of
Southern; provided, further, that any such reuse or adaption by Southern
Energy, with the consent of Southern, will be at Southern Energy's sole risk
and without liability or legal exposure to Southern.
11.6 Non-Restrictive Relationship. Nothing in this Agreement will
be construed to preclude Southern Energy from independently developing,
acquiring or obtaining Engineering and Technical Services or related documents
which may perform the same or similar functions as the Engineering and
Technical Services or related documents provided by Southern.
ARTICLE 12
CONFIDENTIALITY
The terms of the Confidential Disclosure Agreement between the Parties
shall apply to any Confidential Information (as defined therein) which is the
subject matter of this Agreement.
ARTICLE 13
LIMITATION OF LIABILITY
IN NO EVENT SHALL EITHER PARTY OR ITS SUBSIDIARIES, AFFILIATED
COMPANIES, DIRECTORS, OFFICERS OR EMPLOYEES BE LIABLE TO THE OTHER PARTY OR ITS
SUBSIDIARIES OR AFFILIATED COMPANIES FOR ANY LOST PROFITS, LOSS OF DATA, LOSS
OF USE, COST OF COVER, BUSINESS
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INTERRUPTION OR OTHER SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL
DAMAGES, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY, ARISING FROM THE
PERFORMANCE OF, OR RELATING TO, THIS AGREEMENT.
ARTICLE 14
FORCE MAJEURE
Each Party will be excused for any failure or delay in performing any
of its obligations under this Agreement, other than the obligations of Southern
Energy to make payments to Southern pursuant to Article 5 hereof for services
rendered, if such failure or delay is caused solely by Force Majeure. "Force
Majeure" includes, without limitation, any act of God or the public enemy; any
accident, explosion, fire, ice, earthquake, lightning, tornado, hurricane, or
other severe weather condition or calamity; any civil disturbance, labor
dispute, or labor or material shortage; any sabotage or acts of terrorism; any
acts of a public enemy, uprising, insurrection, civil unrest, war or rebellion;
any action or restraint by court order or public or governmental authority or
lawfully established civilian authorities, or any other circumstance or event
beyond the reasonable control of the Party relying upon such circumstance or
event.
ARTICLE 15
DISPUTE RESOLUTION
15.1 Mediation. If a dispute, controversy or claim ("Dispute")
arises between the Parties relating to the interpretation or performance of
this Agreement or the Ancillary Agreements, or the grounds for the termination
hereof, appropriate senior executives (e.g. director or vice president level)
of each Party who shall have the authority to resolve the matter shall meet or
confer (in person or by telephone) to attempt in good faith to negotiate a
resolution of the Dispute prior to pursuing other available remedies. The
initial meeting or conference between the appropriate senior executives shall
be referred to herein as the "Dispute Resolution Commencement Date."
Discussions and correspondence relating to trying to resolve such Dispute shall
be treated as confidential information developed for the purpose of settlement
and shall be exempt from discovery or production and shall not be admissible in
any proceeding relating to the subject matter of the Dispute. If the senior
executives are unable to resolve the Dispute within thirty (30) days from the
Dispute Resolution Commencement Date, and either Party wishes to pursue its
rights relating to such Dispute, then the Dispute will be mediated by a
mutually acceptable mediator appointed pursuant to the mediation rules of
JAMS/Endispute within thirty (30) days after written notice by one Party to the
other demanding non-binding mediation. Neither Party may unreasonably withhold
consent to the selection of a mediator or the location of the mediation. Both
Parties will share the costs of the mediation equally, except that each Party
shall bear its own costs and expenses, including attorney's fees, witness fees,
travel expenses, and preparation costs. The Parties may also
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agree to replace mediation with some other form of non-binding or binding
alternative dispute resolution ("ADR").
15.2 Arbitration. Any Dispute which the Parties cannot resolve
through mediation within ninety (90) days of the Dispute Resolution
Commencement Date, unless otherwise mutually agreed, shall be submitted to
final and binding arbitration under the then current Commercial Arbitration
Rules of the American Arbitration Association ("AAA"), by three (3) arbitrators
in Dekalb County, Georgia. Such arbitrators shall be selected by the mutual
agreement of the Parties or, failing such agreement, shall be selected
according to the aforesaid AAA rules. The arbitrators will be instructed to
prepare and deliver a written, reasoned opinion stating their decision within
thirty (30) days of the completion of the arbitration. The prevailing Party in
such arbitration shall be entitled to expenses, including costs and reasonable
attorneys' and other professional fees, incurred in connection with the
arbitration (but excluding any costs and fees associated with prior negotiation
or mediation). The decision of the arbitrator shall be final and non-appealable
and may be enforced in any court of competent jurisdiction. The use of any ADR
procedures will not be construed under the doctrine of laches, waiver or
estoppel to adversely affect the rights of either Party.
15.3 Court Action. Any Dispute regarding the following is not
required to be negotiated, mediated or arbitrated prior to seeking material
relief from a court of competent jurisdiction: breach of any obligation of
confidentiality; infringement, misappropriation, or misuse of any intellectual
property right; any other claim where interim relief from the court is sought
to prevent serious and irreparable injury to one of the Parties or to others.
However, the Parties to the Dispute shall make a good faith effort to negotiate
and mediate such Dispute, according to the above procedures, while such court
action is pending.
15.4 Continuity Of Service And Performance. Unless otherwise agreed
in writing, the Parties will continue to provide service and honor all other
commitments under this Agreement and each Ancillary Agreement during the course
of dispute resolution pursuant to the provisions of this Article 15 with
respect to all matters not subject to such dispute, controversy or claim.
ARTICLE 16
MISCELLANEOUS
16.1 Entire Agreement. This Agreement, the Master Separation and
Distribution Agreement and the other Ancillary Agreements and the Exhibits and
Schedules referenced or attached hereto and thereto constitute the entire
agreement between the Parties with respect to the subject matter hereof and
thereof and shall supersede all prior written and oral and all contemporaneous
oral agreements and understandings with respect to the subject matter hereof
and thereof.
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16.2 Existing Services Agreement. The Parties acknowledge that
Subsidiaries of Southern are currently authorized to provide the services
contracted for herein to Southern Energy and its subsidiaries and, more
specifically, that Southern Company Services, Inc., a Subsidiary of Southern,
is authorized to provide the services identified herein directly, and,
indirectly, to Southern Energy and its Subsidiaries to Southern Energy
Resources, Inc. (formerly known as Southern Electric International, Inc.)
pursuant to an Agreement dated July 17, 1981 (the "Existing Service
Agreement"), all subject to certain conditions established by applicable
government regulations, orders, and approvals ("Existing Authority"). The
Parties intend to implement this Agreement consistent with and to the extent
permitted by Existing Authority and to cooperate toward obtaining and
maintaining in effect such governmental agency consents, orders or approvals as
may be required in order to implement this Agreement as fully as possible in
accordance with its terms for the stated term. After the Effective Date and
upon receipt of and applicable regulatory approvals and consents, the Existing
Services Agreement shall be terminated and superseded by this Agreement to the
extent permitted under the Existing Authority.
16.3 Governing Law. This Agreement shall be construed in accordance
with and all Disputes hereunder shall be governed by the laws of the State of
Georgia. Any state court sitting in Dekalb County, Georgia and/or the United
States District Court for the Northern District of Georgia shall have
jurisdiction and venue over all Disputes between the Parties that are permitted
to be brought in a court of law pursuant to Article 15 above.
16.4 Descriptive Headings. 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 Exhibit or Schedule 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 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.
16.5 Notices. Notices, offers, requests, or other communications
required or permitted to be given by either Party pursuant to the terms of this
Agreement shall be given in writing to the respective Parties to the following
addresses:
if to Southern:
The Southern Company
270 Peachtree Street
Atlanta, Georgia 30303
Attention: General Counsel
Fax: (404) 506-0544
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if to Southern Energy:
Southern Energy, Inc.
900 Ashwood Parkway
Suite 500
Atlanta, Georgia 30338
Attention: General Counsel
Fax: (770) 821-7001
or to such other address as the Party to whom notice is given may have
previously furnished to the other in writing as provided herein. Any notice
involving non-performance, termination, or renewal shall be sent by hand
delivery, recognized overnight courier or, within the United States, may also
be sent via certified mail, return receipt requested. All other notices may
also be sent by fax, confirmed by first class mail. All notices shall be deemed
to have been given and received on the earlier of actual delivery or three (3)
days from the date of postmark.
16.6 Nonassignability; Third-Party Beneficiaries. Except as
specifically permitted under Article 9 above, neither Party may, directly or
indirectly, in whole or in part, whether by operation of law or otherwise,
assign or transfer this Agreement, without the other Party's prior written
consent, and any attempted assignment, transfer or delegation without such
prior written consent shall be voidable at the sole option of such other Party.
Without limiting the foregoing, this Agreement will be binding upon and inure
to the benefit of the Parties and their permitted successors and assigns. This
Agreement, including the Transition Services Schedules and the other documents
referred to herein, shall be binding upon and inure solely to the benefit of
each party hereto and their 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.
16.7 Severability. If any term or other provision of this Agreement
is determined 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 will nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated is not affected in any manner materially adverse to
any Party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties 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.
16.8 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
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and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
16.9 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 hereto.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed in duplicate originals by its duly authorized representatives.
THE SOUTHERN COMPANY SOUTHERN ENERGY, INC.
By: By:
--------------------------------- ---------------------------------
Name: H. Allen Franklin Name: S. Marce Fuller
Title: President and Chief Operating Title: President and Chief Executive
Officer Officer
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FORM OF TRANSITION SERVICE SCHEDULE TO
TRANSITIONAL SERVICES AGREEMENT
1. Transition Service Schedule #:____________ (To be inserted by
representative)
2. Functional Area:
---------------
3. Start/End Date: The Services start on the Effective Date of
the Transitional Services Agreement between The Southern Company ("Southern")
and Southern Energy, Inc. ("Southern Energy") to which this Transition Service
Schedule is attached and end on [__________] unless otherwise indicated below.
Indicate below if other start/end date:
Start Date:
-----------------------------
End Date:
------------------------------
If Start and End dates vary by service and/or location, please
indicate in Section 5 below.
4. Summary of Services (Describe the service to be provided in
appropriate detail.
5. List of services to be provided per location and site: (List
all the services to be provided at each site. Enter Start Date and End Date if
different from Section 3 above.)
Location Site Service(s) Start Date End Date
6. Performance parameters/Service level: (State minimum
performance expected from each service, if applicable.):
7. Estimated Total Compensation
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8. Describe cost methodology and cost drivers affecting Estimated
Total Compensation (Describe on an individual service basis if necessary):
9. Describe the process by which the cost of services will be
adjusted in the instance of an increase/reduction in the services provided:
(Describe on an individual service basis if necessary.)
10. Software: Will software be used or included with the Services
to be provided under this Transition Service Schedule: ____ Yes ____ No
List software/licenses to be provided, if any:
11. Contract Administrators. List Service Representatives from
Southern and Southern Energy:
Upon execution of this Transition Service Schedule by both Parties,
this Transition Service Schedule is hereby deemed incorporated into and made
part of that certain Transitional Services Agreement between The Southern
Company and Southern Energy, Inc.
THE SOUTHERN COMPANY SOUTHERN ENERGY, INC.
By: By:
---------------------------- ----------------------------
(Authorized Signature) (Authorized Signature)
Date: Date:
-------------------------- --------------------------
Name: Name:
-------------------------- --------------------------
Title: Title:
------------------------- -------------------------
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Schedule 3.7
Senior Service Representatives
Southern Energy
Service Senior Representative (Title)
------- -----------------------------
Engineering and Technical Services Chief Technical Officer
Intellectual Property/
Information Technology Chief Information Officer
All other Services Senior Vice President of Administration
and External Affairs
Southern
Service Senior Representative (Title)
------- -----------------------------
Engineering and Technical Services;
Procurement President of Southern Company Generation
Intellectual Property/
Information Technology Chief Information Officer
Human Resources Senior Vice President of Human Resources,
Legal General Counsel
External Affairs Vice President of External Affairs
Finance and Risk Management Chief Financial Officer
Accounting Senior Vice President - Chief Accounting
Officer
Internal Auditing Director of Internal Auditing
System Aircraft Vice President, System Aircraft
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Schedule 11.4
Insurance
INSURANCE COVERAGE
Types of Coverage Limits of Liability
----------------- -------------------
Workers' Compensation Statutory Minimum
Errors and Omissions $1,000,000
Commercial General
Liability
Bodily Injury and $5,000,000 Combined
Property Damage Single Limit
Automobile Liability
Bodily Injury and $2,000,000 Combined
Property Damage Single Limit
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