\n Section 6.9 Failure or Indulgence Not Waiver; Remedies Cumulative………………………………19
\n Section 6.10 Amendment…………………………………………………………………….19
\n Section 6.11 Authority…………………………………………………………………….19
\n Section 6.12 Interpretation………………………………………………………………..20
\n Section 6.13 Conflicting Agreements…………………………………………………………20
\nARTICLE VII DEFINITIONS……………………………………………………………………..20
\n Section 7.1 Affiliated Company……………………………………………………………..20
\n Section 7.2 Ancillary Agreements……………………………………………………………20
\n Section 7.3 Business Day…………………………………………………………………..20
\n Section 7.4 Change of Control Date………………………………………………………….20
\n Section 7.5 Code………………………………………………………………………….20
\n Section 7.6 Commission…………………………………………………………………….20
\n Section 7.7 Disputes………………………………………………………………………21
\n Section 7.8 Distribution…………………………………………………………………..21
\n Section 7.9 Distribution Agent……………………………………………………………..21
\n Section 7.10 Distribution Date……………………………………………………………..21
\n Section 7.11 Exchange Act………………………………………………………………….21
\n Section 7.12 Governmental Approvals…………………………………………………………21
\n Section 7.13 Governmental Authority…………………………………………………………21
\n Section 7.14 HoldCo Transaction…………………………………………………………….21
\n Section 7.15 Information…………………………………………………………………..21
\n Section 7.16 IPO………………………………………………………………………….21
\n Section 7.17 IPO Closing Date………………………………………………………………21
\n Section 7.18 IPO Registration Statement……………………………………………………..21
\n Section 7.19 NYSE…………………………………………………………………………22
\n Section 7.20 Person……………………………………………………………………….22
\n Section 7.21 Record Date…………………………………………………………………..22
\n Section 7.22 SE Finance……………………………………………………………………22
\n Section 7.23 SE Capital Funding…………………………………………………………….22
\n Section 7.24 Separation……………………………………………………………………22
\n Section 7.25 Separation Date……………………………………………………………….22
\n Section 7.26 Southern Business……………………………………………………………..22
\n Section 7.27 Southern Energy Business……………………………………………………….22
\n Section 7.28 Southern Energy Group………………………………………………………….22
\n Section 7.29 Southern Energy Auditors……………………………………………………….23
\n Section 7.30 Southern Group………………………………………………………………..23
\n Section 7.31 Southern’s Auditors……………………………………………………………23
\n Section 7.32 Subsidiary……………………………………………………………………23
\n Section 7.33 Troutman Sanders………………………………………………………………23
\n Section 7.34 Underwriters………………………………………………………………….23
\n Section 7.35 Underwriting Agreement…………………………………………………………23
\n Schedule 5.11 HoldCo Transaction
\n Schedule 5.12 Plant Dahlberg Transaction
\n Schedule 5.14 Transferred Agreements
\n Schedule 7.1 Southern Energy Affiliated Companies
\n<\/c><\/s><\/table>\n 4<\/p>\n
MASTER SEPARATION AND DISTRIBUTION AGREEMENT<\/p>\n
THIS MASTER SEPARATION AND DISTRIBUTION AGREEMENT (this “Agreement”) is
\nentered into as of September 1, 2000, between The Southern Company (“Southern”),
\na Delaware corporation, and Southern Energy, Inc. (“Southern Energy”), a
\nDelaware corporation. Capitalized terms used herein and not otherwise defined
\nshall have the meanings ascribed to such terms in Article VII hereof.<\/p>\n
RECITALS<\/p>\n
WHEREAS, the Boards of Directors of Southern and Southern Energy have each
\ndetermined that it would be appropriate and desirable for Southern to separate
\nthe Southern Energy Group from the Southern Group (the “Separation”), and, in
\nconnection with the Separation, for Southern to acquire certain entities
\ncurrently associated with the Southern Energy Business from Southern Energy, and
\nfor Southern Energy to acquire certain assets from Southern; and<\/p>\n
WHEREAS, Southern and Southern Energy currently contemplate that, in
\nconnection with the Separation, Southern Energy will make an initial public
\noffering (“IPO”) of an amount of its common stock pursuant to a registration
\nstatement on Form S-1 pursuant to the Securities Act of 1933, as amended (the
\n“IPO Registration Statement”), that will reduce Southern’s ownership of Southern
\nEnergy by less than 20%; and<\/p>\n
WHEREAS, Southern and Southern Energy further currently contemplate that, in
\nconnection with the Separation, Southern Energy will transfer two of its
\nwholly-owned Subsidiaries, SE Finance and SE Capital Funding, to Southern (the
\n“HoldCo Transaction”), and Southern will assume certain liabilities in
\nconnection therewith; and<\/p>\n
WHEREAS, Southern currently contemplates that, within twelve months
\nfollowing the IPO, Southern will distribute to the holders of its common stock,
\nby means of a pro rata distribution, all of the shares of Southern Energy common
\nstock then owned by Southern (the “Distribution”); and<\/p>\n
WHEREAS, Southern and Southern Energy intend that the Distribution will
\nqualify as a tax-free distribution under Section 355 of the Internal Revenue
\nCode of 1986, as amended (the “Code”), and that this Agreement is intended to
\nbe, and is hereby adopted as, a plan of reorganization under Section 368 of the
\nCode; and<\/p>\n
WHEREAS, the parties intend in this Agreement, including the Exhibits and
\nSchedules hereto, to set forth the principal arrangements between them regarding
\nthe Separation.<\/p>\n
5<\/p>\n
NOW, THEREFORE, in consideration of the foregoing and the covenants and
\nagreements set forth below, the parties hereto agree as follows:<\/p>\n
ARTICLE I<\/p>\n
SEPARATION<\/p>\n
Section 1.1. Separation Date. Unless otherwise provided in this Agreement,
\nor in any agreement to be executed in connection with this Agreement, the
\neffective time and date of each undertaking or agreement in connection with the
\nSeparation shall be as of 12:01 a.m., Eastern Time, September 1, 2000 or such
\nother date as may be fixed by Southern (the “Separation Date”).<\/p>\n
Section 1.2. Closing of Transactions. Unless otherwise provided herein, the
\nclosing of the transactions contemplated in Article II shall occur by the
\nlodging of each of the executed agreements, instruments or other documents to be
\nexecuted pursuant to this Agreement with Troutman Sanders LLP, 600 Peachtree
\nStreet, Suite 5200, Atlanta, Georgia 30308, to be held in escrow for delivery as
\nprovided in Section 1.3 of this Agreement.<\/p>\n
Section 1.3. Exchange of Secretary’s Certificates. Upon receipt of a
\ncertificate of the Secretary or an Assistant Secretary of Southern in the form
\nattached to this Agreement as Exhibit A, Troutman Sanders shall deliver to
\nSouthern Energy on behalf of Southern all of the items required to be delivered
\nby Southern hereunder pursuant to Section 2.1 of this Agreement and each such
\nitem shall be deemed to be delivered to Southern Energy as of the Separation
\nDate upon delivery of such certificate. Upon receipt of a certificate of the
\nSecretary or an Assistant Secretary of Southern Energy in the form attached to
\nthis Agreement as Exhibit B, Troutman Sanders shall deliver to Southern on
\nbehalf of Southern Energy all of the items required to be delivered by Southern
\nEnergy hereunder and each such item shall be deemed to be delivered to Southern
\nas of the Separation Date upon receipt of such certificate.<\/p>\n
ARTICLE II<\/p>\n
DOCUMENTS TO BE DELIVERED ON THE SEPARATION DATE<\/p>\n
Section 2.1. Documents to Be Delivered By Southern. On the Separation Date,
\nSouthern will deliver, or will cause its appropriate Subsidiaries to deliver, to
\nSouthern Energy all of the following items and agreements (collectively,
\ntogether with all agreements and documents contemplated by this Agreement and
\nsuch other agreements, including any agreements, the “Ancillary Agreements”):<\/p>\n
2<\/p>\n
6<\/p>\n
(a) A duly executed Technology and Intellectual Property Ownership and
\n License Agreement substantially in the form attached hereto as
\n Exhibit C;<\/p>\n
(b) A duly executed Employee Matters Agreement substantially in the form
\n attached hereto as Exhibit D;<\/p>\n
(c) A duly executed Tax Indemnification Agreement substantially in the
\n form attached hereto as Exhibit E;<\/p>\n
(d) A duly executed Transitional Services Agreement substantially in the
\n form attached hereto as Exhibit F;<\/p>\n
(e) A duly executed Confidential Disclosure Agreement substantially in
\n the form attached hereto as Exhibit G;<\/p>\n
(f) A duly executed Indemnification and Insurance Matters Agreement
\n substantially in the form attached hereto as Exhibit H;<\/p>\n
(g) Such other agreements, documents or instruments as the parties may
\n agree are necessary or desirable in order to achieve the purposes
\n hereof.<\/p>\n
Section 2.2 Documents to Be Delivered by Southern Energy. As of the
\nSeparation Date, in each case where Southern Energy or any of its Subsidiaries
\nis a party to any agreement or instrument referred to in Section 2.1, Southern
\nEnergy will or will cause its appropriate Subsidiaries to deliver to Southern a
\nduly executed counterpart of such agreement or instrument.<\/p>\n
ARTICLE III<\/p>\n
THE IPO AND ACTIONS PENDING THE IPO<\/p>\n
Section 3.1 Transactions Prior to the IPO. Subject to the conditions
\nspecified in Section 3.4, Southern and Southern Energy shall use their
\nreasonable commercial efforts to consummate the IPO. Such efforts shall include,
\nbut not necessarily be limited to, those specified in this Section 3.1:<\/p>\n
(a) Registration Statement. Southern Energy shall file the IPO
\nRegistration Statement, and such amendments or supplements thereto, as may be
\nnecessary in order to cause the same to become and remain effective as required
\nby law or by the managing underwriters for the IPO (the “Underwriters”),
\nincluding, but not limited to, filing such amendments to the IPO Registration
\nStatement as may be required by the underwriting agreement to be entered into
\namong Southern Energy and the Underwriters (the “Underwriting Agreement”), the
\nSecurities and Exchange Commission (the “Commission”) or federal, state or
\nforeign securities laws. Southern and Southern Energy<\/p>\n
3
\n 7<\/p>\n
shall also cooperate in preparing, filing with the Commission and causing to
\nbecome effective a registration statement registering the common stock of
\nSouthern Energy under the Securities and Exchange Act of 1934, as amended (the
\n“Exchange Act”), and any registration statements or amendments thereof which are
\nrequired to reflect the establishment of, or amendments to, any employee benefit
\nand other plans necessary or appropriate in connection with the IPO, the
\nSeparation, the Distribution or the other transactions contemplated by this
\nAgreement.<\/p>\n
(b) Underwriting Agreement. Southern Energy shall enter into the
\nUnderwriting Agreement, in form and substance reasonably satisfactory to
\nSouthern Energy, and shall comply with its obligations thereunder.<\/p>\n
(c) Other Matters. Southern and Southern Energy shall consult with each
\nother and the Underwriters regarding the timing, pricing and other material
\nmatters with respect to the IPO.<\/p>\n
(d) Blue Sky. Southern Energy shall use its reasonable commercial efforts to
\ntake all such action as may be necessary or appropriate under state securities
\nand blue sky laws of the United States (and any comparable laws under any
\nforeign jurisdictions) in connection with the IPO.<\/p>\n
(e) NYSE Listing. Southern Energy shall prepare, file and use reasonable
\ncommercial efforts to seek to make effective, an application for listing of the
\ncommon stock of Southern Energy issued in the IPO on the New York Stock Exchange
\n(the “NYSE”), subject to official notice of issuance.<\/p>\n
Section 3.2. Use of Proceeds. The proceeds of the IPO will be retained by
\nSouthern Energy to be used for general corporate purposes.<\/p>\n
Section 3.3 Cooperation. Southern Energy shall consult with, and cooperate
\nin all respects with, Southern in connection with the pricing of the common
\nstock of Southern Energy to be offered in the IPO and shall, at Southern’s
\ndirection, promptly take any and all actions necessary or desirable to
\nconsummate the IPO as contemplated by the IPO Registration Statement and the
\nUnderwriting Agreement.<\/p>\n
Section 3.4 Conditions Precedent to Consummation of the IPO. As soon as
\npracticable after the Separation Date, the parties hereto shall use their
\nreasonable commercial efforts to satisfy the conditions listed below to the
\nconsummation of the IPO. The obligations of the parties to use their reasonable
\ncommercial efforts to consummate the IPO shall be conditioned on the
\nsatisfaction, or waiver by Southern, of the following conditions:<\/p>\n
(a) Registration Statement. The IPO Registration Statement shall have been
\nfiled and declared effective by the Commission, and there shall be no stop-order
\nin effect with respect thereto.<\/p>\n
4<\/p>\n
8<\/p>\n
(b) Blue Sky. The actions and filings with regard to state securities and
\nblue sky laws of the United States (and any comparable laws under any foreign
\njurisdictions) described in Section 3.1(d) shall have been taken and, where
\napplicable, have become effective or been accepted.<\/p>\n
(c) NYSE Listing. The common stock of Southern Energy to be issued in the
\nIPO shall have been accepted for listing on the NYSE, on official notice of
\nissuance.<\/p>\n
(d) Underwriting Agreement. Southern Energy shall have entered into the
\nUnderwriting Agreement and all conditions to the obligations of Southern Energy
\nand the Underwriters shall have been satisfied or waived.<\/p>\n
(e) Common Stock Ownership. Southern shall be satisfied in its sole
\ndiscretion that it will own more than 80% of the outstanding common stock of
\nSouthern Energy following the IPO. All other conditions to permit the
\nDistribution to qualify as a tax-free distribution to Southern, Southern Energy
\nand Southern’s stockholders shall, to the extent applicable as of the time of
\nthe IPO, be satisfied, and there shall be no event or condition that is likely
\nto cause any of such conditions not to be satisfied as of the time of the
\nDistribution or thereafter.<\/p>\n
(f) Governmental Approvals. Any material Governmental Approvals necessary to
\nconsummate the IPO shall have been obtained and be in full force and effect.<\/p>\n
(g) No Legal Restraints. No order, injunction or decree issued by any court
\nor agency of competent jurisdiction or other legal restraint or prohibition
\npreventing the consummation of the Separation or the IPO or any of the other
\ntransactions contemplated by this Agreement shall be in effect.<\/p>\n
(h) Separation. The Separation shall have become effective.<\/p>\n
(i) Other Actions. Such other actions as the parties hereto may, based upon
\nthe advice of counsel, reasonably request to be taken prior to the IPO in order
\nto assure the successful completion of the IPO shall have been taken.<\/p>\n
(j) No Termination. This Agreement shall not have been terminated.<\/p>\n
5<\/p>\n
9<\/p>\n
ARTICLE IV<\/p>\n
THE DISTRIBUTION<\/p>\n
Section 4.1 The Distribution.<\/p>\n
(a) Delivery of Shares for Distribution. Subject to Section 4.4 hereof, on
\nor prior to the date the Distribution is effective (the “Distribution Date”),
\nSouthern will deliver to the distribution agent to be appointed by Southern, or
\nif no distribution agent is appointed, then Southern (the “Distribution Agent”),
\nto distribute to the stockholders of Southern the shares of common stock of
\nSouthern Energy held by Southern pursuant to the Distribution for the benefit of
\nholders of record of common stock of Southern on the Record Date, a single stock
\ncertificate, endorsed by Southern in blank, representing all of the outstanding
\nshares of common stock of Southern Energy then owned by Southern, and shall
\ncause the transfer agent for the shares of common stock of Southern to instruct
\nthe Distribution Agent to distribute on the Distribution Date the appropriate
\nnumber of such shares of common stock of Southern Energy to each such holder or
\ndesignated transferee or transferees of such holder.<\/p>\n
(b) Shares Received. Subject to Sections 4.4 and 4.5, each holder of common
\nstock of Southern on the Record Date (or such holder’s designated transferee or
\ntransferees) will be entitled to receive in the Distribution a number of shares
\nof common stock of Southern Energy equal to the number of shares of common stock
\nof Southern held by such holder on the Record Date multiplied by a fraction the
\nnumerator of which is the number of shares of common stock of Southern Energy
\nbeneficially owned by Southern on the Record Date and the denominator of which
\nis the number of shares of common stock of Southern outstanding on the Record
\nDate.<\/p>\n
(c) Obligation to Provide Information. Southern Energy and Southern, as the
\ncase may be, will provide to the Distribution Agent all share certificates and
\nany information required in order to complete the Distribution on the basis
\nspecified above.<\/p>\n
Section 4.2 Actions Prior To The Distribution.<\/p>\n
(a) Information Statement. Southern and Southern Energy shall prepare and
\nmail, prior to the Distribution Date, to the holders of common stock of Southern
\nsuch information concerning Southern Energy and the Distribution and such other
\nmatters as Southern shall reasonably determine are necessary and as may be
\nrequired by law. Southern and Southern Energy will prepare, and Southern Energy
\nwill, to the extent required under applicable law, file with the Commission any
\nsuch documentation which Southern and Southern Energy determines is necessary or
\ndesirable to effectuate the Distribution, and Southern and Southern Energy shall
\neach use its reasonable commercial efforts to obtain all necessary approvals
\nfrom the Commission with respect thereto as soon as practicable.<\/p>\n
6<\/p>\n
10<\/p>\n
(b) Blue Sky. Southern and Southern Energy shall take all such actions as
\nmay be necessary or appropriate under the securities or blue sky laws of the
\nUnited States (and any comparable laws under any foreign jurisdiction) in
\nconnection with the Distribution.<\/p>\n
(c) NYSE Listing. Southern Energy shall prepare and file, and shall use its
\nreasonable commercial efforts to have approved, an application for the listing
\nof the common stock of Southern Energy to be distributed in the Distribution on
\nthe NYSE, subject to official notice of distribution.<\/p>\n
(d) Resignation of Directors and Officers. Immediately prior to the
\nDistribution, (i) each person who is an officer, director or employee of any
\nmember of the Southern Group and an officer, director or employee of any member
\nof the Southern Energy Group immediately prior to the Distribution (each a
\n“Joint Employee”) and who is to continue as an officer, director or employee of
\nany member of the Southern Group after the Distribution shall resign from each
\nof such person’s positions with each member of the Southern Energy Group, and
\n(ii) each such Joint Employee who is to continue as an officer, director or
\nemployee of any member of the Southern Energy Group, after the Distribution,
\nshall resign from each of such person’s positions with each member of the
\nSouthern Group.<\/p>\n
(e) Conditions. Southern and Southern Energy shall take all reasonable steps
\nnecessary and appropriate to cause the conditions set forth in Section 4.4 to be
\nsatisfied and to effect the Distribution on the Distribution Date.<\/p>\n
Section 4.3 Sole Discretion of Southern. Southern currently intends,
\nfollowing the consummation of the IPO, to complete the Distribution within
\ntwelve (12) months of the IPO Closing Date. Southern shall, in its sole and
\nabsolute discretion, determine the date of the consummation of the Distribution
\nand all terms of the Distribution, including, without limitation, the form,
\nstructure and terms of any transaction(s) and\/or offering(s) to effect the
\nDistribution and the timing of and conditions to the consummation of the
\nDistribution. In addition, Southern may at any time and from time to time until
\nthe completion of the Distribution decide to abandon the Distribution or modify
\nor change the terms of the Distribution, including, without limitation, by
\naccelerating or delaying the timing of the consummation of all or part of the
\nDistribution. Southern Energy shall cooperate with Southern in all respects to
\naccomplish the Distribution and shall, at Southern’s direction, promptly take
\nany and all actions necessary or desirable to effect the Distribution,
\nincluding, without limitation, the registration under the Securities Act of the
\ncommon stock of Southern Energy on an appropriate registration form or forms to
\nbe designated by Southern. Southern shall select any investment banker(s) and
\nmanager(s) in connection with the Distribution, as well as any financial
\nprinter, solicitation and\/or exchange agent and outside counsel for Southern;
\nprovided, however, that nothing herein shall prohibit Southern Energy from
\nengaging (at its own expense) its own financial, legal, accounting and other
\nadvisors in connection with the Distribution.<\/p>\n
7
\n 11<\/p>\n
Section 4.4 Conditions To Distribution. The following are conditions to the
\nconsummation of the Distribution. The conditions are for the sole benefit of
\nSouthern and shall not give rise to or create any duty on the part of Southern
\nor the Southern Board of Directors to waive or not waive any such condition.<\/p>\n
(a) IRS Ruling. Southern shall have obtained a private letter ruling from
\nthe Internal Revenue Service in form and substance satisfactory to Southern (in
\nits sole discretion), and such ruling shall remain in effect as of the
\nDistribution Date, to the effect that (i) the distribution by Southern of all of
\nits Southern Energy stock to the stockholders of Southern will qualify as a
\nreorganization under Section 355 of the Code; and (ii) no gain or loss will be
\nrecognized by (and no amount will otherwise be included in the income of) the
\nstockholders of Southern upon their receipt of Southern Energy common stock
\npursuant to the Distribution.<\/p>\n
(b) Governmental Approvals. Any material Governmental Approvals necessary to
\nconsummate the Distribution and the HoldCo Transaction shall have been obtained
\nand be in full force and effect;<\/p>\n
(c) No Legal Restraints. No order, injunction or decree issued by any court
\nor agency of competent jurisdiction or other legal restraint or prohibition
\npreventing the consummation of the Distribution shall be in effect and no other
\nevent outside the control of Southern shall have occurred or failed to occur
\nthat prevents the consummation of the Distribution; and<\/p>\n
(d) No Material Adverse Effect. No other events or developments shall have
\noccurred subsequent to the IPO Closing Date that, in the judgment of the Board
\nof Directors of Southern, would result in the Distribution having a material
\nadverse effect on Southern or on the stockholders of Southern.<\/p>\n
Section 4.5 Fractional Shares. As soon as practicable after the Distribution
\nDate, Southern shall direct the Distribution Agent to determine the number of
\nwhole shares and fractional shares of common stock of Southern Energy allocable
\nto each holder of record or beneficial owner of common stock of Southern as of
\nthe Record Date, to aggregate all such fractional shares and sell the whole
\nshares obtained thereby at the direction of Southern, in open market
\ntransactions, at then prevailing trading prices, and to cause to be distributed
\nto each such holder or for the benefit of each such beneficial owner to which a
\nfractional share shall be allocable such holder’s or owner’s ratable share of
\nthe proceeds of such sale, after making appropriate deductions of the amount
\nrequired to be withheld for federal income tax purposes and after deducting an
\namount equal to all brokerage charges, commissions and transfer taxes attributed
\nto such sale. Southern and the Distribution Agent shall use their reasonable
\ncommercial efforts to aggregate the shares of common stock of Southern that may
\nbe held by any beneficial owner thereof through more than one account in
\ndetermining the fractional share allocable to such beneficial owner.<\/p>\n
8<\/p>\n
12<\/p>\n
ARTICLE V<\/p>\n
COVENANTS AND OTHER MATTERS<\/p>\n
Section 5.1 Other Agreements. In addition to the specific agreements,
\ndocuments and instruments annexed to this Agreement, Southern and Southern
\nEnergy agree to execute or cause to be executed by the appropriate parties and
\ndeliver, as appropriate, such other agreements, instruments and other documents
\nas may be necessary or desirable in order to effect the purposes of this
\nAgreement and the Ancillary Agreements.<\/p>\n
Section 5.2 Further Instruments. At the request of Southern Energy and
\nwithout further consideration, Southern will execute and deliver, and will cause
\nits applicable Subsidiaries to execute and deliver, to Southern Energy and its
\nSubsidiaries such other instruments of transfer, conveyance, assignment,
\nsubstitution and confirmation and take such action as Southern Energy may
\nreasonably deem necessary or desirable in order more effectively to transfer,
\nconvey and assign to Southern Energy and its Subsidiaries and confirm Southern
\nEnergy’s and its Subsidiaries’ title to all of the assets, rights and other
\nthings of value contemplated to be transferred to Southern Energy and its
\nSubsidiaries pursuant to this Agreement, the Ancillary Agreements, and any
\ndocuments referred to therein, to put Southern Energy and its Subsidiaries in
\nactual possession and operating control thereof and to permit Southern Energy
\nand its Subsidiaries to exercise all rights with respect thereto (including,
\nwithout limitation, rights under contracts and other arrangements as to which
\nthe consent of any third party to the transfer thereof shall not have previously
\nbeen obtained). At the request of Southern and without further consideration,
\nSouthern Energy will execute and deliver, and will cause its applicable
\nSubsidiaries to execute and deliver, to Southern and its Subsidiaries all
\ninstruments, assumptions, novations, undertakings, substitutions or other
\ndocuments and take such other action as Southern may reasonably deem necessary
\nor desirable in order to have Southern Energy fully and unconditionally assume
\nand discharge the liabilities contemplated to be assumed by Southern Energy
\nunder this Agreement or any document in connection herewith and to relieve the
\nSouthern Group of any liability or obligation with respect thereto and evidence
\nthe same to third parties. Neither Southern nor Southern Energy shall be
\nobligated, in connection with the foregoing, to expend money other than
\nreasonable out-of-pocket expenses, attorneys’ fees and recording or similar
\nfees. Furthermore, each party, at the request of another party hereto, shall
\nexecute and deliver such other instruments and do and perform such other acts
\nand things as may be necessary or desirable for effecting completely the
\nconsummation of the transactions contemplated hereby.<\/p>\n
Section 5.3 Agreement For Exchange of Information. Each of Southern and
\nSouthern Energy agrees to provide, or cause to be provided, to each other, at
\nany time before or after the Change of Control Date, as soon as reasonably
\npracticable after written request therefor, any Information in the possession or
\nunder the control of such party that the requesting party reasonably needs (i)
\nto comply with reporting, disclosure, filing or<\/p>\n
9<\/p>\n
13<\/p>\n
other requirements imposed on the requesting party (including under applicable
\nsecurities laws) by a Governmental Authority having jurisdiction over the
\nrequesting party, (ii) for use in any other judicial, regulatory, administrative
\nor other proceeding or in order to satisfy audit, accounting, claims,
\nregulatory, litigation or other similar requirements, (iii) to comply with its
\nobligations under this Agreement or any Ancillary Agreement or (iv) in
\nconnection with the ongoing businesses of Southern or Southern Energy as it
\nrelates to the conduct of such businesses prior to the Change of Control Date,
\nas the case may be; provided, however, that in the event that any party
\ndetermines that any such provision of Information could be commercially
\ndetrimental, violate any law or agreement, or waive any attorney-client
\nprivilege, the parties shall take all reasonable measures to permit the
\ncompliance with such obligations in a manner that avoids any such harm or
\nconsequence.<\/p>\n
(a) Internal Accounting Controls; Financial Information. After the
\nSeparation Date, (i) each party shall maintain in effect at its own cost and
\nexpense adequate systems and controls for its business to the extent necessary
\nto enable the other party to satisfy its reporting, accounting, audit and other
\nobligations, and (ii) each party shall provide, or cause to be provided, to the
\nother party and its Subsidiaries in such form as such requesting party shall
\nrequest, at no charge to the requesting party, all financial and other data and
\ninformation as the requesting party determines necessary or advisable in order
\nto prepare its financial statements and reports or filings with any Governmental
\nAuthority.<\/p>\n
(b) Ownership of Information. Any Information owned by a party that is
\nprovided to a requesting party pursuant to this Section 5.3 shall be deemed to
\nremain the property of the providing party. Unless specifically set forth
\nherein, nothing contained in this Agreement shall be construed as granting or
\nconferring rights of license or otherwise in any such Information.<\/p>\n
(c) Record Retention. To facilitate the possible exchange of Information
\npursuant to this Section 5.3 and other provisions of this Agreement after the
\nChange of Control Date, each party agrees to use its reasonable commercial
\nefforts to retain all Information in its respective possession or control on the
\nChange of Control Date substantially in accordance with its policies as in
\neffect on the Separation Date. Southern Energy shall not amend its or its
\nSubsidiaries’ record retention policies prior to the Change of Control Date
\nwithout the consent of Southern. However, except as set forth in the Tax
\nIndemnification Agreement, at any time after the Change of Control Date, each
\nparty may amend their respective record retention policies at such party’s
\ndiscretion; provided, however, that if a party desires to effect the amendment
\nwithin three (3) years after the Change of Control Date, the amending party must
\ngive thirty (30) days prior written notice of such change in the policy to the
\nother party to this Agreement. No party will destroy, or permit any of its
\nSubsidiaries to destroy, any Information that exists on the Separation Date
\n(other than Information that is permitted to be destroyed under the current
\nrecord retention policy of such party) without first using its reasonable
\ncommercial efforts to notify the other party of the proposed destruction and
\ngiving the other party the opportunity to take possession of such Information
\nprior to such destruction.<\/p>\n
10<\/p>\n
14<\/p>\n
(d) Limitation of Liability. No party shall have any liability to any other
\nparty in the event that any Information exchanged or provided pursuant to this
\nSection is found to be inaccurate, in the absence of willful misconduct by the
\nparty providing such Information. No party shall have any liability to any other
\nparty if any Information is destroyed or lost after reasonable commercial
\nefforts by such party to comply with the provisions of Section 5.4(c).<\/p>\n
(e) Other Agreements Providing For Exchange of Information. The rights and
\nobligations granted under this Section 5.3 are subject to any specific
\nlimitations, qualifications or additional provisions on the sharing, exchange or
\nconfidential treatment of Information set forth in this Agreement and any
\nAncillary Agreement.<\/p>\n
(f) Production of Witnesses; Records; Cooperation. Each party hereto shall,
\nexcept in the case of a legal or other proceeding by one party against another
\nparty (which shall be governed by such discovery rules as may be applicable
\nunder Section 5.7 or otherwise), use its reasonable commercial efforts to make
\navailable to each other party, upon written request, the former, current and
\nfuture directors, officers, employees, other personnel and agents of such party
\nas witnesses and any books, records or other documents within its control or
\nwhich it otherwise has the ability to make available, to the extent that any
\nsuch person (giving consideration to business demands of such directors,
\nofficers, employees, other personnel and agents) or books, records or other
\ndocuments may reasonably be required in connection with any legal, regulatory,
\nadministrative or other proceeding in which the requesting party may from time
\nto time be involved, regardless of whether such legal, regulatory,
\nadministrative or other proceeding is a matter with respect to which
\nindemnification may be sought hereunder. The requesting party shall bear all
\ncosts and expenses in connection therewith.<\/p>\n
Section 5.4 Auditors and Audits; Annual and Quarterly Statements and
\nAccounting. Each party agrees that, for so long as Southern Energy remains a
\nSubsidiary of Southern, and with respect to any financial reporting period
\nduring which Southern Energy was a Subsidiary of Southern:<\/p>\n
(a) Selection of Auditors. Southern Energy shall not select a different
\naccounting firm than the firm selected by Southern to audit its financial
\nstatements to serve as its independent certified public accountants (the
\n“Southern Energy Auditors”) for purposes of providing an opinion on its
\nconsolidated financial statements without Southern’s prior written consent
\n(which shall not be unreasonably withheld).<\/p>\n
(b) Date of Auditors’ Opinion and Quarterly Reviews. Southern Energy shall
\nuse its reasonable commercial efforts to enable the Southern Energy Auditors to
\ncomplete their audit such that they will date their opinion on Southern Energy’s
\naudited annual financial statements on the same date that Southern’s independent
\ncertified public accountants (“Southern’s Auditors”) date their opinion on
\nSouthern’s audited annual financial statements, and to enable Southern to meet
\nits timetable for the printing, filing <\/p>\n
11<\/p>\n
15<\/p>\n
and public dissemination of Southern’s annual financial statements. Southern
\nEnergy shall use its reasonable commercial efforts to enable the Southern Energy
\nAuditors to complete their quarterly review procedures such that they will
\nprovide clearance on Southern Energy’s quarterly financial statements on the
\nsame date that Southern’s Auditors provide clearance on Southern’s quarterly
\nfinancial statements.<\/p>\n
(c) Annual and Quarterly Financial Statements. Southern Energy shall provide
\nto Southern on a timely basis all Information that Southern reasonably requires
\nto meet its schedule for the preparation, printing, filing, and public
\ndissemination of Southern’s annual and quarterly financial statements. Without
\nlimiting the generality of the foregoing, Southern Energy will provide all
\nrequired financial Information with respect to Southern Energy and its
\nSubsidiaries to the Southern Energy Auditors in a sufficient and reasonable time
\nand in sufficient detail to permit the Southern Energy Auditors to take all
\nsteps and perform all reviews necessary to provide sufficient assistance to
\nSouthern’s Auditors with respect to Information to be included or contained in
\nSouthern’s annual and quarterly financial statements. Similarly, Southern shall
\nprovide to Southern Energy on a timely basis all Information that Southern
\nEnergy reasonably requires to meet its schedule for the preparation, printing,
\nfiling, and public dissemination of Southern Energy’s annual and quarterly
\nfinancial statements. Without limiting the generality of the foregoing, Southern
\nwill provide all required financial Information with respect to Southern and its
\nSubsidiaries to Southern’s Auditors in a sufficient and reasonable time and in
\nsufficient detail to permit Southern’s Auditors to take all steps and perform
\nall reviews necessary to provide sufficient assistance to the Southern Energy
\nAuditors with respect to Information to be included or contained in Southern
\nEnergy’s annual and quarterly financial statements.<\/p>\n
(d) Identity of Personnel Performing the Annual Audit and Quarterly Reviews.
\nSouthern Energy shall authorize the Southern Energy Auditors to make available
\nto Southern’s Auditors both the personnel who performed or are performing the
\nannual audits and quarterly reviews of Southern Energy and work papers related
\nto the annual audits and quarterly reviews of Southern Energy, in all cases
\nwithin a reasonable time prior to the Southern Energy Auditors’ opinion date, so
\nthat Southern’s Auditors are able to perform the procedures they consider
\nnecessary to take responsibility for the work of the Southern Energy Auditors as
\nit relates to Southern’s Auditors’ report on Southern’s financial statements,
\nall within sufficient time to enable Southern to meet its timetable for the
\nprinting, filing and public dissemination of Southern’s annual and quarterly
\nstatements. Similarly, Southern shall authorize Southern’s Auditors to make
\navailable to the Southern Energy Auditors both the personnel who performed or
\nare performing the annual audits and quarterly reviews of Southern and work
\npapers related to the annual audits and quarterly reviews of Southern, in all
\ncases within a reasonable time prior to Southern’s Auditors’ opinion date, so
\nthat the Southern Energy Auditors are able to perform the procedures they
\nconsider necessary to take responsibility for the work of Southern’s Auditors as
\nit relates to the Southern Energy Auditors’ report on Southern Energy’s
\nstatements, all within sufficient time to enable Southern Energy to meet its<\/p>\n
12<\/p>\n
16<\/p>\n
timetable for the printing, filing and public dissemination of Southern Energy’s
\nannual and quarterly financial statements.<\/p>\n
(e) Notice of Change in Accounting Principles. Southern Energy shall give
\nSouthern as much prior notice as reasonably practical of any proposed
\ndetermination of, or any significant changes in, its accounting estimates or
\naccounting principles from those in effect on the Separation Date. Southern
\nEnergy will consult with Southern and, if requested by Southern, Southern Energy
\nwill consult with Southern’s Auditors with respect thereto. Southern shall give
\nSouthern Energy as much prior notice as reasonably practical of any proposed
\ndetermination of, or any significant changes in, its accounting estimates or
\naccounting principles from those in effect on the Separation Date.<\/p>\n
(f) Conflict with Third-Party Agreements. Nothing in Sections 5.3 and 5.4
\nshall require Southern Energy to violate any agreement with any third parties
\nregarding the confidentiality of confidential and proprietary information
\nrelating to that third party or its business; provided, however, that in the
\nevent that Southern Energy is required under Sections 5.3 and 5.4 to disclose
\nany such information, Southern Energy shall use all commercially reasonable
\nefforts to seek to obtain such third party’s consent to the disclosure of such
\ninformation.<\/p>\n
Section 5.5 Consistency with Past Practices. At all times Southern will
\ncause Southern Energy before the Separation Date to continue to conduct business
\nin the ordinary course, including but not limited to acquisitions, divestitures
\nand project financings, consistent with past practices.<\/p>\n
Section 5.6 Payment of Expenses. Southern Energy shall pay all underwriting
\nfees (other than incentive fees), discounts and commissions incurred in
\nconnection with the IPO. Except as otherwise provided in this Agreement, the
\nAncillary Agreements or any other agreement between the parties relating to the
\nSeparation, the IPO or the Distribution, all other out-of-pocket costs and
\nexpenses of the parties hereto in connection with the preparation of this
\nAgreement and the Ancillary Agreements, the IPO (including underwriting
\nincentive fees) and the Distribution shall be paid by Southern. Notwithstanding
\nthe foregoing, Southern Energy shall pay any internal fees, costs and expenses
\nincurred by Southern Energy in connection with the Separation, the IPO and the
\nDistribution.<\/p>\n
Section 5.7 Dispute Resolution. Except as otherwise set forth in any
\nAncillary Agreement, resolution of any and all disputes arising from or in
\nconnection with this Agreement, whether based on contract, tort, or otherwise
\n(collectively, “Disputes”), shall be exclusively governed by and settled in
\naccordance with the provisions of this Section 5.7.<\/p>\n
(a) Negotiation. The parties shall make a good faith attempt to resolve any
\nDispute arising out of or relating to this Agreement through negotiation. Within
\nthirty (30) days after notice of a Dispute is given by either party to the other
\nparty, each party<\/p>\n
13<\/p>\n
17<\/p>\n
shall select one or more representatives who are vice presidents, senior vice
\npresidents or executive vice presidents of such party, which representatives
\nshall meet and make a good faith attempt to resolve such Dispute and shall
\ncontinue to negotiate in good faith in an effort to resolve the Dispute or
\nrenegotiate the applicable section or provision without the necessity of any
\nformal proceedings. If such representatives fail to resolve a Dispute within
\nthirty (30) days after the first meeting of the representatives, such Dispute
\nshall be referred to the chief executive officers of each of the parties for
\nresolution. During the course of negotiations under this Section 5.7(a), all
\nreasonable requests made by one party to the other for information, including
\nrequests for copies of relevant documents, will be honored. The specific format
\nfor such negotiations will be left to the discretion of the designated
\nrepresentatives but may include the preparation of agreed upon statements of
\nfact or written statements of position furnished to the other party.<\/p>\n
(b) Non-Binding Mediation. In the event that any Dispute arising out of or
\nrelated to this Agreement is not settled by the parties within thirty (30) days
\nafter the referral of such Dispute to the chief executive officers of the
\nparties under Section 5.7(a), the parties will attempt in good faith to resolve
\nsuch Dispute by non-binding mediation in accordance with the American
\nArbitration Association Commercial Mediation Rules. The mediation shall be held
\nwithin thirty (30) days of the end of such thirty (30) day negotiation period of
\nthe chief executive officers. Except as provided below in Section 5.7(c), no
\nlitigation for the resolution of such dispute may be commenced until the parties
\ntry in good faith to settle the dispute by such mediation in accordance with
\nsuch rules and either party has concluded in good faith that amicable resolution
\nthrough continued mediation of the matter does not appear likely. The costs of
\nmediation shall be shared equally by the parties to the mediation. Any
\nsettlement reached by mediation shall be recorded in writing, signed by the
\nparties, and shall be binding on them.<\/p>\n
(c) Proceedings. Nothing herein, however, shall prohibit either party from
\ninitiating litigation or other judicial or administrative proceedings if such
\nparty would be substantially harmed by a failure to act during the time that
\nsuch good faith efforts are being made to resolve the Dispute through
\nnegotiation or mediation. In the event that litigation is commenced under this
\nSection 5.7(c), the parties agree to continue to attempt to resolve any Dispute
\naccording to the terms of Sections 5.7(a) and 5.7(b) during the course of such
\nlitigation proceedings under this Section 5.7(c).<\/p>\n
Section 5.8 Governmental Approvals. The parties acknowledge that certain of
\nthe transactions contemplated by this Agreement and the Ancillary Agreements are
\nsubject to certain conditions established by applicable government regulations,
\norders, and approvals (“Existing Authority”). The parties intend to implement
\nthis Agreement, the Ancillary Agreements and the transactions contemplated
\nthereby consistent with and to the extent permitted by Existing Authority and to
\ncooperate toward obtaining and maintaining in effect such Governmental Approvals
\nas may be required in order to implement this Agreement and each of the
\nAncillary Agreements as fully as possible in accordance with their respective
\nterms. To the extent that any of the transactions contemplated by this Agreement
\nor any Ancillary Agreement require any Governmental<\/p>\n
14<\/p>\n
18<\/p>\n
Approvals, the parties will use their reasonable commercial efforts to obtain
\nany such Governmental Approvals.<\/p>\n
Section 5.9 Regulatory Proceedings. For a period beginning on the Separation
\nDate and ending eighteen (18) months after the Change of Control Date, neither
\nSouthern Energy nor any Subsidiary of Southern Energy will initiate, intervene
\nin, or participate in any proceedings or matter before the Federal Energy
\nRegulatory Commission or any agency or legislature of the States of Alabama,
\nFlorida, Georgia or Mississippi which directly involves (1) corporate
\ntransactions or (2) the generation, transmission, distribution, purchase or sale
\nof electric power by Southern or any of its Subsidiaries unless prior written
\nconsent is given by Southern, except to the extent that any such proceedings or
\nmatters involve obligations arising under this Agreement or any of the Ancillary
\nAgreements, or to the extent any such proceeding or matter directly involves a
\ncontract or agreement for the purchase or sale of electricity or gas by Southern
\nEnergy or any Subsidiary of Southern Energy, or to the extent any such
\nproceeding before the Federal Energy Regulatory Commission involves the
\ntransmission of electricity, except for a proceeding to establish a regional
\ntransmission organization in which Southern or any of its Subsidiaries is a
\nparticipant.<\/p>\n
Section 5.10 Regulatory Effect of Distribution. Southern and Southern Energy
\nintend that the Distribution will result in Southern Energy and its Subsidiaries
\nlosing their status under the Public Utility Holding Company Act of 1935
\n(“PUHCA”) as “affiliates” or “subsidiaries” of Southern or its Subsidiaries. To
\nthe extent a doubt arises as to that legal effect, at the request of either,
\nSouthern and Southern Energy shall cooperate in resolving such doubt to achieve
\nthat mutual goal through reasonable changes in business practices, cooperating
\ntowards regulatory or judicial filings or proceedings or obtaining no-action
\nletter relief. Without limiting the foregoing, in the event Southern owns less
\nthan 20% of the outstanding common stock of Southern Energy at any time while
\nPUHCA continues to be in effect, Southern shall, at Southern Energy’s request,
\nenter into voting trust agreements or voting covenants designed to eliminate
\nattribution of voting securities control to Southern to the extent necessary to
\ncause Southern Energy and its Subsidiaries to lose their status under PUHCA as
\n“affiliates” or “subsidiaries” of Southern or its Subsidiaries.<\/p>\n
Section 5.11 HoldCo Transaction. As promptly as practicable following the
\nreceipt of all required Governmental Approvals and any required consents or
\napprovals of any lender to Southern or Southern Energy or its Subsidiaries, (a)
\nSouthern Energy and Southern shall cause SE Finance and SE Capital Funding to be
\ntransferred to Southern, in substantially the manner set forth on Schedule
\n5.11(a) or in such other manner as Southern and Southern Energy may agree, and
\neach of Southern and Southern Energy shall execute and deliver any and all
\ninstruments of transfer, stock transfer powers or other agreements or documents
\nand take such actions as may be necessary to effectively transfer SE Finance and
\nSE Capital Funding to Southern in such manner, and to permit Southern and its
\nSubsidiaries to exercise all rights with respect thereto, and (b) Southern and
\nSouthern Energy shall execute and deliver any and all such instruments of<\/p>\n
15<\/p>\n
19<\/p>\n
substitution and such other instruments or agreements as shall be necessary for
\nthe obligations of Southern Energy under the each of the agreements set forth on
\nSchedule 5.11(b) (the “Keepwell Agreements”) to be substituted by Southern and
\nfor Southern Energy to be unconditionally released therefrom, provided that
\nSouthern shall not be required to grant or provide any cash or other
\nconsideration in connection with any such assumption or substitution or assume
\nor otherwise become liable for any liabilities or obligations which exceed the
\nliabilities or obligations of Southern Energy under the Keepwell Agreements
\nimmediately prior to such assumption.<\/p>\n
Section 5.12. Continuance of Southern Credit Support. Notwithstanding any
\nother provision of this Agreement or the provisions of any Ancillary Agreement
\nto the contrary, the parties hereby agree that (i) Southern shall maintain in
\nfull force and effect each guarantee, letter of credit, keepwell or support
\nagreement or other credit support document, instrument or other similar
\narrangement issued for the benefit of any Person in the Southern Energy Group by
\nor on behalf of Southern (the “Credit Support Arrangements”) which is
\noutstanding as of the Separation Date, until such time as such Credit Support
\nArrangement terminates in accordance with its terms or is otherwise released at
\nthe request of Southern Energy; provided, that Southern Energy shall use
\ncommercially reasonable efforts, at the request of Southern, to attempt to
\nrelease or replace any Credit Support Arrangement for which such replacement or
\nrelease is reasonably available; and (ii) after the IPO Closing Date and until
\nthe first date on which Southern Energy is no longer a Subsidiary of Southern
\n(the “Additional Credit Support Arrangement Commitment Termination Date”), upon
\nthe request of Southern Energy, Southern shall issue additional Credit Support
\nArrangements for the benefit of Southern Company Energy Marketing L.P. (“SCEM”);
\nprovided, that Southern shall not be obligated to issue any such additional
\nCredit Support Arrangements to the extent that the aggregate amount of all
\noutstanding Credit Support Arrangements for the benefit of SCEM would exceed
\n$425,000,000; provided further, that Southern shall not be required to provide
\nany such additional Credit Support Arrangements on terms that are materially
\nmore burdensome to Southern than the terms of the Credit Support Arrangements
\noutstanding on the date of this Agreement; and provided, further, that Southern
\nmay condition such additional Credit Support Arrangements such that they may
\nexpire approximately six (6) months following the Additional Credit Support
\nArrangement Commitment Termination Date. In consideration of Southern’s
\nprovision of the Credit Support Arrangements, Southern Energy shall pay to
\nSouthern, beginning on the Additional Credit Support Arrangement Commitment
\nTermination Date, a monthly fee in an amount equal to 1% per annum, payable in
\narrears on the first day of each month on the average aggregate maximum
\nprincipal amount of all Credit Support Arrangements outstanding during such
\nmonth.<\/p>\n
Section 5.13. Mobile Facility. Southern and Southern Energy shall continue
\ndiscussions following the Separation Date regarding the appropriate ownership
\nand operation of the Mobile, Alabama cogeneration facility, including the
\npossibility of an incentive-based operating agreement with a Southern Energy
\nSubsidiary.<\/p>\n
16<\/p>\n
20<\/p>\n
Section 5.14 Assignment of Agreements. Effective as of the Separation Date,
\nSouthern shall assign, transfer, convey and deliver to Southern Energy, and
\nagrees to cause its applicable Subsidiaries to assign, transfer, convey and
\ndeliver to Southern Energy’s applicable Subsidiaries, and Southern Energy hereby
\naccepts from Southern, and agrees to cause its applicable Subsidiaries to accept
\nfrom Southern’s applicable Subsidiaries, all of Southern’s and its applicable
\nSubsidiaries’ respective right, title and interest in and to the documents and
\nagreements listed on Schedule 5.14 attached hereto (each an “Assigned
\nAgreement”). To the extent that Southern’s or its applicable Subsidiaries’
\nrespective right, title and interest in and to any Assigned Agreement may not be
\nassigned without the consent of another Person which consent has not been
\nobtained, this provision shall not constitute an agreement to assign the same if
\nan attempted assignment would constitute a breach thereof or be unlawful, and
\nSouthern shall use its commercially reasonable efforts to obtain any such
\nrequired consent(s) by the Distribution Date. The parties agree that if any
\nconsent to an assignment of any Assigned Agreement shall not be obtained or if
\nany attempted assignment would be ineffective or would impair Southern Energy’s
\nor its applicable Subsidiaries’ rights and obligations under such Assigned
\nAgreement, such that Southern Energy would not in effect acquire the benefit of
\nall such rights and obligations, Southern, to the maximum extent permitted by
\nlaw and such Assigned Agreement, shall enter into such reasonable arrangements
\nwith Southern Energy as are necessary to provide Southern Energy or its
\napplicable Subsidiary with the benefits and obligations of such Assigned
\nAgreement from the Separation Date. The parties shall cooperate and shall each
\nuse their commercially reasonable efforts after the Separation Date to obtain an
\nassignment of such Assigned Agreement to Southern Energy.<\/p>\n
Section 5.15 Southern Energy Board Representation. At any time after the
\nSeparation Date, if and for so long as Southern shall beneficially own (within
\nthe meaning of Rule 13d-3 under the Exchange Act) shares of Southern Energy
\ncommon stock which at such time represent more than 25% of the outstanding
\nshares of Southern Energy common stock and less than 50% of such outstanding
\nshares, Southern shall be entitled to designate two of the nominees of the Board
\nof Directors of Southern Energy for election to such Board at each annual
\nmeeting of Southern Energy’s shareholders, provided that such number of
\ndesignees shall be reduced by the number of persons then serving on the Southern
\nEnergy Board in any class of directors that is not up for election at such
\nannual meeting who are then also serving as officers or directors of Southern.<\/p>\n
17<\/p>\n
21<\/p>\n
ARTICLE VI<\/p>\n
MISCELLANEOUS<\/p>\n
Section 6.1 LIMITATION OF LIABILITY. IN NO EVENT SHALL ANY MEMBER OF THE
\nSOUTHERN GROUP OR SOUTHERN ENERGY GROUP OR THEIR RESPECTIVE DIRECTORS, OFFICERS
\nAND EMPLOYEES BE LIABLE TO ANY OTHER MEMBER OF THE SOUTHERN GROUP OR SOUTHERN
\nENERGY GROUP FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE
\nDAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY
\n(INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT
\nSUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED,
\nHOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EACH PARTY’S
\nINDEMNIFICATION OBLIGATIONS FOR LIABILITIES TO THIRD PARTIES AS SET FORTH IN THE
\nINDEMNIFICATION AND INSURANCE MATTERS AGREEMENT.<\/p>\n
Section 6.2 Entire Agreement. This Agreement, the other Ancillary
\nAgreements and the Exhibits and Schedules referenced or attached hereto and
\nthereto, constitutes the entire agreement between the parties with respect to
\nthe subject matter hereof and shall supersede all prior written and oral and all
\ncontemporaneous oral agreements and understandings with respect to the subject
\nmatter hereof.<\/p>\n
Section 6.3 Governing Law. This Agreement shall be governed and construed
\nand enforced in accordance with the laws of the State of Georgia as to all
\nmatters regardless of the laws that might otherwise govern under the principles
\nof conflicts of laws applicable thereto.<\/p>\n
Section 6.4 Termination. This Agreement and all Ancillary Agreements may
\nbe terminated and the Distribution abandoned at any time prior to the IPO
\nClosing Date by and in the sole discretion of Southern without the approval of
\nSouthern Energy. This Agreement may be terminated at any time after the IPO
\nClosing Date and before the Change of Control Date by mutual consent of Southern
\nand Southern Energy. In the event of termination pursuant to this Section, no
\nparty shall have any liability of any kind to the other party.<\/p>\n
Section 6.5 Notices. Any notice, demand, offer, request or other
\ncommunication required or permitted to be given by either party pursuant to the
\nterms of this Agreement shall be in writing and shall be deemed effectively
\ngiven the earlier of (i) when received, (ii) when delivered personally, (iii)
\none (1) business day after being delivered by facsimile (with receipt of
\nappropriate confirmation), (iv) one (1) business day after being deposited with
\nan overnight courier service or (v) four (4) days after being deposited in the
\nU.S. mail, First Class with postage prepaid, and addressed to the attention of
\nthe<\/p>\n
18<\/p>\n
22<\/p>\n
party’s General Counsel at the address of its principal executive office or such
\nother address as a party may request by notifying the other in writing.<\/p>\n
Section 6.6 Counterparts. This Agreement, including the Schedules and
\nExhibits hereto and the other documents referred to herein, may be executed in
\ncounterparts, each of which shall be deemed to be an original but all of which
\nshall constitute one and the same agreement.<\/p>\n
Section 6.7 Binding Effect; Assignment. This Agreement shall inure to the
\nbenefit of and be binding upon the parties hereto and their respective legal
\nrepresentatives and successors, and nothing in this Agreement, express or
\nimplied, is intended to confer upon any other Person any rights or remedies of
\nany nature whatsoever under or by reason of this Agreement. This Agreement may
\nnot be assigned by any party hereto.<\/p>\n
Section 6.8 Severability. If any term or other provision of this
\nAgreement or the Schedules or Exhibits attached hereto is determined by a
\nnonappealable decision by a court, administrative agency or arbitrator to be
\ninvalid, illegal or incapable of being enforced by any rule of law or public
\npolicy, all other conditions and provisions of this Agreement shall nevertheless
\nremain in full force and effect so long as the economic or legal substance of
\nthe transactions contemplated hereby is not affected in any manner materially
\nadverse to either party. Upon such determination that any term or other
\nprovision is invalid, illegal or incapable of being enforced, the parties hereto
\nshall negotiate in good faith to modify this Agreement so as to effect the
\noriginal intent of the parties as closely as possible in an acceptable manner to
\nthe end that transactions contemplated hereby are fulfilled to the fullest
\nextent possible.<\/p>\n
Section 6.9 Failure or Indulgence Not Waiver; Remedies Cumulative. No
\nfailure or delay on the part of either party hereto in the exercise of any right
\nhereunder shall impair such right or be construed to be a waiver of, or
\nacquiescence in, any breach of any representation, warranty or agreement herein,
\nnor shall any single or partial exercise of any such right preclude other or
\nfurther exercise thereof or of any other right. All rights and remedies existing
\nunder this Agreement or the Schedules or Exhibits attached hereto are cumulative
\nto, and not exclusive of, any rights or remedies otherwise available.<\/p>\n
Section 6.10 Amendment. No change or amendment will be made to this
\nAgreement except by an instrument in writing signed on behalf of each of the
\nparties to such agreement.<\/p>\n
Section 6.11 Authority. Each of the parties hereto represents to the
\nother that (a) it has the corporate or other requisite power and authority to
\nexecute, deliver and perform this Agreement, (b) the execution, delivery and
\nperformance of this Agreement by it have been duly authorized by all necessary
\ncorporate or other actions, (c) it has duly and validly executed and delivered
\nthis Agreement, and (d) this Agreement is a legal, valid and binding obligation,
\nenforceable against it in accordance with its terms subject to<\/p>\n
19<\/p>\n
23<\/p>\n
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
\nlaws affecting creditors’ rights generally and general equity principles.<\/p>\n
Section 6.12 Interpretation. The headings contained in this Agreement, in
\nany Exhibit or Schedule hereto and in the table of contents to this Agreement
\nare for reference purposes only and shall not affect in any way the meaning or
\ninterpretation of this Agreement. Any capitalized term used in any Schedule or
\nExhibit but not otherwise defined therein, shall have the meaning assigned to
\nsuch term in this Agreement. When a reference is made in this Agreement to an
\nArticle or a Section, Exhibit or Schedule, such reference shall be to an Article
\nor Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
\nindicated.<\/p>\n
Section 6.13 Conflicting Agreements. In the event of conflict between
\nthis Agreement and any Ancillary Agreement or other agreement executed in
\nconnection herewith, the provisions of such other agreement shall prevail.<\/p>\n
ARTICLE VII<\/p>\n
DEFINITIONS<\/p>\n
Section 7.1 Affiliated Company. “Affiliated Company” means, with respect
\nto Southern, any entity in which Southern holds a 50% or less ownership interest
\nand, with respect to Southern Energy, any entity in which Southern Energy holds
\na 50% or less ownership interest and that is listed on Schedule 7.1 hereto.
\nSchedule 7.1 may be amended from time to time after the date hereof upon mutual
\nwritten consent of the parties.<\/p>\n
Section 7.2 Ancillary Agreements. “Ancillary Agreements” has the meaning
\nset forth in Section 2.1 hereof.<\/p>\n
Section 7.3 Business Day. “Business Day” means a day other than a
\nSaturday, a Sunday or a day on which banking institutions located in the State
\nof Georgia are authorized or obligated by law or executive order to close.<\/p>\n
Section 7.4 Change of Control Date. “Change of Control Date” means the
\nearlier of: (a) the Distribution Date (defined in the Master Separation
\nAgreement as the date the Distribution is effective), or (b) the first date on
\nwhich Southern ceases to control at least 33 1\/3% of the common stock of
\nSouthern Energy then outstanding.<\/p>\n
Section 7.5 Code. “Code” means the Internal Revenue Code of 1986, as
\namended from time to time.<\/p>\n
Section 7.6 Commission. “Commission” means the Securities and Exchange
\nCommission.<\/p>\n
20<\/p>\n
24<\/p>\n
Section 7.7 Disputes. “Disputes” has the meaning set forth in Section 5.7
\nhereof.<\/p>\n
Section 7.8 Distribution. “Distribution” has the meaning set forth in the
\nRecitals hereof.<\/p>\n
Section 7.9 Distribution Agent. “Distribution Agent” has the meaning set
\nforth in Section 4.1 hereof.<\/p>\n
Section 7.10 Distribution Date. “Distribution Date” has the meaning set
\nforth in Section 4.1 hereof.<\/p>\n
Section 7.11 Exchange Act. “Exchange Act” means the Securities and
\nExchange Act of 1934, as amended.<\/p>\n
Section 7.12 Governmental Approvals. “Governmental Approvals” means any
\nnotices, reports or other filings to be made, or any consents, registrations,
\napprovals, permits or authorizations to be obtained from, any Governmental
\nAuthority.<\/p>\n
Section 7.13 Governmental Authority. “Governmental Authority” shall mean
\nany federal, state, local, foreign or international court, government,
\ndepartment, commission, board, bureau, agency, official or other regulatory,
\nadministrative or governmental authority.<\/p>\n
Section 7.14 HoldCo Transaction. “HoldCo Transaction” has the meaning set
\nforth in the Recitals hereof.<\/p>\n
Section 7.15 Information. “Information” means information, whether or not
\npatentable or copyrightable, in written, oral, electronic or other tangible or
\nintangible forms, stored in any medium, including studies, reports, records,
\nbooks, contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
\ntechniques, designs, specifications, drawings, blueprints, diagrams, models,
\nprototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
\ncomputer programs or other software, marketing plans, customer names,
\ncommunications by or to attorneys (including attorney-client privileged
\ncommunications), memos and other materials prepared by attorneys or under their
\ndirection (including attorney work product), and other technical, financial,
\nemployee or business information or data.<\/p>\n
Section 7.16 IPO. “IPO” has the meaning set forth in the Recitals hereof.<\/p>\n
Section 7.17 IPO Closing Date. “IPO Closing Date” means the date of the
\nclosing of the IPO upon satisfaction of the conditions of Article II hereof.<\/p>\n
Section 7.18 IPO Registration Statement. “IPO Registration Statement”
\nmeans the registration statement on Form S-1 pursuant to the Securities Act of
\n1933, as amended, to <\/p>\n
21<\/p>\n
25<\/p>\n
be filed with the Commission registering the shares of common stock of Southern
\nEnergy to be issued in the IPO, together with all amendments thereto.<\/p>\n
Section 7.19 NYSE. “NYSE” means the New York Stock Exchange.<\/p>\n
Section 7.20 Person. “Person” means an individual, a partnership, a
\ncorporation, a limited liability company, an association, a joint stock company,
\na trust, a joint venture, an unincorporated organization and a governmental
\nentity or any department, agency or political subdivision thereof.<\/p>\n
Section 7.21 Record Date. “Record Date” means the close of business on
\nthe date to be determined by the Board of Directors of Southern as the record
\ndate for determining the stockholders of Southern entitled to receive shares of
\ncommon stock of Southern Energy in the Distribution.<\/p>\n
Section 7.22 SE Finance. “SE Finance” means SE Finance Capital
\nCorporation and its Subsidiaries and Affiliated Companies.<\/p>\n
Section 7.23 SE Capital Funding. “SE Capital Funding” means Southern
\nEnergy Capital Funding, Inc. and its Subsidiaries and Affiliated Companies.<\/p>\n
Section 7.24 Separation. “Separation” has the meaning set forth in the
\nRecitals hereof.<\/p>\n
Section 7.25 Separation Date. “Separation Date” has the meaning set forth
\nin Section 1.1 hereof.<\/p>\n
Section 7.26 Southern Business. “Southern Business” means any business of
\nSouthern and its Subsidiaries and Affiliated Companies other than the Southern
\nEnergy Business.<\/p>\n
Section 7.27 Southern Energy Business. “Southern Energy Business” means
\n(a) the business and operations of Southern Energy and its Subsidiaries and
\nAffiliated Companies, and (b) except as otherwise expressly provided herein, any
\nterminated, divested or discontinued businesses or operations that at the time
\nof termination, divestiture or discontinuation primarily related to the Southern
\nEnergy Business as then conducted; provided, that the Southern Energy Business
\nshall not include the business or operations of HoldCo, SE Finance, SE Capital
\nFunding or Southern Company Energy Solutions, Inc.<\/p>\n
Section 7.28 Southern Energy Group. “Southern Energy Group” means
\nSouthern Energy, each Subsidiary and Affiliated Company of Southern Energy
\nimmediately after the Separation Date and each Person that becomes a Subsidiary
\nor Affiliate Company of Southern Energy after the Separation Date; provided that
\nthe Southern Energy Group <\/p>\n
22<\/p>\n
26<\/p>\n
shall not include HoldCo, SE Finance, SE Capital Funding or Southern Company
\nEnergy Solutions, Inc.<\/p>\n
Section 7.29 Southern Energy Auditors. “Southern Energy Auditors” means
\nSouthern Energy’s independent certified public accountants.<\/p>\n
Section 7.30 Southern Group. “Southern Group” means Southern, each
\nSubsidiary and Affiliated Company of Southern (other than any member of the
\nSouthern Energy Group) immediately after the Separation Date and each Person
\nthat becomes a Subsidiary or an Affiliated Company of Southern after the
\nSeparation Date.<\/p>\n
Section 7.31 Southern’s Auditors. “Southern’s Auditors” means Southern’s
\nindependent certified public accountants.<\/p>\n
Section 7.32 Subsidiary. “Subsidiary” means with respect to any specified
\nPerson, any corporation, any limited liability company, any partnership or other
\nlegal entity of which such Person or its Subsidiaries owns, directly or
\nindirectly, more than 50% of the stock or other equity interest entitled to vote
\non the election of the members of the board of directors or similar governing
\nbody. Unless context otherwise requires, reference to Southern Energy and its
\nSubsidiaries at any time following the HoldCo Transaction shall not include the
\nsubsidiaries of Southern Energy that will be transferred to Southern in
\nconnection with the HoldCo Transaction.<\/p>\n
Section 7.33 Troutman Sanders. “Troutman Sanders” means Troutman Sanders
\nLLP.<\/p>\n
Section 7.34 Underwriters. “Underwriters” means the underwriters of the
\nIPO.<\/p>\n
Section 7.35 Underwriting Agreement. “Underwriting Agreement” has the
\nmeaning set forth in Section 3.1(a) hereof.<\/p>\n
23
\n 27<\/p>\n
WHEREFORE, the parties have signed this Master Separation and
\nDistribution Agreement effective as of the date first set forth above.<\/p>\n
THE SOUTHERN COMPANY SOUTHERN ENERGY, INC.<\/p>\n
By: By:
\n ———————————- ———————————-
\nName: H. Allen Franklin Name: S. Marce Fuller
\nTitle: President and Chief Operating Title: President and Chief Executive
\n Officer Officer<\/p>\n
24<\/p>\n
28<\/p>\n
Schedule 5.11
\n HoldCo Transaction<\/p>\n
(a) Description of HoldCo Transaction. SE Finance and SE Capital Funding
\nshall be transferred from Southern Energy to Southern in a manner and in an
\norder substantially similar to the following:<\/p>\n
1. Southern Energy issues 1 share of redeemable preferred stock to Southern.<\/p>\n
2. Southern Energy and Southern Company Energy Solutions (“Energy
\n Solutions”), a wholly-owned subsidiary of Southern, shall then create
\n Southern Energy Holdco, Inc. (“HoldCo”).<\/p>\n
3. Southern Energy then makes contribution to capital of HoldCo in exchange
\n for 80% or more of the shares of Holdco; such contribution consists of
\n 100% of the common stock of SE Finance and SE Capital Funding. At the
\n same time, Energy Solutions shall contribute certain assets to a
\n wholly-owned limited liability company of Holdco in exchange for 20% or
\n less of the shares of Holdco.<\/p>\n
4. Southern Energy redeems its 1 share of redeemable preferred stock held by
\n Southern in exchange for the shares of Holdco Southern Energy owns.<\/p>\n
(b) Credit Support to be Substituted for and Released. In connection with
\nthe HoldCo Transaction, the following instruments will be substituted for by
\nSouthern, and Southern Energy will be released from any liability thereunder:<\/p>\n
1. Keep Well Agreement dated December 17, 1998, from Southern Energy to
\n Southern Energy Finance Company, Inc. and Credit Suisse First Boston, as
\n agent for the lenders under the Term Loan Agreement and various Note
\n Purchase Agreements dated of even date therewith.<\/p>\n
2. Keep Well Agreement dated November 17, 1999, as amended and restated as
\n of December 16, 1999, from Southern Energy to SE Finance Capital
\n Corporation and ING (U.S.) Capital L.L.C., as agent for the lenders under
\n the Amended and Restated Term Loan Agreement.<\/p>\n
25
\n 29<\/p>\n
Schedule 5.14<\/p>\n
Transferred Agreements<\/p>\n
Cooperation Agreement between The State Power Corporation of China and Southern
\nCompany dated February, 1999.<\/p>\n
26
\n 30<\/p>\n
Schedule 7.1<\/p>\n
Southern Energy Affiliated Companies<\/p>\n
Each Affiliated Company listed on Exhibit 21.1 to the in the final
\nprospectus filed by Southern Energy with the SEC pursuant to Rule 424(b) under
\nthe Securities Act of 1933, as amended, in connection with the IPO; other than
\nSE Finance and SE Capital Funding and their respective Subsidiaries and
\nAffiliated Companies.<\/p>\n
27
\n 31<\/p>\n
EXHIBIT A<\/p>\n
CERTIFICATE OF SECRETARY OR ASSISTANT SECRETARY OF SOUTHERN<\/p>\n
I, ____________________, [Assistant] Secretary of The Southern Company, a
\ncorporation organized and existing under the laws of the State of Delaware (the
\n“Company”), DO HEREBY CERTIFY that attached hereto are true and correct copies
\nof certain resolutions adopted by the Board of Directors of the Company, which
\nresolutions have not been amended, modified or rescinded and remain in full
\nforce and effect on the date hereof.<\/p>\n
IN WITNESS WHEREOF, I have hereunder set my hand and affixed the seal of The
\nSouthern Company this __________________ day of ___________, 2000.<\/p>\n
———————————–
\n [Assistant] Secretary<\/p>\n
28
\n 32<\/p>\n
EXHIBIT B<\/p>\n
CERTIFICATE OF SECRETARY OR ASSISTANT SECRETARY
\n OF SOUTHERN ENERGY<\/p>\n
I, ____________________, [Assistant] Secretary of Southern Energy, Inc., a
\ncorporation organized and existing under the laws of the State of Delaware (the
\n“Company”), DO HEREBY CERTIFY that attached hereto are true and correct copies
\nof certain resolutions adopted by the Board of Directors of the Company, which
\nresolutions have not been amended, modified or rescinded and remain in full
\nforce and effect on the date hereof.<\/p>\n
IN WITNESS WHEREOF, I have hereunder set my hand and affixed the seal of
\nSouthern Energy, Inc. this __________________ day of ___________, 2000.<\/p>\n
———————————–
\n [Assistant] Secretary<\/p>\n
29<\/p>\n
33<\/p>\n
EXHIBIT C<\/p>\n
TECHNOLOGY AND INTELLECTUAL PROPERTY OWNERSHIP AND LICENSE AGREEMENT<\/p>\n
See Exhibit 10.4 of the IPO Registration Statement.<\/p>\n
30
\n 34<\/p>\n
EXHIBIT D<\/p>\n
EMPLOYEE MATTERS AGREEMENT<\/p>\n
See Exhibit 10.6 of the IPO Registration Statement.<\/p>\n
31
\n 35<\/p>\n
EXHIBIT E<\/p>\n
TAX INDEMNIFICATION AGREEMENT<\/p>\n
See Exhibit 10.7 of the IPO Registration Statement.<\/p>\n
32
\n 36<\/p>\n
EXHIBIT F<\/p>\n
TRANSITIONAL SERVICES AGREEMENT<\/p>\n
See Exhibit 10.2 of the IPO Registration Statement.<\/p>\n
33
\n 37<\/p>\n
EXHIBIT G<\/p>\n
CONFIDENTIAL DISCLOSURE AGREEMENT<\/p>\n
See Exhibit 10.5 of the IPO Registration Statement.<\/p>\n
34
\n 38<\/p>\n
EXHIBIT H<\/p>\n
INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT<\/p>\n
See Exhibit 10.3 of the IPO Registration Statement.<\/p>\n
35<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8237,8872],"corporate_contracts_industries":[9534],"corporate_contracts_types":[9622,9628],"class_list":["post-43462","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-mirant-corp","corporate_contracts_companies-southern-co","corporate_contracts_industries-utilities__electric","corporate_contracts_types-planning","corporate_contracts_types-planning__separation"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43462","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43462"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43462"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43462"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43462"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}