\nARTICLE 11 ENGINEERING AND TECHNICAL SERVICES…………………………………………………. 10
\n 11.1 Engineering and Technical Services…………………………………………………….. 10
\n 11.2 Professional Responsibility Regarding Engineering and Technical Services…………………… 10
\n 11.3 Applicable Laws and Regulations……………………………………………………….. 10
\n 11.4 Insurance…………………………………………………………………………… 11
\n 11.5 Reuse of Documents…………………………………………………………………… 11
\n 11.6 Non-Restrictive Relationship………………………………………………………….. 11
\nARTICLE 12 CONFIDENTIALITY………………………………………………………………….. 11
\nARTICLE 13 LIMITATION OF LIABILITY…………………………………………………………… 12
\nARTICLE 14 FORCE MAJEURE……………………………………………………………………. 12
\nARTICLE 15 DISPUTE RESOLUTION……………………………………………………………….. 12
\n 15.1 Mediation…………………………………………………………………………… 12
\n 15.2 Arbitration…………………………………………………………………………. 13
\n 15.3 Court Action………………………………………………………………………… 13
\n 15.4 Continuity Of Service And Performance………………………………………………….. 13
\nARTICLE 16 MISCELLANEOUS……………………………………………………………………. 14
\n 16.1 Entire Agreement…………………………………………………………………….. 14
\n 16.2 Existing Services Agreement…………………………………………………………… 14
\n 16.3 Governing Law……………………………………………………………………….. 14
\n 16.4 Descriptive Headings…………………………………………………………………. 14
\n 16.5 Notices…………………………………………………………………………….. 14
\n 16.6 Nonassignability; Third-Party Beneficiaries…………………………………………….. 15
\n 16.7 Severability………………………………………………………………………… 15
\n 16.8 Failure Or Indulgence Not Waiver; Remedies Cumulative……………………………………. 16
\n 16.9 Amendment…………………………………………………………………………… 16
\n<\/c><\/s><\/table>\n 4<\/p>\n
TRANSITIONAL SERVICES AGREEMENT<\/p>\n
THIS TRANSITIONAL SERVICES AGREEMENT (the “Agreement”) dated as of
\nSeptember 1, 2000, between The Southern Company, a Delaware corporation
\n(“Southern”), having an office at 270 Peachtree Street, Atlanta, Georgia 30303
\nand Southern Energy, Inc., a Delaware corporation (“Southern Energy”; Southern
\nEnergy and Southern each being referenced herein individually as a “Party,” and
\ncollectively as the “Parties”), having an office at 900 Ashwood Parkway, Suite
\n500, Atlanta, Georgia 30338.<\/p>\n
ARTICLE 1
\n DEFINITIONS<\/p>\n
For the purpose of this Agreement, the following capitalized terms
\nshall have the following meanings:<\/p>\n
1.1 Additional Services. “Additional Services” shall have the
\nmeaning set forth in Section 3.5.<\/p>\n
1.2 Ancillary Agreements. “Ancillary Agreements” shall have the
\nmeaning set forth in the Master Separation and Distribution Agreement.<\/p>\n
1.3 [Intentionally omitted].<\/p>\n
1.4 Confidential Disclosure Agreement. “Confidential Disclosure
\nAgreement” shall mean that certain Confidential Disclosure Agreement between
\nSouthern and Southern Energy.<\/p>\n
1.5 Distribution Date. “Distribution Date” shall have the meaning
\nset forth in the Master Separation and Distribution Agreement.<\/p>\n
1.6 Engineering and Technical Services. “Engineering and Technical
\nServices” shall have the meaning set forth in Section 11.1.<\/p>\n
1.7 Impracticable. “Impracticable” shall have the meaning set
\nforth in Section 3.3.<\/p>\n
1.8 Master Separation And Distribution Agreement. “Master
\nSeparation and Distribution Agreement” shall mean that certain Master
\nSeparation and Distribution Agreement between Southern and Southern Energy.<\/p>\n
1.9 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 action 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 the Board of Directors of Southern (the
\n“Separation Date”).<\/p>\n
5<\/p>\n
1.10 Service(s). “Service(s)” shall have the meaning set forth in
\nSection 3.1 and includes the Engineering and Technical Services.<\/p>\n
1.11 Subsidiary. “Subsidiary” of any Party means a corporation or
\nother organization whether incorporated or unincorporated of which at least a
\nmajority of the securities or interests having by the terms thereof ordinary
\nvoting power to elect at least a majority of the board of directors or others
\nperforming similar functions with respect to such corporation or other
\norganization is directly or indirectly owned or controlled by such Party or by
\nany one or more of its Subsidiaries, or by such Party and one or more of its
\nSubsidiaries; provided, however, that no Party that is not directly or
\nindirectly wholly-owned by any other Party shall be a Subsidiary of such other
\nParty unless such other Party controls, or has the right, power or ability to
\ncontrol, that Party. For purposes of this Agreement, Southern Energy shall be
\ndeemed not to be a subsidiary of Southern.<\/p>\n
1.12 Warranty. “Warranty” shall have the meaning set forth in
\nSection 11.2.1.<\/p>\n
ARTICLE 2
\n TRANSITION SERVICE SCHEDULES<\/p>\n
This Agreement will govern individual transitional services as
\nrequested by Southern Energy and its Subsidiaries and provided by Southern and
\nits Subsidiaries, the details of which shall be set forth in the Transition
\nService Schedules attached to this Agreement. Each Service shall be covered by
\nthis Agreement upon execution of a transition service schedule in the form
\nattached hereto (each transition service schedule, a “Transition Service
\nSchedule”).<\/p>\n
The Parties shall set forth the terms for each Service on the
\napplicable Transitional Service Schedule, which may include, but are not
\nlimited to, the time period during which the Service will be provided if
\ndifferent from the term of this Agreement determined pursuant to Article 4
\nhereof, a summary of the Service to be provided; a description of the Service;
\nand the estimated charge(s), if applicable, for the Service and any other terms
\napplicable thereto on the Transition Service Schedule. Obligations under each
\nTransition Service Schedule shall be effective upon the later of the execution
\nof this Agreement or the execution of the respective Transition Services
\nSchedule. This Agreement shall be deemed to include all the Transition Service
\nSchedules wherever reference to it is made.<\/p>\n
ARTICLE 3
\n SERVICES<\/p>\n
3.1 Services Generally. Except as otherwise provided herein, for
\nthe term determined pursuant to Article 4 hereof, Southern shall provide or
\ncause to be provided to Southern Energy the service(s) described in the
\nTransition Service Schedule(s) attached hereto, beginning on the Separation
\nDate (the “Effective Date”). The service(s) described<\/p>\n
2
\n 6<\/p>\n
on a single Transition Service Schedule shall be referred to herein as a
\n“Service.” Collectively, the services described on all the Transition Service
\nSchedules (including Additional Services and Engineering and Technical
\nServices) shall be referred to herein as “Services.”<\/p>\n
3.2 Service Parameters. (i) Southern shall provide the Services
\nonly to the extent and under the personnel availability conditions such
\nServices are being provided by Southern for Southern Energy immediately prior
\nto the Effective Date; and (ii) the Services will be available only for
\npurposes of conducting the business of Southern Energy substantially in the
\nmanner it was conducted prior to the Effective Date.<\/p>\n
3.3 Impracticability. Southern shall not be required to provide
\nany Service to the extent the performance of such Service becomes
\n“Impracticable” as a result of a cause or causes outside the reasonable control
\nof Southern, or to the extent the performance of such Services would require
\nSouthern to violate any applicable laws, rules or regulations or would result
\nin the breach of any agreement or other applicable contract.<\/p>\n
3.4 Additional Resources. In providing the Services, Southern
\nshall not be obligated to: (i) hire any additional employees; (ii) maintain the
\nemployment of any specific employee; (iii) purchase, lease or license any
\nadditional equipment or materials; or (iv) pay any costs related to the
\ntransfer or conversion of Southern Energy’s data to Southern Energy or any
\nalternate supplier of Services.<\/p>\n
3.5 Additional Services. From time to time after the Effective
\nDate, the Parties may agree to identify additional Services that Southern will
\nprovide to Southern Energy in accordance with the terms of this Agreement (the
\n“Additional Services”). In such event, the Parties shall execute additional
\nTransition Service Schedules for such Additional Services pursuant to Article
\n2. Except as set forth in Section 3.6, the Parties may agree in writing on
\nAdditional Services during the term of this Agreement.<\/p>\n
3.6 Further Obligations As To Services. Subject to the
\nprovisions of Sections 3.2, 3.3 and 3.4 and otherwise except as set forth in
\nthe next sentence, Southern shall perform, at a charge determined using the
\nprinciples for determining fees under Section 5.1, any Service that: (a) was
\nprovided by Southern immediately prior to the Separation Date and which was
\ninadvertently or unintentionally omitted from the list of Services included in
\nTransition Service Schedules executed at the time of execution of this
\nAgreement, or (b) is essential to effectuate an orderly transition under the
\nMaster Separation and Distribution Agreement unless such performance would
\nsignificantly disrupt Southern’s operations or materially increase the scope of
\nits responsibility under this Agreement. If Southern reasonably believes the
\nperformance of Services requested under subparagraphs (a) or (b) would
\nsignificantly disrupt its operations or materially increase the scope of its
\nresponsibility under this Agreement, Southern and Southern Energy shall
\nnegotiate in good faith to establish terms under which Southern can provide
\nsuch Services, but Southern shall not be obligated to provide such Services if,
\nfollowing good faith negotiation, it is unable to reach agreement on such
\nterms.<\/p>\n
3
\n 7<\/p>\n
3.7 Service Representatives. The Parties shall each appoint a
\nrepresentative with respect to each Service (each a “Service Representative”),
\nwhich Service Representative shall coordinate the requesting, coordination,
\nscheduling and delivery of such Service. Unless otherwise indicated on the
\nTransition Service Schedule for a Service, the Party’s respective Service
\nRepresentatives for such Service shall be the persons set forth on Schedule 3.7
\nas being responsible for such Service and certain other related Services (each
\nsuch person being a “Senior Representative”). Each Senior Representative shall
\nadditionally be responsible for the replacement or substitution, as necessary,
\nof any Service Representatives for such Senior Representative’s assigned
\nServices, and shall coordinate any requests for changes in the scope of such
\nServices, or for the provision of any additional related Services, with such
\nSenior Representative’s counterpart with the other Party. Either Party may
\nnominate a substitute Service Representative for itself with respect to a
\nService at any time upon reasonable notice to the other Party. Any request for
\na Service made by Southern Energy through any person other than Southern
\nEnergy’s Senior Representative or Service Representative with respect to such
\nService shall not be binding upon Southern.<\/p>\n
ARTICLE 4
\n TERM<\/p>\n
The term of this Agreement shall commence on the Effective Date and
\nshall remain in effect until two (2) years after the Effective Date (the
\n“Expiration Date”), unless earlier terminated under Article 7. This Agreement
\nmay be extended by the Parties in writing, either in whole or with respect to
\none or more of the Services; provided, however, that such extension shall only
\napply to the Services for which the Agreement was extended. At least six (6)
\nmonths prior to the Expiration Date, Southern Energy shall give Southern
\nwritten notice, in accordance with the provisions of Section 16.4, of Southern
\nEnergy’s request to extend the term of the Agreement in respect of any
\nServices. In addition, the Parties shall be deemed to have extended this
\nAgreement with respect to a specific Service if the Transition Service Schedule
\nfor such Service specifies a completion or termination date beyond the
\naforementioned Expiration Date. The Parties may agree on an earlier expiration
\ndate respecting a specific Service by specifying such date on the Transition
\nService Schedule for that Service. Services shall be provided up to and
\nincluding the date set forth in the applicable Transition Service Schedule,
\nsubject to earlier termination as provided herein.<\/p>\n
ARTICLE 5
\n COMPENSATION<\/p>\n
5.1 Charges For Services. Charges for Services shall be based upon
\nthe greater of (a) the full cost of providing the Services, including direct
\ncosts and indirect costs, or (b) the market value of such Services. Southern
\nEnergy shall pay Southern the charges, if any, set forth on the Transition
\nService Schedules for each of the Services listed therein as adjusted, from
\ntime to time, in accordance with the processes and procedures<\/p>\n
4
\n 8<\/p>\n
established under Section 5.4 and Section 5.5 hereof. The Parties shall use
\ngood faith efforts to discuss any situation in which the actual charge for a
\nService is reasonably expected to exceed the estimated charge, if any, set
\nforth on a Transition Service Schedule for a particular Service; provided,
\nhowever, that the incurrence of charges in excess of any such estimate on such
\nTransition Service Schedule shall not justify stopping the provision of, or
\npayment for, Services under this Agreement.<\/p>\n
5.2 Payment Terms. Southern shall bill Southern Energy monthly for
\nall charges pursuant to this Agreement. Such bills shall be accompanied by
\nreasonable documentation or other reasonable explanation supporting such
\ncharges. Southern Energy shall pay Southern for all Services provided hereunder
\nwithin thirty (30) days after receipt of an invoice therefor. Late payments
\nshall bear interest at the lesser of 18% per annum or the maximum rate allowed
\nby law.<\/p>\n
5.3 Performance Under Ancillary Agreements. Notwithstanding
\nanything to the contrary contained herein, Southern Energy shall not be charged
\nunder this Agreement for any obligations that are specifically required to be
\nperformed under the Master Separation and Distribution Agreement or any other
\nAncillary Agreement and any such other obligations shall be performed and
\ncharged for (if applicable) in accordance with the terms of the Master
\nSeparation and Distribution Agreement or such other Ancillary Agreement.<\/p>\n
5.4 Error Correction; True-Ups; Accounting. The Parties shall
\nreasonably agree on a process and procedure for conducting internal audits and
\nmaking adjustments to charges as a result of the movement of employees and
\nfunctions between Parties, the discovery of errors or omissions in charges, as
\nwell as a true-up of amounts owed. In no event shall such processes and
\nprocedures extend beyond two (2) years after completion of a Service.<\/p>\n
5.5 Pricing Adjustments. In the event of a tax or regulatory audit
\nadjustment relating to the pricing of any or all Services provided pursuant to
\nthis Agreement in which it is determined by a taxing or regulatory authority
\nthat any of the charges, individually or in combination, did not result in an
\narm’s-length payment, as determined under internationally accepted arm’s-length
\nstandards, then the Parties, including any Southern subcontractor providing
\nServices hereunder, may agree to make corresponding adjustments to the charges
\nin question for such period to the extent necessary to achieve arm’s-length
\npricing. Any adjustment made pursuant to this Section 5.5 at any time during
\nthe term of this Agreement or after termination of this Agreement shall be
\nreflected in the Parties’ legal books and records, and the resulting
\nunderpayment or overpayment shall create, respectively, an obligation to be
\npaid in the manner specified in Section 5.2, or shall create a credit against
\namounts owed under this Agreement.<\/p>\n
5
\n 9<\/p>\n
ARTICLE 6
\n GENERAL OBLIGATIONS; STANDARD OF CARE<\/p>\n
6.1 Performance Metrics: Southern. Subject to Sections 3.2, 3.3,
\n3.4 and any other terms and conditions of this Agreement, Southern shall
\nperform its obligations hereunder in a commercially reasonable manner. Specific
\nperformance metrics for Southern for a specific Service may be set forth in the
\ncorresponding Transition Service Schedule. Where none is set forth, Southern
\nshall use reasonable efforts to provide Services in accordance with its
\npolicies, procedures and practices in effect before the Effective Date and
\nshall exercise the same care and skill as it exercises in performing similar
\nservices for itself.<\/p>\n
6.2 DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE SET FORTH HEREIN
\nSOUTHERN MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT
\nLIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
\nPARTICULAR PURPOSE, WITH RESPECT TO THE SERVICES OR OTHER DELIVERABLES PROVIDED
\nBY IT HEREUNDER.<\/p>\n
6.3 Performance Metrics: Southern Energy. Specific performance
\nmetrics for Southern Energy for a specific Service may be set forth in the
\ncorresponding Transition Service Schedule. Where none is set forth, Southern
\nEnergy shall use reasonable efforts, in connection with receiving Services, to
\nfollow the policies, procedures and practices in effect before the Effective
\nDate including providing information and documentation sufficient for Southern
\nto perform the Services as they were performed before the Effective Date and
\nmaking available, as reasonably requested by Southern, sufficient resources and
\ntimely decisions, approvals and acceptances in order that Southern may
\naccomplish its obligations hereunder in a timely manner.<\/p>\n
6.4 Transitional Nature Of Services; Changes. The Parties
\nacknowledge the transitional nature of the Services and agree that Southern may
\nmake changes from time to time in the manner of performing the Services if
\nSouthern is making similar changes in performing similar services for itself
\nand its subsidiaries and if Southern furnishes to Southern Energy thirty (30)
\ndays written notice regarding such changes.<\/p>\n
6.5 Responsibility For Errors; Delays. Southern’s sole
\nresponsibility to Southern Energy:<\/p>\n
(a) for errors or omissions in Services (except for Engineering
\nand Technical Services provided for in Article 11), shall be to furnish correct
\ninformation, payment and\/or adjustment in the Services, at no additional cost
\nor expense to Southern Energy; provided, Southern Energy must promptly advise
\nSouthern of any such error or omission of which it becomes aware after having
\nused reasonable efforts to detect any such errors or omissions in accordance
\nwith the standard of care set forth in Section 6.3; and<\/p>\n
6
\n 10<\/p>\n
(b) for failure to deliver any Service because of
\nImpracticability, shall be to use reasonable efforts, subject to Sections 3.2,
\n3.3 and 3.4, to make the Services available and\/or to resume performing the
\nServices as promptly as reasonably practicable.<\/p>\n
6.6 Good Faith Cooperation; Consents. The Parties will use good
\nfaith efforts to cooperate with each other in all matters relating to the
\nprovision and receipt of Services. Such cooperation shall include exchanging
\ninformation, performing true-ups and adjustments, and obtaining all third party
\nconsents, licenses, sublicenses or approvals necessary to permit each Party to
\nperform its obligations hereunder (including by way of example, not by way of
\nlimitation, rights to use third party software needed for the performance of
\nServices). The costs of obtaining such third party consents, licenses,
\nsublicenses or approvals shall be borne by Southern Energy. Each Party will
\nmaintain, in accordance with its standard document retention procedures,
\ndocumentation supporting the information relevant to cost calculations and
\ncooperate with each other in making such information available as needed in the
\nevent of a tax audit, whether in the United States or any other country.<\/p>\n
ARTICLE 7
\n EARLY TERMINATION<\/p>\n
7.1 Early Termination. Southern Energy may terminate this
\nAgreement, either with respect to all or with respect to any one or more of the
\nServices provided to Southern Energy hereunder, for any reason or for no
\nreason, at any time upon one hundred eighty (180) days prior written notice to
\nSouthern. Southern may terminate this Agreement if Southern Energy fails to pay
\nany amount which is due and payable in respect of any Service in accordance
\nwith the provisions of Section 5.2 hereof, and Southern Energy does not cure
\nsuch breach within ten (10) days after being given notice of such breach. In
\naddition, subject to the provisions of Article 15 below, either Party may
\nterminate this Agreement with respect to a specific Service if the other Party
\nmaterially breaches a material provision with regard to that particular Service
\n(other than for nonpayment) and does not cure such breach (or does not take
\nreasonable steps required under the circumstances to cure such breach going
\nforward) within sixty (60) days after being given notice of the breach;
\nprovided, however, that the non-terminating Party may request that the Parties
\nengage in a dispute resolution negotiation as specified in Article 15 below
\nprior to termination for breach.<\/p>\n
7.2 Survival. Those Sections of this Agreement that, by their
\nnature, are intended to survive termination will survive in accordance with
\ntheir terms. Notwithstanding the foregoing, in the event of any termination
\nwith respect to one or more, but less than all Services, this Agreement shall
\ncontinue in full force and effect with respect to any Services not terminated
\nhereby.<\/p>\n
7
\n 11<\/p>\n
ARTICLE 8
\n RELATIONSHIP BETWEEN THE PARTIES<\/p>\n
The relationship between the Parties established under this Agreement
\nis that of independent contractors and neither Party is an employee, agent,
\npartner, or joint venturer of or with the other. Southern will be solely
\nresponsible for the payment of any employment-related taxes, insurance premiums
\nor other employment benefits in respect of the performance of Services by
\nSouthern personnel under this Agreement. Southern Energy agrees to grant
\nSouthern personnel access to sites, systems and information (subject to the
\nprovisions of confidentiality in Article 12 below) as necessary for Southern to
\nperform its obligations hereunder. Southern Energy shall inform Southern
\npersonnel of, and Southern personnel agree to obey, any and all security
\nregulations and other published policies of Southern Energy.<\/p>\n
ARTICLE 9
\n SUBCONTRACTORS<\/p>\n
Southern may engage a “Subcontractor” to perform all or any portion of
\nSouthern’s duties under this Agreement, provided that any such Subcontractor
\nagrees in writing to be bound by confidentiality obligations at least as
\nprotective as the terms of Article 13 regarding confidentiality below, and
\nprovided further that Southern remains responsible for the performance of such
\nSubcontractor. As used in this Agreement, “Subcontractor” will mean any
\nindividual, partnership, corporation, firm, association, unincorporated
\norganization, joint venture, trust or other entity engaged to perform
\nhereunder, other than Southern and its Subsidiaries.<\/p>\n
ARTICLE 10
\n INTELLECTUAL PROPERTY<\/p>\n
Except as otherwise set forth herein, the terms of the Technology and
\nIntellectual Property Ownership and License Agreement between the Parties, a
\ncopy of which is attached as an exhibit to the Master Separation and
\nDistribution Agreement, shall govern the use and ownership of any Technology
\n(as defined therein) and any patents, trademarks, or other intellectual
\nproperty transferred, licensed used or created in connection with the Services
\nor otherwise under this Agreement.<\/p>\n
8
\n 12<\/p>\n
ARTICLE 11
\n ENGINEERING AND TECHNICAL SERVICES<\/p>\n
11.1 Engineering and Technical Services. Pursuant to the terms of
\nthis Agreement, Southern shall provide certain engineering, technical and
\nconsulting Services to Southern Energy from time to time in connection with the
\ndevelopment, construction, ownership, maintenance and operation of electric
\ngenerating, transmission and distribution facilities, including, but not
\nlimited to, technical and field services, engineering and generation technical
\nservices, fuel procurement and related services and environmental services (the
\n“Engineering and Technical Services”); provided, however, that Southern shall
\nnot be required to provide any Engineering and Technical Service if the
\nprovision of such Engineering and Technical Service, in Southern’s reasonable
\ndiscretion, would be in violation of Southern’s fiduciary duties to its
\nshareholders or customers.<\/p>\n
11.2 Professional Responsibility Regarding Engineering and
\nTechnical Services.<\/p>\n
11.2.1 Standard of Care\/Warranty. In the performance of Engineering
\n and Technical Services under this Agreement, Southern shall exercise
\n due care to assure that the Services are provided in a workmanlike
\n manner, and that such Services meet the standards and specifications
\n set forth in the applicable Transitional Service Schedule. Southern
\n hereby warrants that all Engineering and Technical Services provided
\n hereunder will comply with the foregoing standard of care (the
\n “Warranty”).<\/p>\n
11.2.2 Warranty Cure. If Southern Energy discovers that any part of
\n the Engineering and Technical Services fail to meet the Warranty,
\n Southern Energy will notify Southern of such failure. Southern’s sole
\n obligation for failing to meet the Warranty shall be to reperform the
\n Engineering and Technical Services thereunder at cost (direct cost
\n plus indirect costs) such that it fully complies with the Transitional
\n Service Schedule and applicable laws and regulations. Southern Energy
\n will bear all costs and expenses incurred by Southern in association
\n with curing any Warranted Engineering and Technical Services, except
\n where the failure to meet the Warranty with respect to any Engineering
\n and Technical Services is due to any willful misconduct on the part of
\n Southern or its employees, agents, contractors or subcontractors, in
\n which case such costs and expenses shall be borne by Southern.
\n Southern makes no other warranties with respect to its performance of
\n the Services, and Southern Energy agrees to accept such services
\n without further warranties of any nature.<\/p>\n
11.3 Applicable Laws and Regulations. Southern shall comply with
\nall national, federal, provincial, state and local laws, decrees, regulations
\nand ordinances (including without limitation those of any local jurisdiction in
\nwhich Engineering and Technical Services are performed) including, without
\nlimitation, those pertaining to the environment, health, safety, sanitary
\nfacilities, waste disposal and other matters applicable to or affecting the
\nperformance of Engineering and Technical Services that are published and in
\neffect at the time particular Engineering and Technical Services are<\/p>\n
9
\n 13<\/p>\n
rendered. Southern Energy shall inform Southern of, and Southern shall ensure
\nthat its employees, agents and subcontractors comply with, site rules and
\nregulations while on the premises of any Southern Energy property or project.<\/p>\n
11.4 Insurance. During the course of performance of any Engineering
\nand Technical Services following the Separation Date, Southern will obtain and
\nmaintain in full force and effect insurance substantially in accordance with,
\nand meeting the requirements set forth in, Schedule 11.4 attached hereto.
\nPromptly after the execution hereof Southern shall furnish Southern Energy with
\na written certificate from its insurers, addressed to Southern Energy,
\nindicating the existence of Southern’s insurance coverage, the amount and
\nnature of such coverage, and the expiration date(s) of each policy. The
\ncertificate also shall include a provision requiring Southern’s insurers to
\ngive Southern Energy at least thirty (30) days’ written notice prior to the
\ncancellation, nonrenewal or material alteration of any policy.<\/p>\n
11.5 Reuse of Documents. All documents, including drawings and
\nspecifications, prepared and furnished by Southern to Southern Energy pursuant
\nto this Agreement shall be the property of Southern Energy; provided, however,
\nthat such documents are not intended or represented to be suitable for reuse by
\nSouthern Energy or others on any other project. Southern Energy may not reuse
\nor adapt such documents on or for other projects without the written consent of
\nSouthern; provided, further, that any such reuse or adaption by Southern
\nEnergy, with the consent of Southern, will be at Southern Energy’s sole risk
\nand without liability or legal exposure to Southern.<\/p>\n
11.6 Non-Restrictive Relationship. Nothing in this Agreement will
\nbe construed to preclude Southern Energy from independently developing,
\nacquiring or obtaining Engineering and Technical Services or related documents
\nwhich may perform the same or similar functions as the Engineering and
\nTechnical Services or related documents provided by Southern.<\/p>\n
ARTICLE 12
\n CONFIDENTIALITY<\/p>\n
The terms of the Confidential Disclosure Agreement between the Parties
\nshall apply to any Confidential Information (as defined therein) which is the
\nsubject matter of this Agreement.<\/p>\n
ARTICLE 13
\n LIMITATION OF LIABILITY<\/p>\n
IN NO EVENT SHALL EITHER PARTY OR ITS SUBSIDIARIES, AFFILIATED
\nCOMPANIES, DIRECTORS, OFFICERS OR EMPLOYEES BE LIABLE TO THE OTHER PARTY OR ITS
\nSUBSIDIARIES OR AFFILIATED COMPANIES FOR ANY LOST PROFITS, LOSS OF DATA, LOSS
\nOF USE, COST OF COVER, BUSINESS<\/p>\n
10
\n 14<\/p>\n
INTERRUPTION OR OTHER SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR CONSEQUENTIAL
\nDAMAGES, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY, ARISING FROM THE
\nPERFORMANCE OF, OR RELATING TO, THIS AGREEMENT.<\/p>\n
ARTICLE 14
\n FORCE MAJEURE<\/p>\n
Each Party will be excused for any failure or delay in performing any
\nof its obligations under this Agreement, other than the obligations of Southern
\nEnergy to make payments to Southern pursuant to Article 5 hereof for services
\nrendered, if such failure or delay is caused solely by Force Majeure. “Force
\nMajeure” includes, without limitation, any act of God or the public enemy; any
\naccident, explosion, fire, ice, earthquake, lightning, tornado, hurricane, or
\nother severe weather condition or calamity; any civil disturbance, labor
\ndispute, or labor or material shortage; any sabotage or acts of terrorism; any
\nacts of a public enemy, uprising, insurrection, civil unrest, war or rebellion;
\nany action or restraint by court order or public or governmental authority or
\nlawfully established civilian authorities, or any other circumstance or event
\nbeyond the reasonable control of the Party relying upon such circumstance or
\nevent.<\/p>\n
ARTICLE 15
\n DISPUTE RESOLUTION<\/p>\n
15.1 Mediation. If a dispute, controversy or claim (“Dispute”)
\narises between the Parties relating to the interpretation or performance of
\nthis Agreement or the Ancillary Agreements, or the grounds for the termination
\nhereof, appropriate senior executives (e.g. director or vice president level)
\nof each Party who shall have the authority to resolve the matter shall meet or
\nconfer (in person or by telephone) to attempt in good faith to negotiate a
\nresolution of the Dispute prior to pursuing other available remedies. The
\ninitial meeting or conference between the appropriate senior executives shall
\nbe referred to herein as the “Dispute Resolution Commencement Date.”
\nDiscussions and correspondence relating to trying to resolve such Dispute shall
\nbe treated as confidential information developed for the purpose of settlement
\nand shall be exempt from discovery or production and shall not be admissible in
\nany proceeding relating to the subject matter of the Dispute. If the senior
\nexecutives are unable to resolve the Dispute within thirty (30) days from the
\nDispute Resolution Commencement Date, and either Party wishes to pursue its
\nrights relating to such Dispute, then the Dispute will be mediated by a
\nmutually acceptable mediator appointed pursuant to the mediation rules of
\nJAMS\/Endispute within thirty (30) days after written notice by one Party to the
\nother demanding non-binding mediation. Neither Party may unreasonably withhold
\nconsent to the selection of a mediator or the location of the mediation. Both
\nParties will share the costs of the mediation equally, except that each Party
\nshall bear its own costs and expenses, including attorney’s fees, witness fees,
\ntravel expenses, and preparation costs. The Parties may also<\/p>\n
11
\n 15<\/p>\n
agree to replace mediation with some other form of non-binding or binding
\nalternative dispute resolution (“ADR”).<\/p>\n
15.2 Arbitration. Any Dispute which the Parties cannot resolve
\nthrough mediation within ninety (90) days of the Dispute Resolution
\nCommencement Date, unless otherwise mutually agreed, shall be submitted to
\nfinal and binding arbitration under the then current Commercial Arbitration
\nRules of the American Arbitration Association (“AAA”), by three (3) arbitrators
\nin Dekalb County, Georgia. Such arbitrators shall be selected by the mutual
\nagreement of the Parties or, failing such agreement, shall be selected
\naccording to the aforesaid AAA rules. The arbitrators will be instructed to
\nprepare and deliver a written, reasoned opinion stating their decision within
\nthirty (30) days of the completion of the arbitration. The prevailing Party in
\nsuch arbitration shall be entitled to expenses, including costs and reasonable
\nattorneys’ and other professional fees, incurred in connection with the
\narbitration (but excluding any costs and fees associated with prior negotiation
\nor mediation). The decision of the arbitrator shall be final and non-appealable
\nand may be enforced in any court of competent jurisdiction. The use of any ADR
\nprocedures will not be construed under the doctrine of laches, waiver or
\nestoppel to adversely affect the rights of either Party.<\/p>\n
15.3 Court Action. Any Dispute regarding the following is not
\nrequired to be negotiated, mediated or arbitrated prior to seeking material
\nrelief from a court of competent jurisdiction: breach of any obligation of
\nconfidentiality; infringement, misappropriation, or misuse of any intellectual
\nproperty right; any other claim where interim relief from the court is sought
\nto prevent serious and irreparable injury to one of the Parties or to others.
\nHowever, the Parties to the Dispute shall make a good faith effort to negotiate
\nand mediate such Dispute, according to the above procedures, while such court
\naction is pending.<\/p>\n
15.4 Continuity Of Service And Performance. Unless otherwise agreed
\nin writing, the Parties will continue to provide service and honor all other
\ncommitments under this Agreement and each Ancillary Agreement during the course
\nof dispute resolution pursuant to the provisions of this Article 15 with
\nrespect to all matters not subject to such dispute, controversy or claim.<\/p>\n
ARTICLE 16
\n MISCELLANEOUS<\/p>\n
16.1 Entire Agreement. This Agreement, the Master Separation and
\nDistribution Agreement and the other Ancillary Agreements and the Exhibits and
\nSchedules referenced or attached hereto and thereto constitute the entire
\nagreement between the Parties with respect to the subject matter hereof and
\nthereof and shall supersede all prior written and oral and all contemporaneous
\noral agreements and understandings with respect to the subject matter hereof
\nand thereof.<\/p>\n
12
\n 16<\/p>\n
16.2 Existing Services Agreement. The Parties acknowledge that
\nSubsidiaries of Southern are currently authorized to provide the services
\ncontracted for herein to Southern Energy and its subsidiaries and, more
\nspecifically, that Southern Company Services, Inc., a Subsidiary of Southern,
\nis authorized to provide the services identified herein directly, and,
\nindirectly, to Southern Energy and its Subsidiaries to Southern Energy
\nResources, Inc. (formerly known as Southern Electric International, Inc.)
\npursuant to an Agreement dated July 17, 1981 (the “Existing Service
\nAgreement”), all subject to certain conditions established by applicable
\ngovernment regulations, orders, and approvals (“Existing Authority”). The
\nParties intend to implement this Agreement consistent with and to the extent
\npermitted by Existing Authority and to cooperate toward obtaining and
\nmaintaining in effect such governmental agency consents, orders or approvals as
\nmay be required in order to implement this Agreement as fully as possible in
\naccordance with its terms for the stated term. After the Effective Date and
\nupon receipt of and applicable regulatory approvals and consents, the Existing
\nServices Agreement shall be terminated and superseded by this Agreement to the
\nextent permitted under the Existing Authority.<\/p>\n
16.3 Governing Law. This Agreement shall be construed in accordance
\nwith and all Disputes hereunder shall be governed by the laws of the State of
\nGeorgia. Any state court sitting in Dekalb County, Georgia and\/or the United
\nStates District Court for the Northern District of Georgia shall have
\njurisdiction and venue over all Disputes between the Parties that are permitted
\nto be brought in a court of law pursuant to Article 15 above.<\/p>\n
16.4 Descriptive Headings. The headings contained in this
\nAgreement, in any Exhibit or Schedule hereto and in the table of contents to
\nthis Agreement are for reference purposes only and shall not affect in any way
\nthe meaning or interpretation of this Agreement. Any capitalized term used in
\nany Exhibit or Schedule but not otherwise defined therein, shall have the
\nmeaning assigned to such term in this Agreement. When a reference is made in
\nthis Agreement to an Article or a Section, Exhibit or Schedule, such reference
\nshall be to an Article or Section of, or an Exhibit or Schedule to, this
\nAgreement unless otherwise indicated.<\/p>\n
16.5 Notices. Notices, offers, requests, or other communications
\nrequired or permitted to be given by either Party pursuant to the terms of this
\nAgreement shall be given in writing to the respective Parties to the following
\naddresses:<\/p>\n
if to Southern:
\n The Southern Company
\n 270 Peachtree Street
\n Atlanta, Georgia 30303
\n Attention: General Counsel
\n Fax: (404) 506-0544<\/p>\n
13
\n 17<\/p>\n
if to Southern Energy:
\n Southern Energy, Inc.
\n 900 Ashwood Parkway
\n Suite 500
\n Atlanta, Georgia 30338
\n Attention: General Counsel
\n Fax: (770) 821-7001<\/p>\n
or to such other address as the Party to whom notice is given may have
\npreviously furnished to the other in writing as provided herein. Any notice
\ninvolving non-performance, termination, or renewal shall be sent by hand
\ndelivery, recognized overnight courier or, within the United States, may also
\nbe sent via certified mail, return receipt requested. All other notices may
\nalso be sent by fax, confirmed by first class mail. All notices shall be deemed
\nto have been given and received on the earlier of actual delivery or three (3)
\ndays from the date of postmark.<\/p>\n
16.6 Nonassignability; Third-Party Beneficiaries. Except as
\nspecifically permitted under Article 9 above, neither Party may, directly or
\nindirectly, in whole or in part, whether by operation of law or otherwise,
\nassign or transfer this Agreement, without the other Party’s prior written
\nconsent, and any attempted assignment, transfer or delegation without such
\nprior written consent shall be voidable at the sole option of such other Party.
\nWithout limiting the foregoing, this Agreement will be binding upon and inure
\nto the benefit of the Parties and their permitted successors and assigns. This
\nAgreement, including the Transition Services Schedules and the other documents
\nreferred to herein, shall be binding upon and inure solely to the benefit of
\neach party hereto and their legal representatives and successors, and nothing
\nin this Agreement, express or implied, is intended to confer upon any other
\nPerson any rights or remedies of any nature whatsoever under or by reason of
\nthis Agreement.<\/p>\n
16.7 Severability. If any term or other provision of this Agreement
\nis determined by a court, administrative agency or arbitrator to be invalid,
\nillegal or incapable of being enforced by any rule of law or public policy, all
\nother conditions and provisions of this Agreement will nevertheless remain in
\nfull force and effect so long as the economic or legal substance of the
\ntransactions contemplated is not affected in any manner materially adverse to
\nany Party. Upon such determination that any term or other provision is invalid,
\nillegal or incapable of being enforced, the Parties shall negotiate in good
\nfaith to modify this Agreement so as to effect the original intent of the
\nParties as closely as possible in an acceptable manner to the end that
\ntransactions contemplated hereby are fulfilled to the fullest extent possible.<\/p>\n
16.8 Failure Or Indulgence Not Waiver; Remedies Cumulative. No
\nfailure or delay on the part of either Party hereto in the exercise of any
\nright hereunder shall impair such right or be construed to be a waiver of, or
\nacquiescence in, any breach of any representation, warranty or agreement
\nherein, nor shall any single or partial exercise of any such right preclude
\nother or further exercise thereof or of any other right. All rights<\/p>\n
14
\n 18<\/p>\n
and remedies existing under this Agreement are cumulative to, and not exclusive
\nof, any rights or remedies otherwise available.<\/p>\n
16.9 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 hereto.<\/p>\n
15
\n 19<\/p>\n
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
\nbe executed in duplicate originals by its duly authorized representatives.<\/p>\n
THE SOUTHERN COMPANY SOUTHERN ENERGY, INC.<\/p>\n
By: By:
\n ——————————— ———————————
\n Name: H. Allen Franklin Name: S. Marce Fuller
\n Title: President and Chief Operating Title: President and Chief Executive
\n Officer Officer<\/p>\n
16
\n 20<\/p>\n
FORM OF TRANSITION SERVICE SCHEDULE TO
\n TRANSITIONAL SERVICES AGREEMENT<\/p>\n
1. Transition Service Schedule #:____________ (To be inserted by
\nrepresentative)<\/p>\n
2. Functional Area:
\n —————<\/p>\n
3. Start\/End Date: The Services start on the Effective Date of
\nthe Transitional Services Agreement between The Southern Company (“Southern”)
\nand Southern Energy, Inc. (“Southern Energy”) to which this Transition Service
\nSchedule is attached and end on [__________] unless otherwise indicated below.<\/p>\n
Indicate below if other start\/end date:<\/p>\n
Start Date:
\n —————————–<\/p>\n
End Date:
\n ——————————<\/p>\n
If Start and End dates vary by service and\/or location, please
\nindicate in Section 5 below.<\/p>\n
4. Summary of Services (Describe the service to be provided in
\nappropriate detail.<\/p>\n
\n
\n Service Name Description
\n<\/c><\/s><\/table>\n 5. List of services to be provided per location and site: (List
\nall the services to be provided at each site. Enter Start Date and End Date if
\ndifferent from Section 3 above.)<\/p>\n
\n
\n Location Site Service(s) Start Date End Date
\n<\/c><\/c><\/c><\/c><\/s><\/table>\n 6. Performance parameters\/Service level: (State minimum
\nperformance expected from each service, if applicable.):<\/p>\n
7. Estimated Total Compensation<\/p>\n
21<\/p>\n
8. Describe cost methodology and cost drivers affecting Estimated
\nTotal Compensation (Describe on an individual service basis if necessary):<\/p>\n
9. Describe the process by which the cost of services will be
\nadjusted in the instance of an increase\/reduction in the services provided:
\n(Describe on an individual service basis if necessary.)<\/p>\n
10. Software: Will software be used or included with the Services
\nto be provided under this Transition Service Schedule: ____ Yes ____ No<\/p>\n
List software\/licenses to be provided, if any:<\/p>\n
11. Contract Administrators. List Service Representatives from
\nSouthern and Southern Energy:<\/p>\n
Upon execution of this Transition Service Schedule by both Parties,
\nthis Transition Service Schedule is hereby deemed incorporated into and made
\npart of that certain Transitional Services Agreement between The Southern
\nCompany and Southern Energy, Inc.<\/p>\n
THE SOUTHERN COMPANY SOUTHERN ENERGY, INC.<\/p>\n
By: By:
\n —————————- —————————-<\/p>\n
(Authorized Signature) (Authorized Signature)<\/p>\n
Date: Date:
\n ————————– ————————–
\nName: Name:
\n ————————– ————————–
\nTitle: Title:
\n ————————- ————————-<\/p>\n
2
\n 22<\/p>\n
Schedule 3.7
\n Senior Service Representatives<\/p>\n
Southern Energy<\/p>\n
\n\n Service Senior Representative (Title)
\n ——- —————————–<\/p>\n
\nEngineering and Technical Services Chief Technical Officer<\/p>\nIntellectual Property\/
\nInformation Technology Chief Information Officer<\/p>\n
All other Services Senior Vice President of Administration
\n and External Affairs<\/p>\n
Southern
\n<\/c><\/s><\/caption>\n<\/table>\n
\n\n Service Senior Representative (Title)
\n ——- —————————–<\/p>\n
\nEngineering and Technical Services;
\nProcurement President of Southern Company Generation<\/p>\nIntellectual Property\/
\nInformation Technology Chief Information Officer<\/p>\n
Human Resources Senior Vice President of Human Resources,<\/p>\n
Legal General Counsel<\/p>\n
External Affairs Vice President of External Affairs<\/p>\n
Finance and Risk Management Chief Financial Officer<\/p>\n
Accounting Senior Vice President – Chief Accounting
\n Officer<\/p>\n
Internal Auditing Director of Internal Auditing<\/p>\n
System Aircraft Vice President, System Aircraft
\n<\/c><\/s><\/caption>\n<\/table>\n
3
\n 23<\/p>\n
Schedule 11.4
\n Insurance<\/p>\n
INSURANCE COVERAGE<\/p>\n
\n\nTypes of Coverage Limits of Liability
\n—————– ——————-<\/p>\n
\nWorkers’ Compensation Statutory Minimum<\/p>\nErrors and Omissions $1,000,000<\/p>\n
Commercial General
\nLiability
\nBodily Injury and $5,000,000 Combined
\nProperty Damage Single Limit<\/p>\n
Automobile Liability
\nBodily Injury and $2,000,000 Combined
\nProperty Damage Single Limit
\n<\/c><\/s><\/caption>\n<\/table>\n
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