SOUTHERN COMPANY
CHANGE IN CONTROL
BENEFIT PLAN DETERMINATION POLICY
Troutman Sanders LLP
Bank of America Plaza, Suite 5200
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
SOUTHERN COMPANY
CHANGE IN CONTROL
BENEFIT PLANS POLICY
ARTICLE I - PURPOSE AND ADOPTION OF POLICY
1.1 Adoption of Policy. Southern Company Services, Inc. hereby adopts
this Southern Company Change in Control Benefit Plan Determination Policy,
effective July 10, 2000
1.2 Purpose. The Policy is designed to govern the determination of a
Change in Control of Southern and/or the Employing Companies, and the benefits
to be provided to employees of Southern and the Employing Companies under
certain employee benefit plans.
ARTICLE II - DEFINITIONS
2.1 "Administrative Committee" shall mean the Vice President of Human
Resources of Southern Company, Director of System Compensation and Benefits and
the Comptroller of Southern Company.
2.2 "Beneficial Ownership" shall mean beneficial ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act.
2.3 "Business Combination" shall mean a reorganization, merger or
consolidation of Southern Company or sale or other disposition of all or
substantially all of the assets of Southern Company.
2.4 "Change in Control" shall mean a Southern Change in Control and/or
a Subsidiary Change in Control, as applicable.
2.5 "Common Stock" shall mean the common stock of Southern Company.
2.6 "Company" shall mean Southern Company Services, Inc., its
successors and assigns.
2.7 "Consummation" shall mean the completion of the final act necessary
to complete a transaction as a matter of law, including, but not limited to, any
required approvals by the corporation's shareholders and board of directors, the
transfer of legal and beneficial title to securities or assets and the final
approval of the transaction by any applicable domestic or foreign governments or
agencies.
2.8 "Control" shall mean, in the case of a corporation, Beneficial
Ownership of more than 50% of the combined voting power of the corporation's
Voting Securities, or in the case of any other entity, Beneficial Ownership of
more than 50% of such entity's voting equity interests.
2.9 "Employee Benefit Plan(s)" shall mean, collectively, the Southern
Company Performance Stock Plan, the Southern Company Executive Stock Plan, the
Southern Company Performance Pay Plan (Shareholder Approved), the Southern
Company Performance Pay Plan, the Southern Company Executive Productivity
Improvement Plan, and the Southern Company Performance Dividend Plan, the
Southern Company Supplemental Benefit Plan, the Southern Company Supplemental
Executive Retirement Plan and the Southern Company Deferred Compensation Plan,
as may be amended from time to time in accordance with their terms.
2.10 "Employing Company" shall mean the Company, or any other
corporation or other entity Controlled by Southern Company, which has adopted
the Change in Control Program, and any successor of any of them. With respect to
a Change in Control of Southern Energy, Inc. ("SEI"), employees of Southern
Energy Resources, Inc. shall be deemed to be employed by SEI for purposes of
being covered under this Policy.
2.11 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
2.12 "Group" shall have the meaning set forth in Section 14(d) of the
Exchange Act.
2.13 "Incumbent Board" shall mean those individuals who constitute the
Southern Board as of October 19, 1998, plus any individual who shall become a
director subsequent to such date whose election or nomination for election by
Southern Company's shareholders was approved by a vote of at least 75% of the
directors then comprising the Incumbent Board. Notwithstanding the foregoing, no
individual who shall become a director of the Southern Board subsequent to
October 19, 1998, whose initial assumption of office occurs as a result of an
actual or threatened election contest (within the meaning of Rule 14a-11 of the
Regulations promulgated under the Exchange Act) with respect to the election or
removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Southern Board shall be a
member of the Incumbent Board.
2.14 "Person" shall mean any individual, entity or group within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act.
2.15 "Plan Termination" shall mean the termination of an Employee
Benefit Plan by Southern Company or an Employing Company following a Southern
Change in Control unless an equitable arrangement (embodied in an ongoing
substitute or replacement plan) has been made with respect to the Employee
Benefit Plan in connection with the Change in Control. For purposes of this
Policy, an ongoing substitute or alternative plan shall be considered an
"equitable arrangement" if a nationally recognized compensation consulting firm
chosen by the Administrative Committee opines in writing that the post-Change in
Control plan is an equitable substitute or replacement of the Employee Benefit
Plan.
2.16 "Preliminary Change in Control" shall mean the occurrence of any
of the following as determined by the Southern Committee.
(1) Southern Company or an Employing Company has entered into
a written agreement, such as, but not limited to, a letter of intent,
which, if Consummated, would result in a Southern Change in Control or
a Subsidiary Change in Control, as the case may be;
(2) Southern Company, an Employing Company or any Person
publicly announces an intention to take or to consider taking actions
which, if Consummated, would result in a Southern Change of Control or
a Subsidiary Change in Control under circumstances where the
Consummation of the announced action or intended action is legally and
financially possible;
(3) Any Person achieves the Beneficial Ownership of fifteen
percent (15%) or more of the Common Stock; or
(4) The Southern Board or the board of directors of an
Employing Company has declared that a Preliminary Change of Control has
occurred.
2.17 "Southern Board" shall mean the board of directors of Southern
Company.
2.18 "Southern Change in Control" shall mean any of the following:
(a) The Consummation of an acquisition by any Person of
Beneficial Ownership of 20% or more of Southern Company's Voting
Securities; provided, however, that for purposes of this subsection
(a), the following acquisitions of Southern Company's Voting Securities
shall not constitute a Change in Control:
(i) any acquisition directly from Southern Company;
(ii) any acquisition by Southern Company;
(iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by Southern Company
or any corporation controlled by Southern Company;
(iv) any acquisition by a qualified pension plan or
publicly held mutual fund;
(v) any acquisition by an employee of Southern
Company or its subsidiary of affiliate, or Group composed
exclusively of such employees; or
(vi) any Business Combination which would not
otherwise constitute a Change in Control because of the
application of clauses (i), (ii) and (iii) of this Section;
(b) A change in the composition of the Southern Board whereby
individuals who constitute the Incumbent Board cease for any reason to
constitute at least a majority of the Southern Board; or
(c) Consummation of a Business Combination, unless, following
such Business Combination, all of the following three conditions are
met:
(i) all or substantially all of the individuals and
entities who held Beneficial Ownership, respectively, of
Southern Company's Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly,
65% or more of the combined voting power of the Voting
Securities of the corporation surviving or resulting from such
Business Combination, (including, without limitation, a
corporation which as a result of such transaction holds
Beneficial Ownership of all or substantially all of Southern
Company's Voting Securities or all or substantially all of
Southern Company's assets) (such surviving or resulting
corporation to be referred to as "Surviving Company"), in
substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the
Southern Company's Voting Securities;
(ii) no Person (excluding any corporation resulting
from such Business Combination, any qualified pension plan,
publicly held mutual fund, Group composed exclusively of
Employees or employee benefit plan (or related trust) of
Southern Company, its subsidiaries or Surviving Company) holds
Beneficial Ownership, directly or indirectly, of 20% or more
of the combined voting power of the then outstanding Voting
Securities of Surviving Company except to the extent that such
ownership existed prior to the Business Combination; and
(iii) at least a majority of the members of the board
of directors of Surviving Company were members of the
Incumbent Board at the earlier of the date of execution of the
initial agreement, or of the action of the Southern Board,
providing for such Business Combination.
2.19 "Southern Committee" shall mean the committee comprised of the
Chairman of the Southern Board, Chief Financial Officer of Southern Company,
General Counsel of Southern Company and the Chairman of the Administrative
Committee.
2.20 "Southern Company" shall mean The Southern Company, its successors
and assigns.
2.21 "Southern Termination" shall mean the following:
(a) The Consummation of a reorganization, merger or
consolidation of Southern Company under circumstances where either (i)
Southern Company is not the surviving corporation or (ii) Southern
Company's Voting Securities are no longer publicly traded;
(b) The Consummation of a sale or other disposition of all or
substantially all of Southern Company's assets; or
(c) The Consummation of an acquisition by any Person of
Beneficial Ownership of all of Southern Company's Voting Securities
such that Southern Company's Voting Securities are no longer publicly
traded.
2.22 "Subsidiary Change in Control" shall mean the following:
(a) The Consummation of an acquisition by any Person of
Beneficial Ownership of 50% or more of the combined voting power of the
then outstanding Voting Securities of an Employing Company; provided,
however, that for purposes of this Subsection 2.22, any acquisition by
an employee of Southern Company or its subsidiary of affiliate, or
Group composed entirely of such employees, any qualified pension plan,
publicly held mutual fund or any employee benefit plan (or related
trust) sponsored or maintained by Southern Company or any corporation
Controlled by Southern Company shall not constitute a Change in
Control;
(b) Consummation of a reorganization, merger or consolidation
of an Employing Company (an "Employing Company Business Combination"),
in each case, unless, following such Employing Company Business
Combination, Southern Company Controls the corporation surviving or
resulting from such Employing Company Business Combination, or
(c) Consummation of the sale or other disposition of all or
substantially all of the assets of an Employing Company to an entity
which Southern Company does not Control.
Notwithstanding the foregoing, in no event shall "Subsidiary Change in Control"
mean an initial public offering or a spin-off of an Employing Company.
2.23 "Subsidiary Employee" shall mean an Employee of an Employing
Company which has undergone a Subsidiary Change in Control whose employment is
not immediately transferred to another Employing Company upon such Subsidiary
Change in Control.
2.24 "Surviving Company" shall mean the corporation which either
survives or results from any reorganization, merger or consolidation of which
Southern Company is a party under circumstances where Southern Company does not
survive.
2.25 "Trust" shall mean the Southern Company Deferred Compensation
Trust.
2.26 "Voting Securities" shall mean the outstanding voting securities
of a corporation entitling the holder thereof to vote generally in the election
of such corporation's directors.
ARTICLE III - POOLING ACCOUNTING
Notwithstanding anything to the contrary herein, if, but for any
provision of this Policy, a Change in Control transaction would otherwise be
accounted for as a pooling-of-interests under APB No.16 ("Pooling Accounting")
(after giving effect to any and all other facts and circumstances affecting
whether such Change in Control transaction would use Pooling Accounting), such
provision or provisions of this Policy which would otherwise cause the Change in
Control transaction to be ineligible for Pooling Accounting shall automatically
be void and ineffective in such a manner and to the extent that by eliminating
such provision or provisions of this Policy, Pooling Accounting would be
required for such Change in Control transaction and Pooling Accounting is in
fact used for such Change in Control transaction.
ARTICLE IV - PERFORMANCE STOCK PLAN CHANGE IN CONTROL PROVISIONS
4.1 Application. The provisions of this Article IV apply to benefits
payable under the Southern Company Performance Stock Plan (the "PSP") and the
Southern Company Executive Stock Plan ("ESP"), notwithstanding any provision in
the PSP or ESP to the contrary. The meaning of capitalized terms not defined
herein are determined under the PSP and ESP.
4.2 Subsidiary Change in Control. In the event of a Subsidiary Change
in Control:
(a) Any Options and Stock Appreciation Rights held by a
Subsidiary Employee which are outstanding as of the date such
Subsidiary Change in Control is determined to have occurred, and which
are not then exercisable and vested, shall become fully exercisable and
vested to the full extent of the original grant; provided, that in the
case of a Subsidiary Employee holding a Stock Appreciation Right who is
actually subject to Section 16(b) of the Exchange Act, such Stock
Appreciation Right shall not become fully vested and exercisable unless
it shall have been outstanding for at least six months as of the date
such Subsidiary Change in Control is determined to have occurred.
(b) The restrictions and deferral limitations applicable to
any Restricted Stock held by a Subsidiary Employee shall lapse, and
such Restricted Stock shall become free of all restrictions and
limitations and become fully vested and transferable to the full extent
of the original grant.
(c) The restrictions and deferral limitations and other
conditions applicable to any other Awards held by Subsidiary Employees
shall lapse, and such other Awards shall become free of all
restrictions, limitations or conditions and become fully vested and
transferable to the full extent of the original grant.
4.3 Southern Termination. In the event of a Southern Termination:
(a) Any Options and Stock Appreciation Rights which are
outstanding as of the date such Southern Termination is determined to
have occurred, and which are not then exercisable and vested, shall
become fully exercisable and vested to the full extent of the original
grant; provided, that in the case of a Participant holding a Stock
Appreciation Right who is subject to Section 16(b) of the Exchange Act,
such Stock Appreciation Right shall not become fully vested and
exercisable at such time if such actions would result in liability to
the Participant under Section 16(b), provided further, that any such
actions not taken as a result of the rules under Section 16(b) shall be
effected as of the first date that such activity would no longer result
in liability under such section.
(b) The restrictions and deferral limitations applicable to
any Restricted Stock shall lapse, and such Restricted Stock shall
become free of all restrictions and limitations and become fully vested
and transferable to the full extent of the original grant.
(c) The restrictions and deferral limitations and other
conditions applicable to any other Awards under the PSP or ESP shall
lapse, and such other Awards shall become free of all restrictions,
limitations or conditions and become fully vested and transferable to
the full extent of the original grant.
(d) Any Options, Stock Appreciation Rights or Restricted Stock
which are outstanding as of the date such Southern Termination is
determined to have occurred, shall be converted into or replaced by
options, stock appreciation rights or restricted stock, as the case may
be, in the Surviving Company, or the corporation which has acquired all
of Southern Company's Common Stock or assets. In the event of such
conversion or replacement, the terms of the replacement options or
stock appreciation rights shall preserve with respect to each Option
and each SAR the spread between the Fair Market Value of the shares
subject to the Options or SARs and the Option Price or Base Value, as
the case may be, as determined immediately prior to the Southern
Termination. Similarly, the terms of replacement restricted stock shall
preserve the Fair Market Value of each share of Restricted Stock as
determined immediately prior to the Southern Termination. No
replacement option, stock appreciation right or share of restricted
stock received shall be subject to any terms which are less favorable
than those which existed with respect to the original Option, SAR or
share of Restricted Stock immediately prior to the Southern
Termination.
(e) In the event that it is not possible to effect the
conversion set forth in Section 4.3(d) hereof, any and all outstanding
Options, Stock Appreciation Rights and Restricted Stock as of the date
of the Southern Termination which are not so converted shall be
terminated and the affected Participants shall receive within thirty
(30) days of the Southern Termination cash equal to the difference
between the Option Price and Fair Market Value, in the case of Options,
the Base Value and Fair Market Value, in the case of SARs and equal to
the Fair Market Value, in the case of Restricted Stock. For purposes of
this Section 4.3(e), Fair Market Value shall be determined as of the
day prior to the date of the Southern Termination.
ARTICLE V - PERFORMANCE PAY PLAN (SHAREHOLDER APPROVED)
CHANGE IN CONTROL PROVISIONS
5.1 Application. The provisions of this Article V apply to benefits
payable under the Southern Company Performance Pay Plan (Shareholder Approved)
(the "Executive PPP"), notwithstanding any provision in the Executive PPP to the
contrary. The meaning of capitalized terms not defined herein are determined
under the Executive PPP.
5.2 Southern Change in Control. In the event of a Southern Change in
Control, if there is no Plan Termination with respect to the Executive PPP,
payout of Incentive Pay Awards to Participants for the Performance Period in
which the Southern Change in Control shall have occurred shall be the greater of
actual or target performance under the Executive PPP.
5.3 Plan Termination. In the event of a Plan Termination with respect
to the Executive PPP within two (2) years following a Southern Change in
Control, each Participant who is an Employee on the date of such Plan
Termination shall be entitled to receive within thirty (30) days of the Plan
Termination, cash in an amount equal to a pro-rated payout of his Incentive Pay
Award under the Executive PPP for the Performance Period in which the Plan
Termination shall have occurred, at the greater of target or actual performance
under the Executive PPP and prorated by the number of months which have passed
since the beginning of the Performance Period until the date of the Plan
Termination.
5.4 Subsidiary Change in Control. In the event of a Subsidiary Change
in Control, each Subsidiary Employee on the date of such Change in Control whose
employment is not transferred upon such Subsidiary Change in Control to another
Business Unit shall be entitled to receive within thirty (30) days of the
Subsidiary Change in Control, cash in an amount equal to a prorated payout of
his Incentive Pay Award under the Executive PPP for the Performance Period in
which the Subsidiary Change in Control shall have occurred, at the greater of
actual or target performance under the Executive PPP and prorated by the number
of months which have passed since the beginning of the Performance Period until
the date of the Subsidiary Change in Control.
5.5 Southern Termination. In the event of a Southern Termination, each
Participant on the date of such Southern Termination shall be entitled to
receive within thirty (30) days of the Southern Termination, cash in an amount
equal to a prorated payout of his Incentive Pay Award under the Executive PPP
for the Performance Period in which the Southern Termination shall have
occurred, at the greater of actual or target performance under the Executive PPP
and prorated by the number of months which have passed since the beginning of
the Performance Period until the date of the Southern Termination. The Executive
PPP shall terminate immediately following the payments provided for in this
Section 5.5.
5.6 Pro rata Calculation. For purposes of calculating any pro rata
Incentive Pay Awards under this Article V, a month shall not be considered if
the determining event occurs on or before the 14th day of the month, and a month
shall be considered if the determining event occurs on or after the 15th day of
the month.
ARTICLE VI - PERFORMANCE PAY PLAN CHANGE IN CONTROL PROVISIONS
6.1 Application. The provisions of this Article VI apply to benefits
payable under the Southern Company Performance Pay Plan (the "PPP"),
notwithstanding any provision in the PPP to the contrary. The meaning of
capitalized terms not defined herein are determined under the PPP.
6.2 Southern Change in Control. In the event of a Southern Change in
Control, if there is no Plan Termination with respect to the PPP, payout of
Incentive Pay Awards to Participants for the Performance Period in which the
Southern Change in Control shall have occurred shall be the greater of actual or
target performance under the PPP.
6.3 Plan Termination. In the event of a Plan Termination with respect
to the PPP within two (2) years following a Southern Change in Control, each
Participant who is an Employee on the date of such Plan Termination shall be
entitled to receive within thirty (30) days of the Plan Termination, cash in an
amount equal to a pro-rated payout of his Incentive Pay Award under the PPP for
the Performance Period in which the Plan Termination shall have occurred, at the
greater of target or actual performance under the PPP and prorated by the number
of months which have passed since the beginning of the Performance Period until
the date of the Plan Termination.
6.4 Subsidiary Change in Control. In the event of a Subsidiary Change
in Control, each Subsidiary Employee on the date of such Change in Control whose
employment is not transferred upon such Subsidiary Change in Control to another
Business Unit shall be entitled to receive within thirty (30) days of the
Subsidiary Change in Control, cash in an amount equal to a prorated payout of
his Incentive Pay Award under the PPP for the Performance Period in which the
Subsidiary Change in Control shall have occurred, at the greater of actual or
target performance under the PPP and prorated by the number of months which have
passed since the beginning of the Performance Period until the date of the
Subsidiary Change in Control.
6.5 Southern Termination. In the event of a Southern Termination, each
Participant on the date of such Southern Termination shall be entitled to
receive within thirty (30) days of the Southern Termination, cash in an amount
equal to a prorated payout of his Incentive Pay Award under the PPP for the
Performance Period in which the Southern Termination shall have occurred, at the
greater of actual or target performance under the PPP and prorated by the number
of months which have passed since the beginning of the Performance Period until
the date of the Southern Termination. The PPP shall terminate immediately
following the payments provided for in this Section 6.5.
6.6 Pro rata Calculation. For purposes of calculating any pro rata
Incentive Pay Awards under this Article VI, a month shall not be considered if
the determining event occurs on or before the 14th day of the month, and a month
shall be considered if the determining event occurs on or after the 15th day of
the month.
ARTICLE VII - EXECUTIVE PRODUCTIVITY IMPROVEMENT PLAN
CHANGE IN CONTROL PROVISIONS
7.1 Application. The provisions of this Article VII apply to benefits
payable under the Southern Company Executive Productivity Improvement Plan (the
"Executive PIP"), notwithstanding any provision in the Executive PIP to the
contrary. The meaning of capitalized terms not defined herein are determined
under the Executive PIP.
7.2 Southern Change in Control. In the event of a Plan Termination with
respect to the Executive PIP within the two (2) year period following a Southern
Change in Control, each Participant who is an Executive Employee on the date of
the Plan Termination shall be entitled to receive within thirty (30) days of the
Plan Termination, cash in an amount equal to his Award Opportunity or Award
Units, as the case may be, for the Computation Period in which the Plan
Termination shall have occurred, at a target Value of Performance Unit of $1.00,
prorated for each Computation Period by the number of months which have passed
since the beginning of the Computation Period until the date of the Plan
Termination.
7.3 Subsidiary Change in Control. In the event of a Subsidiary Change
in Control, each Subsidiary Employee on the date of such Change in Control whose
employment is not transferred upon such Subsidiary Change in Control to another
Employing Company shall be entitled to receive within thirty (30) days of the
Subsidiary Change in Control, cash in an amount equal to his Award Opportunity,
or Award Units, as the case may be, for the Computation Period in which the
Subsidiary Change in Control shall have occurred, at a target Value of
Performance Unit of $1.00, prorated for each Computation Period by the number of
months which have passed since the beginning of the Computation Period until the
date of the Subsidiary Change in Control.
7.4 Southern Termination. In the event of a Southern Termination, if
the Executive PIP or an equitable replacement thereto remains effective on
December 31st of the Plan Year in which the Southern Change in Control shall
have occurred, the Executive PIP or Replacement Plan shall operate with respect
to the Performance Period then ended in accordance with its terms, but in no
event shall the Value of Performance Unit under the Plan or similar factor under
a replacement plan for such Performance Period be less than $1.00 or target
performance, respectively.
ARTICLE VIII - PERFORMANCE DIVIDEND PLAN
CHANGE IN CONTROL PROVISIONS
8.1 Application. The provisions of this Article VIII apply to benefits
payable under the Southern Company Performance Dividend Plan (the "PDP"),
notwithstanding any provision in the PDP to the contrary. The meaning of
capitalized terms not defined herein are determined under the PDP.
8.2 Southern Change in Control. In the event of a Plan Termination with
respect to the PDP within two (2) years following a Southern Change in Control,
each Participant who is an employee of his Employing Company on the date of such
Plan Termination shall be entitled to receive within thirty (30) days of the
Plan Termination, cash for each Award held as of such date, based on actual
performance under Section 4.1 of the PDP determined as of the date of the Plan
Termination, and the Annual Dividend declared prior to the date of the Plan
Termination.
8.3 Subsidiary Change in Control. In the event of a Subsidiary Change
in Control, each Subsidiary Employee on the date of such Change in Control whose
employment is not transferred upon such Subsidiary Change in Control to another
Employing Company shall be entitled to receive within thirty (30) days of the
Subsidiary Change in Control, cash for each Award held as of such date, based on
actual performance under Section 4.1 of the PDP determined as of the date on
which the Subsidiary Change in Control shall have occurred, and the Annual
Dividend declared prior to the date of the Subsidiary Change in Control.
8.4 Southern Termination. In the event of a Southern Termination, each
Participant who is an employee of his Employing Company on the date of such
Southern Termination shall be entitled to receive within thirty (30) days of the
Southern Termination, cash for each Award held as of such date, based on actual
performance under Section 4.1 of the PDP determined as of the date on which the
Southern Termination shall have occurred, and the Annual Dividend declared prior
to the date of the Southern Termination.
ARTICLE IX - SUPPLEMENTAL BENEFIT PLAN
CHANGE IN CONTROL AND OTHER SPECIAL PROVISIONS
9.1 Application. The provisions of this Article IX apply to benefits
payable under The Southern Company Supplemental Benefit Plan (the "SBP"),
notwithstanding any provision in the SBP to the contrary. The meaning of
capitalized terms not defined herein are determined under the SBP.
9.2 General. Notwithstanding any other terms of the SBP to the
contrary, upon a Southern Change in Control or a Subsidiary Change in Control,
the provisions of this Article IX shall become operative and apply to the
calculation and payment of benefits under the SBP with respect to any Subsidiary
Employee who is a Participant on such date.
9.3 Funding of Trust. The Trust has been established to hold assets of
the Employing Companies under certain circumstances as a reserve for the
discharge of the Employing Companies' obligations under the SBP. In the event of
a Preliminary Change in Control of Southern Company, all Employing Companies
shall be obligated to immediately contribute such amounts to the Trust as may be
necessary to fully fund the Pension Benefit and Non-Pension Benefit payable
under the SBP, the Pension Benefit to be determined under Section 9.5 hereof, in
accordance with the procedures set forth in Section 9.4 hereof. In the event of
a Preliminary Change in Control of an Employing Company, such Employing Company
shall be obligated to immediately contribute such amounts to the Trust as may be
necessary to fully fund the Pension Benefit and Non-Pension Benefit payable to
its Subsidiary Employees under the SBP, the Pension Benefit to be determined
under Section 9.6 hereof, in accordance with the procedures set forth in Section
9.4 hereof. In addition, in order to provide the added protections for certain
individuals in accordance with Paragraph 7(b) of the Trust, the Employing
Companies may fund the Trust prior to a Preliminary Change in Control of
Southern Company or an Employing Company. All assets held in the Trust remain
subject only to the claims of the Employing Companies' general creditors whose
claims against the Employing Companies are not satisfied because of the
Employing Companies' bankruptcy or insolvency (as those terms are defined in the
Trust). No Participant has any preferred claim on, or beneficial ownership
interest in, any assets of the Trust before the assets are paid to the
Participant and all rights created under the Trust, as under the SBP, are
unsecured contractual claims of the Participant against his Employing Company.
9.4 Calculation of Trust Contribution. As soon as practicable following
either a Preliminary Change in Control of Southern Company or of an Employing
Company, the affected Employing Companies shall contribute an amount based upon
the funding strategy adopted by the Administrative Committee with the assistance
of an appointed actuary necessary to fulfill the Employing Companies'
obligations pursuant to this Article IX. In the event of a dispute after a
Change in Control over such actuary's determination, the respective Employing
Company(ies) and any complaining Participant(s) shall refer such dispute to an
independent, third-party actuarial consultant, chosen by the Employing Company
and such Participant. If the Employing Company and the Participant cannot agree
on an independent, third-party actuarial consultant, the actuarial consultant
shall be chosen by lot from an equal number of actuaries submitted by the
affected Employing Companies and the Trustee. Any such referral shall only occur
once in total and the determination by the third-party actuarial consultant
shall be final and binding upon both parties. The Employing Companies shall be
responsible for all of the fees and expenses of the independent actuarial
consultant.
9.5 Pension Benefit Upon Southern Change in Control. On the date of a
Southern Change in Control, the Pension Benefit of each Participant who is an
Employee of an Employing Company and who has a non-forfeitable right to
Retirement Income under the Pension Plan, will be calculated based on such
Participant's Earnings and Accredited Service on such date, regardless of
whether such Participant is retirement eligible on such date. Each Participant,
who is an Employee of an Employing Company, will be entitled to receive the
amount of his Pension Benefit based on such Participant's Earnings and
Accredited Service as of the date of a Southern Change in Control adjusted to
take into account appropriate early reduction factors, if any, based on the
Participant's commencement of benefits. Such benefit shall be paid in lump sum,
upon termination of employment or retirement. Any benefits accrued under the SBP
subsequent to the date of a Southern Change in Control will be calculated and
distributed pursuant to the terms of the SBP, without regard to this Article IX.
9.6 Pension Benefit Upon Subsidiary Change in Control. On the date of a
Subsidiary Change in Control of an Employing Company, the Pension Benefit of
each Participant who is an Employee of such Employing Company and who has a
non-forfeitable right to Retirement Income under the Pension Plan, will be
calculated based on such Participant's Earnings and Accredited Service on such
date, regardless of whether such Participant is retirement eligible on such
date. Each Participant, who is an Employee of such Employing Company, will be
entitled to receive the amount of his Pension Benefit based on such
Participant's Earnings and Accredited Service as of the date of a Subsidiary
Change in Control adjusted to take into account appropriate early reduction
factors, if any, based on the Participant's commencement of benefits. Such
benefit shall be paid in lump sum, upon termination of employment or retirement.
Any benefits accrued under the SBP subsequent to the date of a Subsidiary Change
in Control will be calculated and distributed pursuant to the terms of the SBP,
without regard to this Article IX.
9.7 Non-Pension Benefit Distribution Election upon Change in Control.
In the event of a Southern Change in Control or a Subsidiary Change in Control,
notwithstanding anything to the contrary in the SBP, upon termination or
retirement from employment, that Non-Pension Benefit of a Participant who was an
Employee of an Employing Company affected by such a Change in Control shall be
paid out in a lump sum if such Participant makes an election pursuant to
procedures established by the Administrative Committee in its sole and absolute
discretion. If no such election is made, the Participant shall receive payment
of his Account solely in accordance with Article V of the SBP.
ARTICLE X - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
CHANGE IN CONTROL AND OTHER SPECIAL PROVISIONS
10.1 Application. The provisions of this Article X apply to benefits
payable under The Southern Company Supplemental Executive Retirement Plan (the
"SERP"), notwithstanding any provision in the SERP to the contrary. The meaning
of capitalized terms not defined herein are determined under the SERP.
10.2 General. Notwithstanding any other terms of the SERP to the
contrary, upon a Southern Change in Control or a Subsidiary Change in Control,
the provisions of this Article X shall become operative and apply to the
calculation and payment of benefits under the SERP with respect to any
Subsidiary Employee who is a Participant on such date.
10.3 Funding of Trust. The Trust has been established to hold assets of
the Employing Companies under certain circumstances as a reserve for the
discharge of the Employing Companies' obligations under the SERP. In the event
of a Preliminary Change in Control of Southern Company, all Employing Companies
shall be obligated to immediately contribute such amounts to the Trust as may be
necessary to fully fund all benefits payable under the SERP, as determined under
Section 10.5 hereof, in accordance with the procedures set forth in Section 10.4
hereof. In the event of a Preliminary Change in Control of an Employing Company,
such Employing Company shall be obligated to immediately contribute such amounts
to the Trust as may be necessary to fully fund all benefits payable to its
Subsidiary Employees under the SERP, as determined under Section 10.6 hereof, in
accordance with the procedures set forth in Section 10.4 hereof. In addition, in
order to provide the added protections for certain individuals in accordance
with Paragraph 7(b) of the Trust, the Employing Companies may fund the Trust
prior to a Preliminary Change in Control of Southern Company or an Employing
Company. All assets held in the Trust remain subject only to the claims of the
Employing Companies' general creditors whose claims against the Employing
Companies are not satisfied because of the Employing Companies' bankruptcy or
insolvency (as those terms are defined in the Trust). No Participant has any
preferred claim on, or beneficial ownership interest in, any assets of the Trust
before the assets are paid to the Participant and all rights created under the
Trust, as under the SERP, are unsecured contractual claims of the Participant
against his Employing Company.
10.4 Calculation of Trust Contribution. As soon as practicable
following either a Preliminary Change in Control of Southern Company or of an
Employing Company, the affected Employing Companies shall contribute an amount
based upon the funding strategy adopted by the Administrative Committee with the
assistance of an appointed actuary necessary to fulfill the Employing Companies'
obligations pursuant to this Article X. In the event of a dispute after a Change
in Control over such actuary's determination, the respective Employing
Company(ies) and any complaining Participant(s) shall refer such dispute to an
independent, third-party actuarial consultant, chosen by the Employing Company
and such Participant. If the Employing Company and the Participant cannot agree
on an independent, third-party actuarial consultant, the actuarial consultant
shall be chosen by lot from an equal number of actuaries submitted by the
affected Employing Companies and the Trustee. Any such referral shall only occur
once in total and the determination by the third-party actuarial consultant
shall be final and binding upon both parties. The Employing Companies shall be
responsible for all of the fees and expenses of the independent actuarial
consultant.
10.5 SERP Benefit Upon Southern Change in Control. On the date of a
Southern Change in Control, the SERP Benefit of each Participant, who is an
Employee of an Employing Company and who has a non-forfeitable right to
Retirement Income under the Pension Plan, will be calculated based on such
Participant's Earnings and Accredited Service on such date, regardless of
whether such Participant is retirement eligible on such date. Each such
Participant, who is an Employee of an Employing Company, will be entitled to
receive the amount of his SERP Benefit based on such Participant's Earnings and
Accredited Service as of the date of a Southern Change in Control adjusted to
take into account appropriate early reduction factors, if any, based on the
Participant's commencement of benefits. Such benefit shall be paid in lump sum,
upon termination of employment or retirement. Any benefits accrued under the
SERP subsequent to the date of a Southern Change in Control will be calculated
and distributed pursuant to the terms of the SERP, without regard to this
Article X.
10.6 SERP Benefit Upon Subsidiary Change in Control. On the date of a
Subsidiary Change in Control of an Employing Company, the SERP Benefit of each
Participant, who is an Employee of such Employing Company and who has a
non-forfeitable right to Retirement Income under the Pension Plan, will be
calculated based on such Participant's Earnings and Accredited Service on such
date, regardless of whether such Participant is retirement eligible on such
date. Each such Participant, who is an Employee of such Employing Company, will
be entitled to receive the amount of his SERP Benefit based on such
Participant's Earnings and Accredited Service as of the date of a Subsidiary
Change in Control adjusted to take into account appropriate early reduction
factors, if any, based on the Participant's commencement of benefits. Such
benefit shall be paid in lump sum, upon termination of employment or retirement.
Any benefits accrued under the SERP subsequent to the date of a Subsidiary
Change in Control will be calculated and distributed pursuant to the terms of
the SERP, without regard to this Article X.
ARTICLE XI - DEFERRED COMPENSATION PLAN
CHANGE IN CONTROL AND OTHER SPECIAL PROVISIONS
11.1 Application. The provisions of this Article XI apply to benefits
payable under the Southern Company Deferred Compensation Plan (the "DCP"),
notwithstanding any provision in the DCP to the contrary. The meaning of
capitalized terms not defined herein are determined under the DCP.
11.2 Notwithstanding any other terms of the DCP to the contrary,
following a Southern Change in Control or a Subsidiary Change in Control, the
provisions of this Article XI shall apply to the payment of benefits under the
DCP with respect to any Subsidiary Employee who is a Participant on such date.
11.3 The Trust has been established to hold assets of the Employing
Companies under certain circumstances as a reserve for the discharge of the
Employing Companies' obligations under the DCP. In the event of a Preliminary
Change in Control of Southern, all Employing Companies shall be obligated to
immediately contribute such amounts to the Trust as may be necessary to fully
fund all benefits payable under the DCP in accordance with the procedures set
forth in Section 11.4 hereof. In the event of a Preliminary Change in Control of
an Employing Company, such Employing Company shall be obligated to immediately
contribute such amounts to the Trust as may be necessary to fully fund all
benefits payable to its Subsidiary Employees under the DCP in accordance with
the procedures set forth in Section 11.4 hereof. In addition, in order to
provide the added protections for certain individuals in accordance with
Paragraph 7(b) of the Trust, the Employing Companies may fund the Trust prior to
a Preliminary Change in Control of Southern or an Employing Company in
accordance with the terms of the Trust. All assets held in the Trust remain
subject only to the claims of the Employing Companies' general creditors whose
claims against the Employing Companies are not satisfied because of the
Employing Companies' bankruptcy or insolvency (as those terms are defined in the
Trust). No Participant has any preferred claim on, or beneficial ownership
interest in, any assets of the Trust before the assets are paid to the
Participant and all rights created under the Trust, as under the DCP, are
unsecured contractual claims of the Participant against his Employing Company.
11.4 As soon as practicable following either a Preliminary Change in
Control of Southern or of an Employing Company, the affected Employing Companies
shall contribute an amount based upon the funding strategy adopted by the
Committee with the assistance of an appointed actuary necessary to fulfill the
Employing Companies' obligations pursuant to this Article XI. In the event of a
dispute over such actuary's determination, the respective Employing Company(ies)
and any complaining Participant(s) shall refer such dispute to an independent,
third-party actuarial consultant, chosen by the Employing Company and such
Participant. If the Employing Company and the Participant cannot agree on an
independent, third-party actuarial consultant, the actuarial consultant shall be
chosen by lot from an equal number of actuaries submitted by the Employing
Company and the Trustee. Any such referral shall only occur once in total and
the determination by the third-party actuarial consultant shall be final and
binding upon both parties. The Employing Companies shall be responsible for all
of the fees and expenses of the independent actuarial consultant.
11.5 In the event of a Southern Change in Control or a Subsidiary
Change in Control, notwithstanding anything to the contrary in the DCP, upon
termination or retirement from employment, the Account of a Participant who was
an Employee of an Employing Company affected by such a Change in Control shall
be paid out in a lump sum if such Participant makes an election pursuant to
procedures established by the Committee in its sole and absolute discretion. If
no such election is made, the Participant shall receive payment of his Account
solely in accordance with Article VII of the DCP.
ARTICLE XII - ADMINISTRATION
12.1 Administrative Committee. The committee designated as
administrator of each of the Employee Benefit Plans shall be responsible for the
general administration of this Policy as it relates to such committee's
respective Employee Benefit Plan.
ARTICLE XIII - MISCELLANEOUS
13.1 Amendment and Termination. This Policy may be amended or
terminated at any time by the board of directors of Southern Company Services,
Inc. (or its successors and assigns, if applicable), provided, however, the
Policy may not be amended in any material respect or terminated within the two
(2) year period following a Change in Control nor shall any amendment or
termination impair the rights of any Participant in the Employee Benefit Plans
which have accrued hereunder prior to any such amendment or termination.
13.2 Additional Rights. Nothing in the Policy shall interfere with or
limit in any way the right of the Employing Companies to terminate any
employee's employment at any time, or confer upon any employee any right to
continue in the employ of the Employing Companies.
IN WITNESS WHEREOF, this Southern Company Change in Control Benefit
Plan Determination Policy has been executed by duly authorized officers of
Southern Company Services, Inc. pursuant to resolutions of the Board of
Directors of Southern Company Services, Inc. this ______ day of
________________________, 2000.
SOUTHERN COMPANY SERVICES, INC.
By:________________________________________
Christopher C. Womack
Senior Vice President, Human Resources
ATTEST:
By: _________________________________________
Its: _________________________________________