Exhibit 10(a)2
SOUTHERN COMPANY
EXECUTIVE CHANGE IN CONTROL
SEVERANCE PLAN
Troutman Sanders LLP
Bank of America Plaza, Suite 5200
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Effective May 1, 2003
SOUTHERN COMPANY
EXECUTIVE CHANGE IN CONTROL
SEVERANCE PLAN
ARTICLE 1 - PURPOSE AND ADOPTION OF PLAN
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1.1 Adoption of Plan. Southern Company Services, Inc. hereby adopts this
Southern Company Executive Change in Control Severance Plan. This Plan was
originally effective December 7, 1998; it was amended by a First Amendment also
effective December 7, 1998, and subsequently amended and restated effective July
10, 2000 and May 9, 2002. This amended and restated Plan is effective May 1,
2003. The Plan shall be an unfunded "top hat" plan designed to provide certain
severance benefits to a select group of management or highly compensated
employees, to be paid solely from the general assets of the respective Employing
Companies.
1.2 Purpose. The Plan is primarily designed to provide benefits to certain key
employees of the Employing Companies, whose employment is terminated subsequent
to a change in control of Southern or their respective Employing Company.
ARTICLE 2 - DEFINITIONS
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2.1 "Administrative Committee" shall mean the Board of Directors, plus, in the
event of any act necessary to be taken in connection with the Plan relative to a
particular Participant, the Chief Executive Officer of the Participant's
Employing Company, if such Chief Executive Officer is not already a member of
the Board of Directors.
2.2 "Annual Compensation" shall mean a Participant's highest annual base salary
rate for the twelve month period immediately preceding the date of the Change in
Control plus target bonus.
2.3 "Beneficial Ownership" shall mean beneficial ownership within the meaning of
Rule 13d-3 promulgated under the Exchange Act.
2.4 "Board of Directors" shall mean the board of directors of the Company.
2.5 "Business Combination" shall mean a reorganization, merger or consolidation
of Southern or sale or other disposition of all or substantially all of the
assets of Southern.
2.6 "Change in Control" shall mean,
(a) with respect to Southern, the occurrence of any of the following:
(i) The Consummation of an acquisition by any Person of
Beneficial Ownership of 20% or more of Southern's Voting Securities;
provided, however, that for purposes of this Section 2.6(a)(i), the
following acquisitions of Southern's Voting Securities shall not
constitute a Change in Control:
(A) any acquisition directly from Southern;
(B) any acquisition by Southern;
(C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Southern or any
Southern Subsidiary;
(D) any acquisition by a qualified pension plan or
publicly held mutual fund;
(E) any acquisition by an employee of Southern or its
subsidiary or affiliate, or Group composed exclusively of such
employees; or
(F) any Business Combination which would not
otherwise constitute a Change in Control because of the
application of clauses (A), (B) and (C) of Section
2.6(a)(iii).
(ii) 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
(iii) Consummation of a Business Combination, unless,
following such Business Combination, all of the following three
conditions are met:
(A) all or substantially all of the individuals and
entities who held Beneficial Ownership, respectively, of
Southern'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's
Voting Securities or all or substantially all of Southern'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 Southern's Voting Securities;
(B) 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, any Southern Subsidiary 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
(C) 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.
(b) with respect to an Employing Company, the occurrence of any of the
following:
(i) 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 Section 2.6(b)(i), any acquisition
by an employee of Southern or its subsidiary or affiliate, or Group
composed entirely of such employees, any qualified pension plan, any
publicly held mutual fund or any employee benefit plan (or related
trust) sponsored or maintained by Southern or any Southern Subsidiary
shall not constitute a Change in Control;
(ii) The 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 or a Southern Subsidiary Controls the
corporation surviving or resulting from such Employing Company Business
Combination; or
(iii) The Consummation of the sale or other disposition of all
or substantially all of the assets of an Employing Company to an entity
which Southern or a Southern Subsidiary does not Control.
Notwithstanding the foregoing, in no event shall "Change in
Control" mean an initial public offering or a spin-off of an Employing
Company.
2.7 "COBRA Coverage" shall mean any continuation coverage to which a
Participant or his dependents may be entitled pursuant to Code Section 4980B.
2.8 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.9 "Company" shall mean Southern Company Services, Inc., its
successors and assigns.
2.10 "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 governmental agencies.
2.11 "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.
2.12 "Effective Date" shall mean the date of execution hereof.
2.13 "Employee" shall mean each regular full-time or regular part-time
employee of an Employing Company of Grades 10 to 13 (or, if the Grade system is
not used, $130,000 or more of annual base salary rate for the twelve month
period immediately preceding the Change in Control who has not otherwise entered
into a Change in Control agreement with his Employing Company and elects to
receive benefits under such agreement) not covered by a collective bargaining
agreement between the Employing Company and a union or other employee
representative. The Administrative Committee of the Southern Company Change in
Control Benefit Determination Policy may deem one or more Employees (as defined
in this Section 2.13 except not employed by an Employing Company) of a
particular Southern Subsidiary, or corporation or entity Controlled by a
Southern Subsidiary, to be employed by an Employing Company for certain purposes
under this Plan. Such action shall be in writing and shall cause such an
Employee to only be entitled to benefits under this Plan in the event of a
Change in Control of his deemed Employing Company, and not his actual employing
company. Notwithstanding the above, no employee shall participate in the Plan
if, prior to a change in control, the employee has entered into a change in
control agreement and such employee elects to receive benefits under such
agreement.
2.14 "Employee Outplacement Program" shall mean the program established
by the Employing Company from time to time for the purpose of assisting
Participants covered by the Plan in finding employment outside of the Employing
Company which provides for the following services:
(a) self assessment, career decision and goal setting;
(b) job market research and job sources;
(c) networking and interviewing skills;
(d) planning and implementation strategy;
(e) resume writing, job hunting methods and salary negotiation; and
(f) office support and job search resources.
2.15 "Employing Company" shall mean the Company, or any other Southern
Subsidiary, which the Board of Directors may from time to time determine to
bring under the Plan and which shall adopt the Plan, and any successor of any of
them. The term "Employing Company" shall also mean any corporation or entity
Controlled by a Southern Subsidiary which the Compensation Committee of the
Southern Board has determined to bring under the Plan and which shall adopt the
Plan, and any successor of any of them. The participation of Southern Company
Gas, LLC in the Plan as an Employing Company shall be limited to Support
Employees.
2.16 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
2.17 "Good Reason" shall mean, without an Employee's express written
consent, after written notice to his Employing Company, and after a thirty (30)
day opportunity for the Employee's Employing Company to cure, the continuing
occurrence of any of the following events:
(a) Inconsistent Duties. A meaningful and detrimental
alteration in the Employee's position or in the nature or status of his
responsibilities from those in effect immediately prior to the Change
in Control;
(b) Reduced Salary. A reduction of five percent (5%) or more
by the Employing Company in either of the following: (i) the Employee's
annual base salary rate for the twelve month period immediately
preceding the date of the Change in Control ("Base Salary") (except for
a less than ten percent (10%), across-the-board Base Salary reduction
similarly affecting at least ninety-five percent (95%) of all Employees
of the Employing Company); or (ii) the sum of the Employee's Base
Salary plus target bonus under his Employing Company's short term bonus
plan (e.g., the PPP under the Omnibus Plan), as in effect immediately
prior to the Change in Control (except for a less than ten percent
(10%), across-the-board reduction of Base Salary plus target bonus
under such short term plan similarly affecting at least ninety-five
percent (95%) of all Employees of the Employing Company);
(c) Compensation Plans. The failure by the Employing Company
to continue in effect any "compensation plan or agreement" in which an
Employee participates as of the date of the Change in Control or the
elimination of the Employee's participation in any such plan, (except
for across-the-board plan changes or terminations similarly affecting
at least ninety-five percent (95%) of all Employees of the Employing
Company);
For purposes of this Section 2.17(c), the "compensation plan
or agreement" shall mean any written arrangement executed by an
authorized officer of the Employing Company which provides for
periodic, non-discretionary compensatory payments to employees in the
nature of bonuses.
(d) Relocation. A change in an Employee's work location to a
location more than fifty (50) miles from the facility where the
Employee was located at the time of the Change in Control, unless such
new work location is within fifty (50) miles from the Employee's
principal place of residence at the time of the Change in Control. The
acceptance, if any, by an Employee of employment by an Employing
Company at a work location which is outside the fifty mile radius set
forth in this Section 2.17(d) shall not be a waiver of the Employee's
right to refuse subsequent transfer by an Employing Company to a
location which is more than fifty (50) miles from the Employee's
principal place of residence at the time of the Change in Control, and
such subsequent, unconsented transfer shall be "Good Reason" under this
Agreement; or
(e) Benefits and Perquisites. The taking of any action by the
Employing Company that would directly or indirectly materially reduce
the benefits enjoyed by an Employee under the Employing Company's
retirement, life insurance, medical, health and accident, disability,
deferred compensation or savings plans in which the Employee was
participating immediately prior to the Change in Control, or the
failure by the Employing Company to provide an Employee with the number
of paid vacation days or, if applicable, paid time off days to which
the Employee is entitled on the basis of years of service with the
Employing Company in accordance with the Employing Company's normal
vacation policy or the paid time off program (whichever applicable) in
effect immediately prior to the Change in Control (except for
across-the-board vacation policy or paid time off program changes or
policy or program terminations similarly affecting at least ninety-five
percent (95%) of all Employees of the Employing Company).
2.18 "Group" shall have the meaning set forth in Section 14(d) of the
Exchange Act.
2.19 "Group Health Plan" shall mean the group health plan covering the
Participant, as such plan may be amended from time to time.
2.20 "Group Life Insurance Plan" shall mean the group life insurance
program covering the Participant, as such plan may be amended from time to time.
2.21 "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'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 the
Effective Date 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.
2.22 "Month of Service" shall mean any calendar month during which a
Participant has worked at least one (1) hour or was on approved leave of absence
while in the employ of an Employing Company or any other Southern Subsidiary.
2.23 "Omnibus Plan" shall mean the Southern Company Omnibus Incentive
Compensation Plan, and the Design and Administrative Specifications duly adopted
thereunder, as in effect on the day before the date of a Change in Control, as
may be amended from time to time.
2.24 "Participant" shall mean an Employee or Support Employee who meets
the eligibility requirements of Section 3.1 of this Plan.
2.25 "Pension Plan" shall mean The Southern Company Pension Plan or any
successor thereto, as such plans may be amended from time to time.
2.26 "Performance Dividend Program" or "PDP" shall mean the Performance
Dividend Program under the Omnibus Plan or any replacement thereto, as such
plans may be amended from time to time.
2.27 "Performance Pay Program" or "PPP" shall mean the Performance Pay
Program under the Omnibus Plan or any replacement thereto, as such plans may be
amended from time to time.
2.28 "Person" shall mean any individual, entity or group within the
meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act.
2.29 "Preliminary Change in Control" shall mean the occurrence of any
of the following as determined by the Southern Committee.
(a) Southern 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 Change in Control;
(b) Southern, an Employing Company or any Person publicly
announces an intention to take or to consider taking actions which, if
Consummated, would result in a Change of Control under circumstances
where the Consummation of the announced action or intended action is
legally and financially possible;
(c) Any Person achieves the Beneficial Ownership of fifteen
percent (15%) or more of the Common Stock; or
(d) The Southern Board or the board of directors of an
Employing Company has declared that a Preliminary Change of Control has
occurred.
2.30 "Plan" shall mean the Southern Company Executive Change in Control
Severance Plan.
2.31 "Southern" shall mean The Southern Company, its successors and
assigns.
2.32 "Southern Board" shall mean the board of directors of Southern.
2.33 "Southern Committee" shall mean the committee comprised of the
Chairman of the Southern Board, Chief Financial Officer of Southern, General
Counsel of Southern and the Chairman of the Administrative Committee.
2.34 "Southern Subsidiary" shall mean any corporation or other entity
Controlled by Southern or another Southern Subsidiary.
2.35 "Support Employee" shall mean an Employee of the Company (which
shall continue to be such Employee's Employing Company for purposes of this
Plan) who:
(a) Is involuntarily terminated without Cause within one year
of the Change in Control of an Employing Company (other than the
Company) and either (i) spent at least 40% of his working time
performing services for such Employing Company at the time of the
Change in Control and for the six months prior thereto, or (ii) is
determined by the Administrative Committee to be involuntarily
terminated without Cause as a result of such Change in Control; or
(b) Voluntarily terminates with Good Reason within one year of
the Change in Control of an Employing Company (other than the Company)
and spent at least 40% of his working time performing services for such
Employing Company at the time of the Change in Control and for the six
months prior thereto. For purposes of this Section 2.35(b) only, Good
Reason shall not include the provisions of Section 2.17(a), entitled
"Inconsistent Duties."
2.36 "Termination for Cause" or "Cause" shall mean an Employee's
termination of employment with his Employing Company upon the occurrence of any
of the following:
(a) The willful and continued failure by the Employee to
substantially perform his duties with his Employing Company (other than
any such failure resulting from the Employee's Total Disability or from
the Employee's retirement or any such actual or anticipated failure
resulting from termination by the Employee for Good Reason) after a
written demand for substantial performance is delivered to him by the
Administrative Committee, which demand specifically identifies the
manner in which the Administrative Committee believes that he has not
substantially performed his duties; or
(b) The willful engaging by the Employee in conduct that is
demonstrably and materially injurious to his Employing Company,
monetarily or otherwise, including but not limited to any of the
following:
(i) any willful act involving fraud or dishonesty in
the course of an Employee's employment by his Employing
Company;
(ii) the willful carrying out of any activity or the
making of any statement by an Employee which would materially
prejudice or impair the good name and standing of his
Employing Company, Southern or any other Southern Subsidiary
or would bring his Employing Company, Southern or any other
Southern Subsidiary into contempt, ridicule or would
reasonably shock or offend any community in which his
Employing Company, Southern or such other Southern Subsidiary
is located;
(iii) attendance by an Employee at work in a state of
intoxication or otherwise being found in possession at his
workplace of any prohibited drug or substance, possession of
which would amount to a criminal offense;
(iv) violation of his Employing Company's policies on
drug and alcohol usage, fitness for duty requirements or
similar policies as may exist from time to time as adopted by
the Employing Company's safety officer;
(v) assault or other act of violence by an Employee
against any person during the course of employment; or
(vi) an Employee's indictment for any felony or any
misdemeanor involving moral turpitude.
No act or failure to act by an Employee shall be deemed "willful"
unless done, or omitted to be done, by the Employee not in good faith and
without reasonable belief that his action or omission was in the best interest
of his Employing Company.
Notwithstanding the foregoing, an Employee shall not be deemed to have
been terminated for Cause unless and until there shall have been delivered to
him a copy of a resolution duly adopted by the affirmative vote of the majority
of the Administrative Committee at a meeting called and held for such purpose
(after reasonable notice to the Employee and an opportunity for him, together
with counsel, to be heard before the Administrative Committee), finding that, in
the good faith opinion of the Administrative Committee, the Employee was guilty
of conduct set forth in Section 2.36(a) or (b) hereof and specifying the
particulars thereof in detail.
2.37 "Termination Date" shall mean the date on which a Participant is
separated from his Employing Company's regular payroll; provided, however, that
solely for purposes of Section 3.2(c) hereof, the Termination Date of
Participants who are deemed to be retired pursuant to the provisions of Section
3.3 hereof, shall be the effective date of their retirement pursuant to the
terms of the Pension Plan.
2.38 "Total Disability" shall mean total disability within the meaning
of the Pension Plan.
2.39 "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.
2.40 "Waiver and Release" shall mean the Waiver and Release attached
hereto as Exhibit A.
2.41 "Year of Service" shall mean an Employee's Months of Service
divided by twelve (12) rounded to the nearest whole year, rounding up if the
remaining number of months is seven (7) or greater and rounding down if the
remaining number of months is less than seven (7). If an Employee has a break in
his service with his Employing Company, he will receive credit under this Plan
for the service prior to the break in service only if the break in service was
less than five years and his service prior to the break exceeds the length of
the break in service.
ARTICLE 3 - SEVERANCE BENEFITS
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3.1 Eligibility.
(a) Employees. Except as otherwise provided herein, any
Employee whose employment is involuntarily terminated by his Employing
Company at any time during the two year period following a Change in
Control of Southern or his Employing Company for reasons other than
Cause or who shall voluntarily terminate his employment with his
Employing Company for Good Reason at any time during the two year
period following a Change in Control of Southern or his Employing
Company, shall be entitled to participate in this Plan and receive the
benefits described in Section 3.2 hereof, subject to the terms and
conditions described in this Article 3.
(b) Deemed Employees. An Employee who is deemed to be employed
by a different Employing Company than his actual Employing Company
under Section 2.13 hereof, shall be entitled to participate in this
Plan and receive the benefits described in Section 3.2 hereof in the
same manner as other Employees under Section 3.1(a) hereof; provided,
however, that such deemed Employee will be considered to be an Employee
of the deemed Employing Company solely for purposes of determining
whether a Change in Control has occurred. For all other purposes under
this Plan, such deemed Employee's actual Employing Company shall be
considered.
(c) Support Employees. A Support Employee shall be entitled to
participate in this Plan and receive the benefits described in Section
3.2 hereof, subject to the terms and conditions described in this
Article 3.
(d) Limits on Eligibility. Notwithstanding anything to the
contrary herein, an Employee or Support Employee shall not be eligible
to receive benefits under this Plan if the Employee or Support
Employee:
(i) is not actively at work on his Termination Date,
unless such Employee or Support Employee is capable of
returning to work within twelve (12) weeks of the beginning of
any leave of absence from work;
(ii) voluntarily terminates his employment with his
Employing Company for other than Good Reason;
(iii) is terminated by his Employing Company for
Cause;
(iv) accepts the transfer of his employment to
Southern, any Southern Subsidiary or any employer that
acquires all or substantially all of the assets of Southern, a
Southern Subsidiary or his Employing Company;
(v) refuses an offer of continued employment with his
Employing Company, Southern or a Southern Subsidiary, or any
employer that acquires all or substantially all of the assets
of Southern, a Southern Subsidiary or his Employing Company,
under circumstances where such refusal would not amount to
Good Reason for voluntary termination of employment and such
employer agrees to adopt this Plan as it applies to such
Participant; or
(vi) elects to receive the benefits of any other
voluntary or involuntary severance, separation or outplacement
program, plan or agreement maintained by his Employing Company
in lieu of benefits under this Plan; provided however, that
the receipt of benefits under any retention plan or agreement
shall not be deemed to be the receipt of benefits under any
severance, separation or outplacement program for purposes of
this Plan.
3.2 Benefits. Upon the Employing Company's receipt of an effective
Waiver and Release, Participants shall be entitled to receive the following
benefits:
(a) Employee Outplacement Services. Each Participant shall be
eligible to participate in the Employee Outplacement Program, which
program shall not be less than six (6) months duration measured from
the Participant's Termination Date.
(b) Severance Benefit. Participants shall be paid in cash an
amount equal to two times the Participant's Annual Compensation, but
not in excess of the Capped Amount. For purposes of this Section
3.2(b), the Capped Amount shall be the amount otherwise payable under
this Section 3.2(b), reduced in such amount and to such extent that no
amount of the payment under this Section 3.2(b), plus all other
"parachute payments" under Code Section 280G, would constitute an
"excess parachute payment" under Code Section 280G, but only to the
extent that if the payment under this Section 3.2(b) were increased by
one additional dollar ($1.00), a portion of the payment under this
Section 3.2(b) would be an "excess parachute payment" under Code
Section 280G. The calculation of the Capped Amount and any other
determinations relating to the applicability of Code Section 280G (and
the rules and regulations promulgated thereunder) to the payments
contemplated by this Plan shall be made by the tax department of the
independent public accounting firm then responsible for preparing
Southern's consolidated federal income tax return, and such
determinations shall be binding upon the Participants, Southern and the
Employing Company.
(c) Welfare Benefit.
(i) Except as provided in Section 3.3 hereof, each
Participant shall be eligible to participate in the Employing
Company's Group Health Plan for a period of six (6) months for
each of the Participant's Years of Service, not to exceed a
period of five (5) years, beginning on the first day of the
first month following the Participant's Termination Date
unless otherwise specifically provided under such plan, upon
the Participant's payment of both the Employing Company's and
the Participant's premium under such plan. A Participant who
receives this extended medical coverage shall also be entitled
to elect coverage under the Group Health Plan for his
dependents who are participating in the Group Health Plan on
the Participant's Termination Date (and for such other
dependents as may be entitled to coverage under the provisions
of the Health Insurance Portability and Accountability Act of
1996) for the duration of the Participant's extended medical
coverage under this Section 3.2(c) to the extent such
dependents remain eligible for dependent coverage under the
terms of the Group Health Plan.
(ii) The extended medical coverage afforded to a
Participant pursuant to this Section 3.2(c) as well as the
premiums to be paid by the Participant in connection with such
coverage shall be determined in accordance with the terms of
the Group Health Plan and shall be subject to any changes in
the terms and conditions of the Group Health Plan as well as
any future increases in premiums under the Group Health Plan.
The premiums to be paid by the Participant in connection with
this extended coverage shall be due on the first day of each
month; provided, however, that if a Participant fails to pay
his premium within thirty (30) days of its due date, such
Participant's extended coverage shall be terminated.
(iii) Any Group Health Plan coverage provided under
this Section 3.2(c) shall be a part of and not in addition to
any COBRA Coverage which a Participant or his dependent may
elect. In the event that a Participant or his dependent
becomes eligible to be covered, by virtue of re-employment or
otherwise, by any employer-sponsored group health plan or is
eligible for coverage under any government-sponsored health
plan during the above period, coverage under the Employing
Company's Group Health Plan available to the Participant or
his dependent by virtue of the provisions of this Article 3
shall terminate, except as may otherwise be required by law,
and shall not be renewed. It shall be the duty of a
Participant to inform the Employing Company of his eligibility
to participate in any such health plan.
(iv) Except as otherwise provided in Section 3.3
hereof, regardless of whether a Participant elects the
extended coverage described in Section 3.2(a) hereof, the
Employing Company shall pay to each Participant a cash amount
equal to the Employing Company's and the Participant's cost of
premiums for two (2) years of coverage under the Group Health
Plan and Group Life Insurance Plan, as such Plans were in
effect as of the date of the Change in Control.
(d) Stock Option Vesting. The provisions of this Section
3.2(d) shall apply to any Participant who, as of the date of the Change
in Control, was a participant in the Omnibus Plan, the defined terms of
which are incorporated in this Section 3.2(d) by reference.
(i) Any of the Participant's Options and Stock
Appreciation Rights outstanding as of the Termination Date
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) of the Exchange Act, provided further that any
such actions not taken as a result of the rules under Section
16(b) of the Exchange Act shall be effected as of the first
date that such activity would no longer result in liability
under Section 16(b) of the Exchange Act.
(ii) The restrictions and deferral limitations
applicable to any of the Participant's Restricted Stock and
Restricted Stock Units as of the Termination Date shall lapse,
and such Restricted Stock and Restricted Stock Units shall
become free of all restrictions and limitations and become
fully vested and transferable to the full extent of the
original grant.
(e) Performance Pay Program. The provisions of this Section
3.2(e) shall apply to any Participant who, as of the date of the Change
in Control, was a participant in the Performance Pay Program, the
defined terms of which are incorporated in this Section 3.2(e) by
reference. Provided the Participant is not entitled to a Cash-Based
Award under the PPP, if the PPP is in place as of the Participant's
Termination Date and to the extent the Participant is entitled to
participate therein, the Participant shall be entitled to receive cash
in an amount equal to a prorated payout of his Cash-Based Award under
the PPP for the performance period in which the Termination Date shall
have occurred, at target performance under the PPP and prorated by the
number of months which have passed since the beginning of the
performance period until the Termination Date.
(f) Performance Dividend Program. The provisions of this
Section 3.2(f) shall apply to any Participant who, as of the date of
the Change in Control, was a participant in the Performance Dividend
Program, the defined terms of which are incorporated in this Section
3.2(f) by reference. Provided the Participant is not entitled to a
Cash-Based Award under the PDP, if the PDP is in place through the
Participant's Termination Date and to the extent the Participant is
entitled to participate therein, the Participant shall be entitled to
receive cash for each such Cash-Based Award under the PDP held as of
such date based on a payout percentage of 50% under the PDP for the
performance period in which the Termination Date shall have occurred,
and the annual dividend declared prior to the Termination Date.
(g) Other Short Term Incentives Under the Omnibus Plan. The
provisions of this Section 3.2(g) shall apply to any Participant who,
as of the date of the Change in Control is entitled to a Performance
Unit or Performance Share award under the Omnibus Plan. Provided the
Participant is not otherwise entitled to a Performance Unit/Share award
under the Omnibus Plan, the Participant shall be entitled to receive
cash in an amount equal to a prorated payout of the value of his
Performance Units and/or Performance Shares for the performance period
in which the Termination Date shall have occurred, at target
performance and prorated by the number of months which have passed
since the beginning of the performance period until the Termination
Date.
(h) Other Short-Term Incentive Plans. The provisions of this
Section 3.2(h) shall apply to any Participant who, as of the date of
the Change in Control, is a participant in any other "short term
incentive compensation plan" not otherwise previously referred to in
this Section 3.2. Provided the Participant is not otherwise entitled to
a plan payout under any change in control provisions of such plans, if
the "short term incentive compensation plan" is in place through the
Participant's Termination Date and to the extent the Participant is
entitled to participate therein, the Participant shall be entitled to
receive cash in an amount equal to his award under his respective
Employing Company's "short term incentive compensation plan" for the
annual performance period in which the Termination Date shall have
occurred, at the Participant's target performance level and prorated by
the number of months which have passed since the beginning of the
annual performance period until the Termination Date. For purposes of
this Section 3.2(h), the term "short term incentive compensation plan"
shall mean any incentive compensation plan or arrangement adopted in
writing by an Employing Company which provides for annual, recurring
compensatory bonuses to participants based upon articulated performance
criteria, and which have been identified by the Board of Directors and
listed on Exhibit B hereto, which may be amended from time to time to
reflect plan additions, terminations and amendments.
3.3 Coordination with Retiree Medical and Life Insurance Coverage.
Notwithstanding anything to the contrary above, any Participant who is otherwise
eligible to retire pursuant to the terms of the Pension Plan shall be deemed to
have retired for purposes of all employee benefit plans sponsored by the
Employing Company of which the Participant is a participant. A Participant who
is deemed to have retired in accordance with the preceding sentence shall not be
eligible to receive the benefits described in Section 3.2(c) hereof if, upon his
Termination Date, such Participant becomes eligible to receive the retiree
medical and life insurance coverage provided to certain retirees pursuant to the
terms of the Pension Plan, the Group Health Plan and the Group Life Insurance
Plan.
3.4 Payment of Benefits. The amounts due a Participant under Sections
3.2(b) and (c) hereof shall be payable in one (1) lump sum payment as soon as
administratively practicable within thirty (30) days of the later of the
following to occur: (a) the Participant's Termination Date, or (b) the tender to
the Employing Company by the Participant of an effective Waiver and Release in
the form of Exhibit A attached hereto and the expiration of any applicable
revocation period for such waiver. In the event of a dispute with respect to
liability or amount of any benefit due hereunder, an effective Waiver and
Release shall be tendered at the time of final resolution of any such dispute
when payment is tendered by the Employing Company.
3.5 Benefits in the Event of Death. In the event of the Participant's
death prior to the payment of all benefits due under this Article 3, the
Participant's estate shall be entitled to receive as due any amounts not yet
paid under this Article 3 upon the tender by the executor or administrator of
the estate of an effective Waiver and Release.
3.6 Legal Fees. In the event of a dispute between a Participant and his
Employing Company with regard to any amounts due hereunder, if any material
issue in such dispute is finally resolved in the Participant's favor, his
Employing Company shall reimburse the Participant's legal fees incurred with
respect to all issues in such dispute in an amount not to exceed thirty thousand
dollars ($30,000).
3.7 No Mitigation. A Participant who receives benefits under Section
3.2 of this Plan shall have no duty or obligation to seek other employment
following his Termination Date and, except as otherwise provided in Subsection
3.1(d) hereof, the amounts due a Participant hereunder shall not be reduced or
suspended if such Participant accepts such subsequent employment.
3.8 Non-qualified Retirement and Deferred Compensation Plans.
Subsequent to a Change in Control, any claims by a Participant for benefits
under any of the Company's non-qualified retirement or deferred compensation
plans shall be resolved through binding arbitration in accordance with the
procedures and provisions set forth in Article 5 hereof and if any material
issue in such dispute is finally resolved in the Participant's favor, the
Company shall reimburse the Participant's legal fees in the manner provided in
Section 3.6 hereof.
ARTICLE 4 - ADMINISTRATION
- ------------------- ----------------
4.1 Administrative Committee. The Administrative Committee shall be
responsible for the general administration of the Plan and may appoint other
persons or entities to perform or assist in the performance of any of its
duties, subject to its review and approval. The Administrative Committee shall
have the right to remove any such appointee from his position without cause upon
notice.
ARTICLE 5 - ARBITRATION
- ------------------- -------------
5.1 General. Any dispute, controversy or claim arising out of or
relating to the Company's obligations to pay severance benefits under this Plan,
or the breach thereof, shall be settled and resolved solely by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") except as otherwise provided herein. The arbitration shall
be the sole and exclusive forum for resolution of any such claim for severance
benefits and the arbitrators' award shall be final and binding. The provisions
of this Article 5 are not intended to apply to any other disputes, claims or
controversies arising out of or relating to a Participant's employment by an
Employing Company or the termination thereof.
5.2 Demand for Arbitration. Arbitration shall be initiated by serving a
written notice of demand for arbitration to the Participant, in the case of an
Employing Company, or to the Administrative Committee, in the case of a
Participant.
5.3 Law and Venue. The arbitrators shall apply the laws of the State of
Georgia, except to the extent pre-empted by federal law, excluding any law which
would require the use of the law of another state. The arbitration shall be held
in Atlanta, Georgia.
5.4 Appointment of Arbitrators. Arbitrators shall be appointed within
fifteen (15) business days following service of the demand for arbitration. The
number of arbitrators shall be three. One arbitrator shall be appointed by the
Participant, one arbitrator shall be appointed by the Employing Company, and the
two arbitrators shall appoint a third. If the arbitrators cannot agree on a
third arbitrator within thirty (30) business days after the service of demand
for arbitration, the third arbitrator shall be selected by the AAA.
5.5 Costs. The arbitration filing fee shall be paid by the Participant.
All other costs of arbitration shall be borne equally by the Participant and his
Employing Company, provided, however, that such Employing Company shall
reimburse such fees and costs in the event any material issue in such dispute is
finally resolved in the Participant's favor and the Participant is reimbursed
legal fees under Section 3.6 hereof.
5.6 Interim and Injunctive Relief. Nothing in this Article 5 is
intended to preclude, upon application of either party, any court having
jurisdiction from issuing and enforcing in any lawful manner such temporary
restraining orders, preliminary injunctions, and other interim measures of
relief as may be necessary to prevent harm to either party's interests or as
otherwise may be appropriate pending the conclusion of arbitration proceedings
pursuant to this Article 5 and nothing herein is intended to prevent any court
from entering and enforcing in any lawful manner such judgments for permanent
equitable relief as may be necessary to prevent harm to a party's interests or
as otherwise may be appropriate following the issuance of arbitral awards
pursuant to this Article 5.
ARTICLE 6 - MISCELLANEOUS
- ------------------- ---------------
6.1 Funding of Benefits. Unless the Board of Directors shall in its
discretion determine otherwise, the benefits payable to a Participant under the
Plan shall not be funded in any manner and shall be paid by the Employing
Companies out of their general assets, which assets are subject to the claims of
the Employing Companies' creditors.
6.2 Withholding. There shall be deducted from the payment of any
benefit due under the Plan the amount of any tax required by any governmental
authority to be withheld and paid over by the Employing Companies to such
governmental authority for the account of the Participant entitled to such
payment.
6.3 Assignment. No Participant or beneficiary shall have any rights to
sell, assign, transfer, encumber, or otherwise convey the right to receive the
payment of any benefit due hereunder, which payment and the rights thereto are
expressly declared to be nonassignable and nontransferable. Any attempt to do so
shall be null and void and of no effect.
6.4 Amendment and Termination. The Plan may be amended or terminated at
any time by the Board of Directors. Notwithstanding the above, no amendment or
termination of the Plan shall be effective if such amendment or termination is
made or is effective within six (6) months of a Preliminary Change in Control
unless such amendment or termination has the effect of increasing benefits to
Participants under the Plan or is determined by the Board of Directors to be
immaterial.
6.5 Pooling Accounting. Notwithstanding anything to the contrary
herein, if, but for any provision of this Plan, 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 Plan which would
otherwise cause the Change in Control transaction to be ineligible for Pooling
Accounting shall be void and ineffective in such a manner and to the extent that
by eliminating such provision or provisions of this Plan, Pooling Accounting
would be required for such Change in Control transaction.
IN WITNESS WHEREOF, this Southern Company Executive Change in Control
Severance Plan has been executed by the Company through its duly authorized
officers, this 16th day of May, 2003, to be effective as provided herein.
SOUTHERN COMPANY SERVICES, INC.
By: /s/Ellen N. Lindemann
Ellen Lindemann, Senior Vice President
Exhibit A
SOUTHERN COMPANY
EXECUTIVE CHANGE IN CONTROL
SEVERANCE PLAN
Waiver and Release
I understand that I am entitled to receive the Severance Benefits
described in Article 3 of the Southern Company Executive Change in Control
Severance Plan (the "Plan") if I execute this Waiver and Release ("Waiver"). I
understand that the benefits I have elected to receive under the Plan are in
excess of those I would have received from ________________________ (the
"Company") if I had not elected to participate in the Plan and sign this Waiver.
I recognize that I may have a claim against the Company under Title VII
of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act, the Rehabilitation Act of 1973, the Americans
with Disabilities Act or other federal, state and local laws.
In exchange for the benefits I elect to receive, I hereby irrevocably
waive and release all claims, of any kind whatsoever, whether known or unknown
in connection with any claim which I ever had, may have, or now have against The
Southern Company, Alabama Power Company, Georgia Power Company, Gulf Power
Company, Mississippi Power Company, Savannah Electric and Power Company,
Southern Communication Services, Inc. d/b/a Southern LINC, Southern Company
Services, Inc., Southern Company Energy Solutions, LLC, Southern Nuclear
Operating Company, Inc., Southern Telecom, Inc., Southern Company Management
Development, Inc., and other current or former subsidiaries of The Southern
Company and their past, present and future officers, directors, employees,
agents and attorneys. Nothing in this Waiver shall be construed to release
claims or causes of action under the Age Discrimination in Employment Act which
arise out of events occurring after the execution date of this Waiver.
In further exchange for the benefits I elect to receive, I understand
and agree that I will respect the proprietary and confidential nature of any
information I have obtained in the course of my service with the Company or any
subsidiary or affiliate of The Southern Company. I understand and agree that I
am obligated to keep confidential and not disclose the terms of this Waiver,
including, but not limited to, the benefits under this Plan, except to my
attorneys, financial advisors, or except where such disclosure is required by
law. However, nothing in this Waiver shall prohibit me from engaging in
protected activities under applicable law or from communicating, either
voluntary or otherwise, with any governmental agency concerning any potential
violation of the law.
In signing this Waiver, I am not releasing claims to any vested or
accrued benefits that I have under any workers' compensation laws or any
retirement plan or welfare benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, as amended, which is sponsored by or
adopted by the Company and/or any of its direct or indirect subsidiaries;
however, I understand and acknowledge that nothing herein is intended to or
shall be construed to require the Company to institute or continue in effect any
particular plan or benefit sponsored by the Company and the Company hereby
reserves the right to amend or terminate any of its benefit programs at any time
in accordance with the procedures set forth in such plans.
In signing this Waiver, I realize that I am waiving and releasing,
among other things, any claims to benefits under any and all bonus, severance,
workforce reduction, early retirement, outplacement, or any other similar type
plan sponsored by the Company except for programs specifically designed for
participants in the Plan.
Notwithstanding anything in this Waiver to the contrary, I understand
that the Company is not discouraging or prohibiting me from engaging in any
protected activity described in Section 211 of the Energy Reorganization Act.
I have been encouraged and advised in writing to seek advice from
anyone of my choosing regarding this Waiver, including my attorney, and my
accountant or tax advisor. Prior to signing this Waiver, I have been given the
opportunity and sufficient time to seek such advice, and I fully understand the
meaning and contents of this Waiver.
I understand that I may take up to forty-five (45) calendar days to
consider whether or not I desire to enter this Waiver. I was not coerced,
threatened or otherwise forced to sign this Waiver. I have made my choice to
sign this Waiver voluntarily and of my own free will.
I understand that I may revoke this Waiver at any time during the seven
(7) calendar day period after I sign and deliver this Waiver to the Company. If
I revoke this Waiver, I must do so in writing delivered to the Company. I
understand that this Waiver is not effective until the expiration of this seven
(7) calendar day revocation period. I understand that upon the expiration of
such seven (7) calendar day revocation period this entire Waiver will be binding
upon me and will be irrevocable.
I understand that by signing this Waiver I am giving up rights I may
have. I understand I do not have to sign this Waiver.
IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this
_________ day of _______________ , in the year ______.
Employee's signature
Employee's printed name
WITNESS
Acknowledged and Accepted by the Administrative Committee of the
Southern Company Executive Change in Control Severance Plan.
By:
-----------------------------------
Date:
-----------------------------------
Attachment to Exhibit A
TO: All Eligible Employees under the Southern Company Executive Change in
Control Severance Plan
FROM: _____________________
RE: ADEA Information Notice
DATE: _____________________
A severance plan known as the Southern Company Executive Change in
Control Severance Plan ("Plan") has been approved and established by The
Southern Company, its affiliates and its direct and indirect subsidiaries
(collectively the "Company"). You are eligible to participate in the Plan
subject to the terms of the Plan. In accordance with the Age Discrimination in
Employment Act ("ADEA"), the Company is providing you the following information
pertaining to eligibility and participation in the Plan. This information, in
conjunction with the information provided in the Plan, should allow you to make
an informed decision concerning your options under the Plan.
The purpose of the Plan is to provide benefits to certain key employees of The
Southern Company and certain subsidiaries of The Southern Company and its
subsidiaries ("Employing Companies") whose employment is terminated subsequent
to a change in control of The Southern Company or their respective Employing
Company. You are eligible to participate in the Plan because your employment has
been terminated under the terms of the Plan.
All eligible employees may receive severance benefits under the Plan by signing
a Waiver and Release no later than 45 calendar days from the date it is
received. The Waiver and Release will remain revocable by you for a seven day
period after you sign it.
Attached is a list sorted by job title and age of each employee eligible to
participate in the Plan as well as a list of the ages of all employees in the
same job classification who are not eligible to participate in the Plan.
In furtherance of you making an informed decision, the Company urges
you to seek a financial advisor, legal counsel and a qualified tax advisor to
assist you in fully understanding your rights and benefits under the plan and
the Waiver and Release that you will be required to sign to receive severance
benefits under the Plan.
If you have any questions or need additional information, please call
me at _______________.
Sincerely,
- ----------------------
[Name]
- ----------------------
[Title]
ADEA INFORMATION NOTICE
- ------------------------------------- ---------------------------------- ---------------------------------------------
Department Job Title, Classification Age of
or Category of Eligible Employees Eligible Employees
- ------------------------------------- ---------------------------------- ---------------------------------------------
- ------------------------------------- ---------------------------------- ---------------------------------------------
- ------------------------------------- ---------------------------------- ---------------------------------------------
- ------------------------------------- ---------------------------------- ---------------------------------------------
[List department of each eligible [List job classification, title [List corresponding age of each
employee] or category of all eligible eligible employee]
employees]
- ------------------------------------- ---------------------------------- ---------------------------------------------
- ------------------------------------- ---------------------------------- ---------------------------------------------
Department Job Title, Classification Age of
or Category of Ineligible Ineligible Employees
Employees
- ------------------------------------- ---------------------------------- ---------------------------------------------
- ------------------------------------- ---------------------------------- ---------------------------------------------
- ------------------------------------- ---------------------------------- ---------------------------------------------
- ------------------------------------- ---------------------------------- ---------------------------------------------
[List department of each eligible [List job classification, title [List corresponding age of each
employee] or category of all eligible eligible employee]
employees]
- ------------------------------------- ---------------------------------- ---------------------------------------------
Exhibit B
SOUTHERN COMPANY
EXECUTIVE CHANGE IN CONTROL
SEVERANCE PLAN
Short Term Incentive Compensation Plans