Exhibit 10(a)3
SOUTHERN COMPANY
SENIOR 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
SENIOR EXECUTIVE CHANGE IN CONTROL
SEVERANCE PLAN
ARTICLE I - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption of Plan. Southern Company Services, Inc. hereby adopts
this Southern Company Senior Executive Change in Control Severance Plan. This
Plan is originally 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 executive employees of the Employing Companies, whose employment is
terminated subsequent to a change in control of Southern or their respective
Employing Company.
ARTICLE II - DEFINITIONS
2.1 "Annual Compensation" shall mean a Participant's highest annual
base salary rate for the twelve (12) month period immediately preceding the date
of the Change in Control plus target bonus.
2.2 "Beneficial Ownership" shall mean beneficial ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act.
2.3 "Board of Directors" shall mean the board of directors of the
Company.
2.4 "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.
2.5 "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 2.5(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 2.5(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 2.5(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.
2.6 "COBRA Coverage" shall mean any continuation coverage to which a
Participant or his dependents may be entitled pursuant to Code Section 4980B.
2.7 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.8 "Company" shall mean Southern Company Services, Inc., its
successors and assigns.
2.9 "Compensation Committee" shall mean the Compensation and Management
Succession Committee of the Southern Board.
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 the (a) Chief Executive Officer of Southern,
(b) Chief Financial Officer of Southern, (c) General Counsel of Southern, (d)
External Affairs Executive Vice President of Southern, (e) Chief Production
Officer of Southern, (f) Chief Executive Officer of Alabama Power Company, (g)
Chief Executive Officer of Georgia Power Company, (h) Chief Executive Officer of
Gulf Power Company, (i) Chief Executive Officer of Mississippi Power Company,
(j) Chief Executive Officer of Southern Communications Services, Inc., (k) Chief
Executive Officer of Savannah Electric and Power Company, (l) Chief Executive
Officer of Southern Nuclear Operating Company, Inc., (m) Chief Executive Officer
of Southern Company Generation and Energy Marketing, (n) Executive Vice
President of Southern Nuclear Operating Company, Inc., and (o) any other
employee that the Compensation Committee has designated as eligible to
participate in the Plan based upon the recommendation of the Chief Executive
Officer of Southern; provided, however, that no employee shall participate in
the Plan (x) if the Compensation Committee has designated the employee as
ineligible to participate in the Plan based upon the recommendation of the Chief
Executive Officer of Southern; or (y) if, prior to a change in control, the
employee has entered into a change in control agreement. The Compensation
Committee 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. An Employee shall immediately cease to be
an Employee who is eligible under the Plan upon his transfer from one of the
named positions set forth above or from a position designated under subsection
(15) above unless the Compensation Committee has designated (upon the
recommendation of the Chief Executive Officer of Southern) the Employee as
eligible under his new position.
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
corporation or other entity controlled by Southern, 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 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 as in effect immediately prior to 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 Executive 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 (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 Executive
Employees of the Employing Company);
(c) Pension and Compensation Plans. The failure by the
Employing Company to continue in effect any "pension plan or
arrangement" or 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 Executive Employees of the
Employing Company). For purposes of this Section 2.17(c), a "pension
plan or agreement" shall mean any written arrangement executed by an
authorized officer of the Employing Company which provides for payments
upon retirement. 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 Executive Employees of the Employing Company).
(f) For purposes of this Section 2.17, the term "Executive
Employee" shall mean those employees of an Employing Company of Grade
Level 10 or above whether or not they participate in the Plan.
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 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 "Plan" shall mean the Southern Company Senior Executive Change in
Control Severance Plan.
2.30 "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.
2.31 "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 (as defined
in the Southern Company Change in Control Benefit Plan Determination Policy).
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 Compensation 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
Southern Board, which demand specifically identifies the manner in
which the Southern Board 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 Southern Board 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 Southern Board), finding that, in the good faith
opinion of the Southern Board, 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 the Participant's
employment with the Employing Company is terminated; 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 III - SEVERANCE BENEFITS
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 three times the Participant's Annual Compensation (the
"Severance Amount"). If any portion of the Severance Amount constitutes
an "excess parachute payment" (as such term is defined under Code
Section 280G ("Excess Parachute Payment")), the Employing Company shall
pay to the Participant an additional amount calculated by determining
the amount of tax under Code Section 4999 that he otherwise would have
paid on any Excess Parachute Payment with respect to the Change in
Control and dividing such amount by a decimal determined by adding the
tax rate under Code Section 4999 ("Excise Tax"), the hospital insurance
tax under Code Section 3101(b) ("HI Tax") and federal and state income
tax measured at the highest marginal rates ("Income Tax") and
subtracting such result from the number one (1) (the "280G Gross-up");
provided, however, that no 280G Gross-up shall be paid unless the
Severance Amount plus all other "parachute payments" to the Participant
under Code Section 280G exceeds three (3) times the Participant's "base
amount" (as such term is defined under Code Section 280G ("Base
Amount")) by ten percent (10%) or more; provided further, that if no
280G Gross-up is paid, the Severance Amount shall be capped at three
(3) times the Participant's Base Amount, less all other "parachute
payments" (as such term is defined under Code Section 280G) received by
the Participant, less one dollar (the "Capped Amount"), if the Capped
Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would
have been the Severance Amount, reduced by HI Tax, Income Tax and
Excise Tax.
For purposes of this Section 3.2(b), whether any amount would
constitute an Excess Parachute Payment and any other calculations of
tax, e.g., Excise Tax, HI Tax, Income Tax, etc., or other amounts,
e.g., Base Amount, Capped Amount, etc., shall be determined by the tax
department of the independent public accounting firm then responsible
for preparing Southern's consolidated federal income tax return, and
such calculations or 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 three (3) 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 fifty thousand
dollars ($50,000).
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 IV - ADMINISTRATION
4.1 Administrative Duties. Except as otherwise provided herein, the
Compensation 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
Compensation Committee shall have the right to remove any such appointee from
his position without cause upon notice.
ARTICLE V - 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 Compensation 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 VI - 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; provided, however, that any material
amendment or termination of the Plan shall not be effective unless approved by
the Compensation Committee upon a recommendation by the Chief Executive Officer
of Southern. 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
has the effect of increasing benefits to Participants under the Plan or is
determined by the Board of Directors to be immaterial.
6.5 Construction. The Plan shall be construed in accordance with and
governed by the laws of the State of Georgia, to the extent not preempted by
federal law, disregarding any provision of law which would require the
application of the law of another state.
IN WITNESS WHEREOF, this Southern Company Senior 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 SENIOR 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 Senior 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 the Civil
Rights Act of 1964 and 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, L.L.C., Southern Nuclear
Operating Company, Inc., Southern Telecom, Inc., Southern Company Management
Development, Inc., and other direct or indirect (current and 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
Acknowledged and Accepted by the Compensation Committee of the Southern
Company Senior Executive Change in Control Severance Plan.
By:
-----------------------------------
Date:
-----------------------------------
Attachment to Exhibit A
TO: All Eligible Employees under the Southern Company Senior Executive
Change in Control Severance Plan
FROM: _____________________
RE: ADEA Information Notice
DATE: _____________________
A severance plan known as the Southern Company Senior 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 executive
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 or category [List corresponding age of each
employee of all eligible employees] eligible employee]
- ---------------------------------- --------------------------------------------- -------------------------------------
- ---------------------------------- --------------------------------------------- -------------------------------------
Department Job Title, Classification Age of
or Category of Ineligible Employees Ineligible Employees
- ---------------------------------- --------------------------------------------- -------------------------------------
- ---------------------------------- --------------------------------------------- -------------------------------------
- ---------------------------------- --------------------------------------------- -------------------------------------
- ---------------------------------- --------------------------------------------- -------------------------------------
List department of each [List job classification, title or category [List corresponding age of each
ineligible employee of all ineligible employees] ineligible employee]
- ---------------------------------- --------------------------------------------- -------------------------------------
Exhibit B
SOUTHERN COMPANY
EXECUTIVE CHANGE IN CONTROL
SEVERANCE PLAN
Short Term Incentive Compensation Plans