Exhibit 10(a)5
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT ("Agreement")
made and entered into by and between The Southern Company ("Southern"), Alabama
Power Company (the "Company") and Mr. Charles Douglas McCrary ("Mr. McCrary")
(hereinafter collectively referred to as the "Parties") is effective June 1,
2004. This Agreement amends and restates the Amended and Restated Change in
Control Agreement entered into by Southern, Southern Company Services, Inc. and
Mr. McCrary effective July 10, 2000.
WITNESSETH:
WHEREAS, Mr. McCrary is the President and Chief Executive Officer of
the Company;
WHEREAS, the Company wishes to provide to Mr. McCrary certain severance
benefits under certain circumstances following a change in control (as defined
herein) of Southern or the Company;
NOW, THEREFORE, in consideration of the premises, and the agreements of
the Parties set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
(a) "Annual Compensation" shall mean Mr. McCrary's highest
annual base salary rate for the twelve (12) month period immediately
preceding the date of the Change in Control plus target bonus.
(b) "Beneficial Ownership" shall mean beneficial ownership
within the meaning of Rule 13d-3 promulgated under the Exchange Act.
(c) "Board" shall mean the board of directors of the Company.
(d) "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.
(e) "Change in Control" shall mean 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
Paragraph l.(e)(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 a Group composed
exclusively of employees of Southern, or any Southern
Subsidiary;
(F) any acquisition by Mr. McCrary or any
Group of which Mr. McCrary is a party; or
(G) any Business Combination which would not
otherwise constitute a change in control because of
the application of clauses (A), (B) and (C) of
Paragraph 1(e )(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;
(iii) Consummation of a Business Combination,
provided, however, that such a Business Combination shall not
constitute a Change in Control if all three (3) of the
following 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
employee benefit plan (or related trust) of Southern,
any Southern Subsidiary or Surviving Company, Mr.
McCrary, any Group of which Mr. McCrary is a party,
any Group composed exclusively of Company employees,
any qualified pension plan (or related trust) or any
publicly held mutual fund) 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.
(iv) 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 the
Company; provided, however, that for purposes of this
Paragraph l.(e)(iv), any acquisition by Mr. McCrary, any Group
composed exclusively of employees of the Company, any Group of
which Mr. McCrary is a party, any qualified pension plan (or
related trust), any publicly held mutual fund, any employee
benefit plan (or related trust) sponsored or maintained by
Southern or any Southern Subsidiary shall not constitute a
Change in Control;
(v) Consummation of a reorganization, merger or
consolidation of the Company (an "Employing Company Business
Combination"), in each case, unless, following such Employing
Company Business Combination, Southern Controls the
corporation or other entity surviving or resulting from such
Employing Company Business Combination; or
(vi) Consummation of the sale or other disposition of
all or substantially all of the assets of the Company to a
corporation or other entity which Southern does not Control.
Notwithstanding the foregoing, in no event shall "Change in Control"
mean an initial public offering or a spin-off of the Company.
(f) "COBRA Coverage" shall mean any continuation coverage to
which Mr. McCrary or his dependents may be entitled pursuant to Code
Section 4980B.
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(h) "Company" shall mean Alabama Company, its successors and
assigns.
(i) "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.
(j) "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.
(k) "Effective Date" shall mean the date of execution of this
Agreement.
(l) "Employee Outplacement Program" shall mean the program
established by the Company from time to time for the purpose of
assisting participants covered by the plan in finding employment
outside of the Company which provides for the following services:
(i) self-assessment, career decision and goal
setting;
(ii) job market research and job sources; (iii)
networking and interviewing skills;
(iv) planning and implementation strategy;
(v) resume writing, job hunting methods and salary
negotiation; and
(vi) office support and job search resources.
(m) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(n) "Good Reason" shall mean, without Mr. McCrary's express
written consent, after written notice to the Board, and after a thirty
(30) day opportunity for the Board to cure, the continuing occurrence
of any of the following events:
(i) Inconsistent Duties. A meaningful and detrimental
alteration in Mr. McCrary's position or in the nature or
status of his responsibilities from those in effect
immediately prior to the Change in Control;
(ii) Reduced Salary. A reduction of five percent (5%)
or more by the Company in either of the following: (i) Mr.
McCrary's annual base salary rate as in effect immediately
prior to the Change in Control (except for a less than ten
percent (10%), across-the-board annual base salary rate
reduction similarly affecting at least ninety-five percent
(95%) of the Executive Employees of the Company); or (ii) the
sum of Mr. McCrary's annual base salary rate plus target bonus
under the PPP (except for a less than ten percent (10%),
across-the-board reduction of annual base salary rate plus
target bonus under the PPP similarly affecting at least
ninety-five percent (95%) of the Executive Employees of the
Company);
(iii) Pension and Compensation Plans. The failure by
the Company to continue in effect any pension or compensation
plan or agreement in which Mr. McCrary participates or is a
party as of the date of the Change in Control or the
elimination of Mr. McCrary's participation therein, (except
for across-the-board plan changes or terminations similarly
affecting at least ninety-five percent (95%) of the Executive
Employees of the Company). For purposes of this Paragraph
l.(n), a "pension plan or agreement" shall mean any written
arrangement executed by an authorized officer of the Company
which provides for payments upon retirement; and a
"compensation plan or arrangement" shall mean any written
arrangement executed by an authorized officer of the Company
which provides for periodic, non-discretionary compensatory
payments in the nature of bonuses.
(iv) Relocation. A change in Mr. McCrary's work
location to a location more than fifty (50) miles from the
office where Mr. McCrary is located at the time of the Change
in Control, unless such new work location is within fifty (50)
miles from Mr. McCrary's principal place of residence at the
time of the Change in Control. The acceptance, if any, by Mr.
McCrary of employment by the Company at a work location which
is outside the fifty mile radius set forth in this Paragraph
l.(n)(iv) shall not be a waiver of Mr. McCrary's right to
refuse subsequent transfer by the Company to a location which
is more than fifty (50) miles from Mr. McCrary'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
(v) Benefits and Perquisites. The taking of any
action by the Company which would directly or indirectly
materially reduce the benefits enjoyed by Mr. McCrary under
the Company's retirement, life insurance, medical, health and
accident, disability, deferred compensation or savings plans
in which Mr. McCrary was participating immediately prior to
the Change in Control; or the failure by the Company to
provide Mr. McCrary with the number of paid vacation days to
which Mr. McCrary is entitled on the basis of years of service
with the Company in accordance with the Company's normal
vacation policy in effect immediately prior to the Change in
Control (except for across-the-board plan or vacation policy
changes or plan terminations similarly affecting at least
ninety-five percent (95%) of the Executive Employees of the
Company).
(vi) For purposes of this Paragraph l.(n), the term
"Executive Employee" shall mean those employees of the Company
of Grade Level 10 or above.
(o) "Group" shall have the meaning set forth in Section 14(d)
of the Exchange Act.
(p) "Group Health Plan" shall mean the group health plan
covering Mr. McCrary, as such plan may be amended from time to time.
(q) "Group Life Insurance Plan" shall mean the group life
insurance program covering Mr. McCrary, as such plan may be amended
from time to time.
(r) "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 October 19, 1998
whose initial assumption of office occurs as a result of an actual or
threatened election contest (within the meaning of Rule 14a-11 of the
Regulations promulgated under the Exchange Act) with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Southern Board shall be a member of the Incumbent Board.
(s) "Month of Service" shall mean any calendar month during
which Mr. McCrary has worked at least one (1) hour or was on approved
leave of absence while in the employ of the Company or any affiliate or
subsidiary of Southern.
(t) "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.
(u) "Pension Plan" shall mean The Southern Company Pension
Plan, as such plan may be amended from time to time.
(v) "Performance Dividend Program" shall mean the Performance
Dividend Program under the Omnibus Plan or any replacement thereto, as
such plans may be amended from time to time.
(w) "Person" shall mean any individual, entity or group within
the meaning of Section 13(d)(3) or 14(d)(2) of Act.
(x) "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.
(y) "Southern" shall mean The Southern Company, its successors
and assigns.
(z) "Southern Board" shall mean the board of directors of
Southern.
(aa) "Southern Subsidiary" shall mean any corporation or other
entity Controlled by Southern.
(bb) "Termination for Cause" or "Cause" shall mean the
termination of Mr. McCrary's employment by the Company upon the
occurrence of any of the following:
(i) The willful and continued failure by Mr. McCrary
substantially to perform his duties with the Company (other
than any such failure resulting from Mr. McCrary's Total
Disability or from Mr. McCrary's retirement or any such actual
or anticipated failure resulting from termination by Mr.
McCrary 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
(ii) The willful engaging by Mr. McCrary in conduct
that is demonstrably and materially injurious to the Company,
monetarily or otherwise, including, but not limited to any of
the following:
(A) any willful act involving fraud or
dishonesty in the course of Mr. McCrary's employment
by the Company;
(B) the willful carrying out of any activity
or the making of any statement which would materially
prejudice or impair the good name and standing of the
Company, Southern or any Southern Subsidiary or would
bring the Company, Southern or any Southern
Subsidiary into contempt, ridicule or would
reasonably shock or offend any community in which the
Company, Southern or such Southern Subsidiary is
located;
(C) attendance 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;
(D) violation of the 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 Company's safety officer;
(E) assault or other act of violence against
any person during the course of employment; or
(F) indictment of any felony or any
misdemeanor involving moral turpitude.
No act or failure to act by Mr. McCrary shall be deemed "willful"
unless done, or omitted to be done, by Mr. McCrary not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company.
Notwithstanding the foregoing, Mr. McCrary 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 not less than
three quarters of the entire membership of the Southern Board at a meeting of
the Southern Board called and held for such purpose (after reasonable notice to
Mr. McCrary 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, Mr. McCrary was guilty of conduct set forth above in clause (i)
or (ii) of this Paragraph l.(bb) and specifying the particulars thereof in
detail.
(cc) "Termination Date" shall mean the date on which Mr.
McCrary's employment with the Company is terminated; provided, however,
that solely for purposes of Paragraph 2.(c) hereof, the Termination
Date shall be the effective date of his retirement pursuant to the
terms of the Pension Plan.
(dd) "Total Disability" shall mean Mr. McCrary's total
disability within the meaning of the Pension Plan.
(ee) "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.
(ff) "Waiver and Release" shall mean the Waiver and Release
attached hereto as Exhibit A. (gg) "Year of Service" shall mean Mr.
McCrary'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 Mr. McCrary has a break in his
service with the Company, he will receive credit under this Agreement
for service prior to the break in service only if the break in service
is less than five years.
2. Severance Benefits.
(a) Eligibility. Except as otherwise provided in this Paragraph 2.(a),
if Mr. McCrary's employment is involuntarily terminated by the Company at any
time during the two year period following a Change in Control for reasons other
than Cause, or if Mr. McCrary voluntarily terminates his employment with the
Company for Good Reason at any time during the two year period following a
Change in Control, Mr. McCrary shall be entitled to receive the benefits
described in this Agreement upon the Company's receipt of an effective Waiver
and Release. Notwithstanding anything to the contrary herein, Mr. McCrary shall
not be eligible to receive benefits under this Agreement if Mr. McCrary:
(i) voluntarily terminates his employment with the Company for
other than Good Reason;
(ii) has his employment terminated by the Company for Cause;
(iii) accepts the transfer of his employment to Southern, any
Southern Subsidiary or any employer that succeeds to all or
substantially all of the assets of the Company, Southern or any
Southern Subsidiary;
(iv) refuses an offer of continued employment with the
Company, any Southern Subsidiary, or any employer that succeeds to all
or substantially all of the assets of the Company, Southern, or any
Southern Subsidiary under circumstances where such refusal would not
amount to Good Reason for voluntary termination of employment; or
(v) elects to receive the benefits of any other voluntary or
involuntary severance or separation program, plan or agreement
maintained by the Company in lieu of benefits under this Agreement;
provided however, that the receipt of benefits under the terms of any
retention plan or agreement shall not be deemed to be the receipt of
severance or separation benefits for purposes of this Agreement.
(b) Severance Benefits. If Mr. McCrary meets the eligibility
requirements of Paragraph 2.(a) hereof, he shall be entitled to a cash severance
benefit in an amount equal to three times his 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 Company shall pay to Mr. McCrary 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 the hospital insurance tax under Code
Section 31O1(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
Mr. McCrary under Code Section 280G exceeds three (3) times Mr. McCrary'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 Mr. McCrary's Base Amount,
less all other "parachute payments" (as such term is defined under Code Section
280G) received by Mr. McCrary, 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 Paragraph 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 parties hereto.
(c) Welfare Benefits. If Mr. McCrary meets the eligibility requirements
of Paragraph 2.(a) hereof and is not otherwise eligible to receive retiree
medical and life insurance benefits provided to certain retirees pursuant to the
terms of the Pension Plan,
the Group Health Plan and the Group Life Insurance Plan, he shall be entitled to
the benefits set forth in this Paragraph 2.( c).
(i) Mr. McCrary shall be eligible to participate in the
Company's Group Health Plan, upon payment of both the Company's and his
monthly premium under such plan, for a period of six (6) months for
each of Mr. McCrary's Years of Service, not to exceed five (5) years.
If Mr. McCrary elects to receive this extended medical coverage, he
shall also be entitled to elect coverage under the Group Health Plan
for his dependents who were participating in the Group Health Plan on
Mr. McCrary'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 Mr.
McCrary's extended medical coverage under this Paragraph 2.(c)(i) to
the extent such dependents remain eligible for dependent coverage under
the terms of the Group Health Plan.
(A) The extended medical coverage afforded to Mr.
McCrary pursuant to Paragraph 2. (c)(i), as well as the
premiums to be paid by Mr. McCrary 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 Mr. McCrary in connection with this
extended coverage shall be due on the first day of each month;
provided, however,
that if he fails to pay his premium within thirty (30) days of
its due date, such extended coverage shall be terminated.
(B) Any Group Health Plan coverage provided under
Paragraph 2.(c)(i) shall be a part of and not in addition to
any COBRA Coverage which Mr. McCrary or his dependents may
elect. In the event that Mr. McCrary or his dependents become
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 Company's
Group Health Plan available to Mr. McCrary or his dependents
by virtue of the provisions of Paragraph 2.
(c)(i) shall terminate, except as may otherwise be required by
law, and shall not be renewed. (ii) Mr. McCrary shall be entitled to
receive cash in an amount equal to the Company's and Mr. McCrary's cost
of premiums for three (3) years of coverage under the Group Health Plan
and Group Life Insurance Plan in accordance with the terms of such
plans as of the date of the Change in Control.
(d) Incentive Plans. If Mr. McCrary meets the eligibility
requirements of Paragraph 2. (a) hereof he shall be entitled to the
following benefits under the Omnibus Plan:
(i) Stock Options.
(A) Any of Mr. McCrary's Options and Stock
Appreciation Rights under the Omnibus Plan (the defined terms
of which are incorporated in this Paragraph 2.(d)(i) by
reference) which are outstanding as of the Termination Date
and which are not then exercisable and vested, shall become
fully exercisable and vested to the full extent of the
original grant; provided, that in the case of a Stock
Appreciation Right, if Mr. McCrary 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 Mr. McCrary 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.
(B) The restrictions and deferral limitations
applicable to any of Mr. McCrary'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.
(ii) Performance Pay Program. Provided Mr. McCrary is not
entitled to a Cash-Based Award under the PPP, (the defined terms of
which are incorporated in this Paragraph 2.(d)(ii) by reference), if
the PPP is in place through Mr. McCrary's Termination Date and to the
extent Mr. McCrary is entitled to participate therein, Mr. McCrary
shall be entitled to receive cash in an amount equal to a prorated
payout of his Cash-Based Awards 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.
(iii) Performance Dividend Program. Provided Mr. McCrary is
not entitled to a Cash-Based Award under the Performance Dividend
Program (the defined terms of which are incorporated in this Paragraph
2.(d)(iii) by reference), if the Performance Dividend Program is in
place through Mr. McCrary's Termination Date and to the extent Mr.
McCrary is entitled to participate therein, Mr. McCrary shall be
entitled to receive cash for each such Cash-Based Award under the
Performance Dividend Program held by Mr. McCrary on his Termination
Date, based on actual performance under the Performance Dividend
Program determined as of the most recently completed calendar quarter
of the performance period in which the Termination Date shall have
occurred, and the annual dividend declared prior to the Termination
Date.
(iv) Other Short Term Incentives Under the Omnibus Plan.
Provided Mr. McCrary is not entitled to a Performance Unit/Share award
under the Omnibus Plan (the defined terms of which are incorporated in
this Paragraph 2.(d)(iv) by reference), Mr. McCrary 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.
(v) Other Short Term Incentive Plans. The provisions of this
Paragraph 2.(d)(v) shall apply if and to the extent that Mr. McCrary is
a participant in any other "short term compensation plan" not otherwise
previously referred to in this Paragraph 2.(d). Provided Mr. McCrary is
not otherwise entitled to a plan payout under any change of control
provisions of such plans, if the "short term compensation plan" is in
place as of the Termination Date and to the extent Mr. McCrary is
entitled to participate therein, Mr. McCrary shall receive cash in an
amount equal to his award under the Company's "short term incentive
plan" for the annual performance period in which the Termination Date
shall have occurred, at Mr. McCrary's target performance level and
prorated by the number of months which have passed since the beginning
of the annual performance period until his Termination Date. For
purposes of this Paragraph 2.(d)(v) the term "short term incentive
compensation plan" shall mean any incentive compensation plan or
arrangement adopted in writing by the Company which provides for
annual, recurring compensatory bonuses based upon articulated
performance criteria.
(e) Payment of Benefits. Any amounts due under this Agreement shall be
paid in one (1) lump sum payment as soon as administratively practicable
following the later of: (i) Mr. McCrary's Termination Date, or (ii) upon Mr.
McCrary's tender of an effective Waiver and Release to the Company 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 Company.
(f) Benefits in the Event of Death. In the event of Mr. McCrary's death
prior to the payment of all amounts due under this Agreement, Mr. McCrary's
estate shall be entitled to receive as due any amounts not yet paid under this
Agreement upon the tender by the executor or administrator of the estate of an
effective Waiver and Release.
(g) Legal Fees. In the event of a dispute between Mr. McCrary and the
Company with regard to any amounts due hereunder, if any material issue in such
dispute is finally resolved in Mr. McCrary's favor, the Company shall reimburse
Mr. McCrary's legal fees incurred with respect to all issues in such dispute in
an amount not to exceed fifty thousand dollars ($50,000).
(h) Employee Outplacement Services. Mr. McCrary shall be eligible to
participate in the Employee Outplacement Program, which program shall not be
less than six (6) months duration measured from Mr. McCrary's Termination Date.
(i) Non-qualified Retirement and Deferred Compensation Plans. The
Parties agree that subsequent to a Change in Control, any claims by Mr. McCrary
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 provisions and procedures set forth in Paragraph 5 hereof and if any
material issue in such dispute is finally resolved in Mr. McCrary's favor, the
Company shall reimburse Mr. McCrary's legal fees in the manner provided in
Paragraph 2.(g) hereof.
3. Transfer of Employment. In the event that Mr. McCrary's employment
by the Company is terminated during the two year period following a Change in
Control and Mr. McCrary accepts employment by Southern, a Southern Subsidiary,
or any employer that succeeds to all or substantially all of the assets of the
Company, Southern or any Southern Subsidiary, the Company shall assign this
Agreement to Southern, such Southern Subsidiary, or successor employer, Southern
shall accept such assignment or cause such Southern Subsidiary or successor
employer to accept such assignment, and such assignee shall become the "Company"
for all purposes hereunder.
4. No Mitigation. If Mr. McCrary is otherwise eligible to receive
benefits under Paragraph 2 of this Agreement, he shall have no duty or
obligation to seek other employment following his Termination Date and, except
as otherwise provided in Paragraph 2.(a)(iii) hereof, the amounts due Mr.
McCrary hereunder shall not be reduced or suspended if Mr. McCrary accepts such
subsequent employment.
5. Arbitration.
(a) Any dispute, controversy or claim arising out of or relating to the
Company's obligations to pay severance benefits under this Agreement, 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 Paragraph 5 are not intended to apply to any other disputes, claims or
controversies arising out of or relating to Mr. McCrary's employment by the
Company or the termination thereof.
(b) Arbitration shall be initiated by serving a written notice of
demand for arbitration to Mr. McCrary, in the case of the Company, or to the
Southern Board, in the case of Mr. McCrary.
(c) The arbitration shall be held in Atlanta, Georgia. The arbitrators
shall apply the law of the State of Georgia, to the extent not preempted by
federal law, excluding any law which would require the application of the law of
another state.
(d) The parties shall appoint arbitrators 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 Mr. McCrary, one arbitrator
shall be appointed by the 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.
(e) The arbitration filing fee shall be paid by Mr. McCrary. All other
costs of arbitration shall be borne equally by Mr. McCrary and the Company,
provided, however, that the Company shall reimburse such fees and costs in the
event any material issue in such dispute is finally resolved in Mr. McCrary's
favor and Mr. McCrary is reimbursed legal fees under Paragraph 2.(g) hereof.
(f) The parties agree that they will faithfully observe the rules that
govern any arbitration between them, they will abide by and perform any award
rendered by the arbitrators in any such arbitration, including any award of
injunctive relief, and a judgment of a court having jurisdiction may be entered
upon an award.
(g) The parties agree that nothing in this Paragraph 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 a party's interests or as otherwise may be
appropriate pending the conclusion of arbitration proceedings pursuant to this
Agreement; regardless of whether an arbitration proceeding under this Paragraph
5 has begun. The parties further agree that nothing herein shall 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 Paragraph 5.
6. Miscellaneous.
(a) Funding of Benefits. Unless the Board in its discretion shall
determine otherwise, the benefits payable to Mr. McCrary under this Agreement
shall not be funded in any manner and shall be paid by the Company out of its
general assets, which assets are subject to the claims of the Company's
creditors.
(b) Withholding. There shall be deducted from the payment of any
benefit due under this Agreement the amount of any tax required by any
governmental authority to be withheld and paid over by the Company to such
governmental authority for the account of Mr. McCrary.
(c) Assignment. Mr. McCrary shall have no 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.
(d) Amendment and Termination. The Agreement may be amended or
terminated only by a writing executed by the parties.
(e) Construction. This Agreement 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, the parties hereto have executed this Agreement
this 17th day of June, 2004.
THE SOUTHERN COMPANY
By: /s/Ellen N. Lindemann
ALABAMA POWER COMPANY
By: /s/Ellen N. Lindemann
MR. MCCRARY
/s/Charles D. McCrary
Charles Douglas McCrary
Exhibit A
CHANGE IN CONTROL AGREEMENT
Waiver and Release
The attached Waiver and Release is to be given to Mr. Charles Douglas
McCrary upon the occurrence of an event that triggers eligibility for severance
benefits under the Change in Control Agreement, as described in Paragraph 2(a)
of such agreement.
CHANGE IN CONTROL AGREEMENT
Waiver and Release
I, Charles Douglas McCrary, understand that I am entitled to receive
the severance benefits described in Section 2 of the Change in Control Agreement
(the "Agreement") if I execute this Waiver and Release ("Waiver"). I understand
that the benefits I will receive under the Agreement are in excess of those I
would have received from The Southern Company and Alabama Power Company
(collectively, the "Company") if I had not elected to 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 Energy Reorganization Act of 1974, as amended,
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 Communications Services, Inc., Southern Company Energy Solutions, LLC,
Southern Company Services, Inc., Southern Nuclear Operating Company, Inc. and
other direct or indirect 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 or the Energy Reorganization Act of
1974, as amended, 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. 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 benefits that I am
already entitled to under any workers' compensation laws or under 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.
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 twenty-one (21) 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.
IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this
____ day of ________, in the year ____.
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Charles Douglas McCrary
Sworn to and subscribed to me this
___day of _________, ____
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Notary Public
My Commission Expires:
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(Notary Seal)
Acknowledged and Accepted by the Company, as defined in the Waiver.
By:
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Date:
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