EXHIBIT 10(a)78
SOUTHERN COMPANY
CHANGE IN CONTROL
SEVERANCE PLAN
Troutman Sanders LLP
NationsBank Plaza, Suite 5200
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Effective December 7, 1998
SOUTHERN COMPANY
CHANGE IN CONTROL
SEVERANCE PLAN
ARTICLE 1 - PURPOSE AND ADOPTION OF PLAN
1.1 Adoption of Plan. Southern Company Services, Inc. hereby adopts
this Southern Company Change in Control Severance Plan, effective December 7,
1998. The Plan shall be an unfunded severance pay plan that is a welfare plan as
such term is defined by the Employee Retirement Income Security Act of 1974, the
benefits of which shall 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 employees of the Employing Companies, whose employment is terminated
subsequent to a change in control of Southern or their respective Employing
Company.
ARTICLE 2 - DEFINITIONS
2.1 "Administrative Committee" shall mean the Board of Directors, plus,
in the event of any act necessary to be taken in connection with the Plan
relative to a particular Participant, the Chief Executive Officer of the
Participant's Employing Company, if such Chief Executive Officer is not already
a member of the Board of Directors.
2.2 "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(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
or Group composed exclusively of 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) 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, or Group composed entirely of 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) 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 Controls the corporation surviving or resulting
from such Employing Company Business Combination; or
(iii) Consummation of the sale or other disposition of all or
substantially all of the assets of an Employing Company to an entity
which Southern does not Control. 2.5 "COBRA Coverage" shall mean any
continuation coverage to which a Participant or his dependents may be
entitled pursuant to Code Section 4980B.
2.6 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.7 "Company" shall mean Southern Company Services, Inc., its
successors and assigns.
2.8 "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.
2.9 "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.
2.10 "Effective Date" shall mean the date of execution hereof.
2.11 "Employee" shall mean each active exempt and nonexempt employee of
an Employing Company of Grade 9 or below (or, if the Grade system is not used,
below $130,000 of annual base salary rate for the twelve month period
immediately preceding the Change in Control) not covered by a collective
bargaining agreement between the Employing Company and a union or other employee
representative.
2.12 "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.
2.13 "Employing Company" shall mean the Company, or any other Southern
Subsidiary, which the Board of Directors may from time to time determine to
bring under the Plan and which shall adopt the Plan, and any successor of any of
them.
2.14 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
2.15 "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) Reduced Salary. A reduction of five percent (5%) or more
by the Employing Company in either of the following: (i) the Employee's
annual base salary rate for the twelve month period immediately
preceding the Change in Control ("Base Salary") (except for a less than
ten percent (10%), across-the-board Base Salary reduction similarly
affecting at least ninety-five percent (95%) of all Employees of the
Employing Company) or (ii) the sum of the Employee's Base Salary plus
target bonus under his Employing Company's short term bonus plan (e.g.,
either the PPP Plan or the Southern Energy, Inc. Short Term Plan, as
the case may be), 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 plans
similarly affecting at least ninety-five (95%) of all Employees of the
Employing Company);
(b) 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 2.15(b) 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;
(c) Compensation Plans. The failure by an Employing Company to
continue in effect any "compensation plan or agreement" in which an
Employee participates or the elimination of the Employee's
participation in any such plan (except for across-the-board plan
changes or terminations similarly affecting at least ninety-five
percent (95%) of all Employees of the Employing Company);
For purposes of this Section 2.15(c), the term "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) 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 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 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 all Employees of the Employing Company).
2.16 "Group" shall have the meaning set forth in Section 14(d) of the
Exchange Act. 2.17 "Group Health Plan" shall mean the group health plan
covering the Participant, as such plan may be amended from time
to time.
2.18 "Group Life Insurance Plan" shall mean the group life insurance
program covering the Participant, as such plan may be amended from time to time.
2.19 "Incumbent Board" shall mean those individuals who constitute the
Southern Board as of the Effective Date 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.
2.20 "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.
2.21 "Participant" shall mean an Employee who meets the eligibility
requirements of Section 3.1 of this Plan. 2.22 "Pension Plan" shall
mean The Southern Company Pension Plan or any successor thereto, as
such plans may be amended
from time to time.
2.23 "Performance Dividend Plan" or "PDP Plan" shall mean the Southern
Company Performance Dividend Plan or any successor thereto which is considered
an "equitable arrangement" under Section 1.25 thereof, as such plans may be
amended from time to time.
2.24 "Performance Pay Plan" or "PPP Plan" shall mean the Southern
Company Performance Pay Plan or any successor thereto which is considered an
"equitable arrangement" under Section 1.31 thereof, as such plans may be amended
from time to time.
2.25 "Performance Stock Plan" shall mean the Southern Company
Performance Stock Plan or any successor thereto which is considered an
"equitable arrangement" under Section 1.33 thereof, as such plans may be amended
from time to time.
2.26 "Person" shall mean any individual, entity or group within the
meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act.
2.27 "Plan" shall mean the Southern Company Change in Control Severance
Plan.
2.28 "PIP Plan" shall mean the "Southern Company Productivity
Improvement Plan or any successor thereto which is considered an "equitable
arrangement" under Section 1.30 thereof, as such plans may be amended from time
to time.
2.29 "Short Term Plan" shall mean the Southern Energy Resources, Inc.
Short Term Plan, as amended from time to time. 2.30 "Southern" shall
mean The Southern Company, its successors and assigns.
2.31 "Southern Board" shall mean the board of directors of Southern.
2.32 "Southern Subsidiary" shall mean any corporation or other entity
which Southern Controls.
2.33 "Straight Time Pay" shall mean a Participant's highest base salary
during the calendar year in which his Termination Date occurs. Base salary shall
include "add ons" such as monthly shift differential, monthly premium pay, etc.,
but shall not include overtime pay. For Participants who were part-time
Employees "Straight Time Pay" shall mean the actual average salary paid during
the calendar year in which the Participant's Termination Date occurs.
2.34 "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
Employee's responsible corporate officer, which demand specifically
identifies the manner in which such corporate officer believes the
Employee has not substantially performed his duties; or
(b) The willful engaging by the Employee in conduct that is
demonstrably and materially injurious to his Employing Company,
monetarily or otherwise, including but not limited to any of the
following:
(i) any willful act involving fraud or dishonesty in
the course of an Employee's employment by his Employing
Company;
(ii) the willful carrying out of any activity or the
making of any statement by an Employee which would materially
prejudice or impair the good name and standing of his
Employing Company, Southern or any other Southern Subsidiary
or would bring his Employing Company, Southern or any other
Southern Subsidiary into contempt, ridicule or would
reasonably shock or offend any community in which his
Employing Company, Southern or such other Southern Subsidiary
is located;
(iii) attendance by an Employee at work in a state of
intoxication or otherwise being found in possession at his
workplace of any prohibited drug or substance, possession of
which would amount to a criminal offense;
(iv) violation of his Employing Company's policies on
drug and alcohol usage, fitness for duty requirements or
similar policies as may exist from time to time as adopted by
the Employing Company's safety officer;
(v) assault or other act of violence by an Employee
against any person during the course of employment; or
(vi) an Employee's indictment for any felony or any
misdemeanor involving moral turpitude. No act or failure to
act by an Employee shall be deemed "willful" unless done, or
omitted to be done, by the Employee not in good faith and
without reasonable belief that his action or omission was in
the best interest of his Employing Company. Notwithstanding
the foregoing, an Employee shall not be deemed to have been
terminated for Cause unless and until there shall have been
delivered to him a copy of a resolution duly adopted by the
affirmative vote of the majority of the Administrative
Committee at a meeting called and held for such purpose (after
reasonable notice to the Employee and an opportunity for him,
together with counsel, to be heard before the Administrative
Committee), finding that, in the good faith opinion of the
Administrative Committee, the Employee was guilty of conduct
set forth in Section 2.34(a) or (b) hereof and specifying the
particulars thereof in detail.
2.35 "Termination Date" shall mean the date on which a Participant is
separated from his Employing Company's regular payroll; provided, however, that
solely for purposes of Section 3.2(c) hereof, the Termination Date of
Participants who are deemed to be retired pursuant to the provisions of Section
3.3 hereof, shall be the effective date of their retirement pursuant to the
terms of the Pension Plan.
2.36 "Total Disability" shall mean total disability under the terms of
the Pension Plan.
2.37 "Value Creation Plan" shall mean the Southern Energy Resources,
Inc. Value Creation Plan or any replacement thereto which is considered an
"equitable arrangement" under Section 1.30 thereof, as such plans may be amended
from time to time.
2.36 "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.
2.37 "Waiver and Release" shall mean the Waiver and Release attached
hereto as Exhibit A.
2.38 "Year of Service" shall mean an Employee's Months of Service
divided by twelve (12) rounded to the nearest whole year, rounding up if the
remaining number of months is seven (7) or greater and rounding down if the
remaining number of months is less than seven (7). If an Employee has a break in
his service with his Employing Company, he will receive credit under this Plan
for the service prior to the break in service only if the break in service was
less than five years and his service prior to the break exceeds the length of
the break in service.
ARTICLE 3 - SEVERANCE BENEFITS
3.1 Eligibility. 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. Notwithstanding anything to the contrary herein, an
Employee shall not be eligible to receive benefits under this Plan if the
Employee:
(a) is not actively at work on his Termination Date, unless
such Employee is capable of returning to work within twelve (12) weeks
of the beginning of any leave of absence from work;
(b) voluntarily terminates his employment with his Employing
Company for other than Good Reason;
(c) is terminated by his Employing Company for Cause;
(d) 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;
(e) 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
(f) elects to receive the benefits of any other voluntary or
involuntary severance, separation or outplacement program maintained by
his Employing Company; 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. Each Participant shall be paid a cash
amount equal to the sum of the following amounts: (i) eight (8) weeks'
Straight Time Pay, (ii) one (1) week's Straight Time Pay for each of
the Participant's first five (5) Years of Service; (iii) two (2) weeks'
Straight Time Pay for each of the Participant's sixth (6th) through
tenth (10th) Years of Service; (iv) three (3) weeks' Straight Time Pay
for each of the Participant's eleventh (11th) through fifteenth (15th)
Years of Service; (v) five (5) weeks' Straight Time Pay for each of the
Participant's sixteenth (16th) through twentieth (20th) Years of
Service; and (vi) six (6) weeks' Straight Time Pay for each of the
Participant's Years of Service in excess of twenty (20) Years of
Service.
(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(c) 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 coverage under the Group Health Plan and Group
Life Insurance Plan, if the Participant was participating in
such plans on his Termination Date, for a period equal to the
total number of weeks of pay the Participant receives as a
severance benefit under Section 3.2(b) hereof. (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 Performance Stock 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 as of
the Termination Date shall lapse, and such Restricted Stock
shall become free of all restrictions and limitations and
become fully vested and transferable to the full extent of the
original grant.
(iii) The restrictions and deferral limitations and
other conditions applicable to any other Awards held by the
Participant under the Performance Stock Plan as of the
Termination Date shall lapse, and such other Awards shall
become free of all restrictions, limitations or conditions and
become fully vested and transferable to the full extent of the
original grant. (e) Performance Pay Plan. 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 Plan, the defined terms of which are
incorporated in this Section 3.2(e) by reference. Provided the
Participant is not entitled to benefits under Article V of the
PPP Plan, if the PPP 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 a prorated payout of his Incentive Pay Award under
the PPP Plan for the Performance Period in which the
Termination Date shall have occurred, at target performance
under the PPP Plan and prorated by the number of months which
have passed since the beginning of the Performance Period
until the Termination Date.
(f) PIP Plan. 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 PIP Plan, the defined terms of which are
incorporated in this Section 3.2(f) by reference. Provided the
Participant is not entitled to benefits under Article IV of the PIP
Plan, if the PIP 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 Opportunity under the PIP Plan for the Computation
Periods in which the Termination Date shall have occurred, at a target
Value of Performance Unit of $1.00, prorated for each Computation
Period by the number of months which have passed since the beginning of
each of the Computation Periods until the Termination Date.
(g) Performance Dividend Plan. The provisions of this Section
3.2(g) shall apply to any Participant who, as of the date of the Change
in Control, was a participant in the Performance Dividend Plan, the
defined terms of which are incorporated in this Section 3.2(g) by
reference. Provided the Participant is not entitled to benefits under
Article V of the Performance Dividend Plan, if the Performance Dividend
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 for each Award held as of
such date based on a Payout Percentage of 50% under Section 4.1 of the
Performance Dividend Plan for the Performance Period in which the
Termination Date shall have occurred, and the Annual Dividend declared
prior to the Termination Date.
(h) Value Creation Plan. The provisions of this Section 3.2(h)
shall apply to any Participant who, as of the date of the Change in
Control, was a participant in the Value Creation Plan, the defined
terms of which are incorporated in this Section 3.2(h) by reference.
Any of the Participant's Appreciation Rights or Indexed 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. Notwithstanding anything in the Value
Creation Plan to the contrary, Share Value with respect to any
Appreciation Rights or Indexed Rights held by the Participant following
his Termination Date shall be no less than the Share Value as of the
date of the Change in Control of Southern or his Employing Company, as
the case may be.
(i) Short Term Plan. The provisions of this Section 3.2(i)
shall apply to any Participant who, as of the date of the Change in
Control was a Participant in the Short Term Plan, the defined terms of
which are incorporated in this Section 3.2(i) by reference. Provided
the Participant is not entitled to benefits under Article V of the
Short Term Plan, if the Short Term 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 the Short Term Plan
for the Performance Period in which the Termination Date shall have
occurred, at Total Target for the Participant's Job Category and
prorated by the number of months which have passed since the beginning
of the Performance Period until the Termination Date.
(j) Other Short Term Incentive Plans. The provisions of this
Section 3.2(j) 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(j), 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 Maximum Benefit. Notwithstanding anything to the contrary above,
with respect to each Participant, the maximum benefit payable under this Article
3 shall be an amount equal to two (2) times such Participant's "annual
compensation" as defined in Department of Labor Regulation Section 2510.3-2(b),
which, for purposes of this Plan shall be no less than Straight Time Pay plus
thirty percent (30%). When necessary, the Administrative Committee shall reduce
the severance benefits described in Section 3.2(b) and 3.2(c)(iv) hereof to
comply with this Section 3.4.
3.5 Payment of Benefits. The total amount payable under this Article 3
shall be paid to a Participant in one (1) lump sum payment within two (2)
payroll periods 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.
3.6 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.
3.7 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 fifteen
thousand dollars ($15,000).
3.8 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.
3.9 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 3.7 hereof.
ARTICLE 4 - ADMINISTRATION
4.1 Administrative Committee. The Administrative Committee shall be
responsible for the general administration of the Plan and shall be a "named
fiduciary" under Section 402 of the Employee Retirement Income Security Act of
1974, as amended.
4.2 Duties of the Administrative Committee.
(a) The Administrative Committee shall be responsible for the
daily administration of the Plan and may appoint other persons or
entities to perform or assist in the performance of any of its
fiduciary duties, subject to its review and approval. The
Administrative Committee shall have the right to remove any such
appointee from his position without cause upon notice. Any person,
group of persons, or entity may serve in more than one fiduciary
capacity.
(b) The Administrative Committee shall maintain permanent
records and accounts of Participants and of their rights under the Plan
and of all receipts, disbursements, transfers, and other transactions
concerning the Plan. Such accounts, books, and records relating thereto
shall be open at all reasonable times to inspection and audit by the
Company and any persons designated thereby.
(c) The Administrative Committee shall take all steps
necessary to ensure that the Plan complies with the law at all times,
including the preparation and filing of all documents and forms
required by any governmental agency; maintenance of adequate
Participant records; recording and transmission of all notices required
to be given to Participants and their beneficiaries; receipt and
dissemination, if required, of all reports and information received
from the Employing Companies; securing of such fidelity bonds as may be
required by law; and doing such other acts necessary for the proper
administration of the Plan. The Administrative Committee shall keep a
record of all of its proceedings and acts, and shall keep all such
books of accounts, records, and other data as may be necessary for
proper administration of the Plan. The Administrative Committee shall
notify the Employing Companies upon their request of any action taken
by it, and when required, shall notify any other interested person or
persons. 4.3 Powers. The Administrative Committee shall administer the
Plan in accordance with its terms and shall have all powers necessary
to carry out the provisions of the Plan as more particularly set forth
herein. The Administrative Committee shall have the discretionary
authority to interpret the Plan (including any ambiguities herein) and
to determine all questions arising in the administration,
interpretation, and application of the Plan. The Administrative
Committee shall adopt such procedures and regulations necessary or
desirable for the discharge of its duties hereunder and may appoint
such accountants, counsel, actuaries, specialists, and other agents as
it deems necessary or desirable in connection with the administration
of this Plan. The Administrative Committee shall be the legal appointed
agent for the service of process.
4.4 Compensation of the Administrative Committee. The Administrative
Committee shall not receive any compensation from the Plan for its services.
4.5 Payment of Expenses. The Administrative Committee shall be
reimbursed by the Employing Companies for its reasonable expenses incurred in
the discharge of its duties. Such expenses shall include any expenses incident
to its duties, including, but not limited to, fees of accountants, counsel,
actuaries, and other specialists, and other costs of administering the Plan.
4.6 Indemnification. Each Employing Company shall indemnify the
Administrative Committee against any and all claims, losses, damages, expenses,
and liability arising from its actions or omissions, except when the same is
finally adjudicated to be the result of gross negligence or willful misconduct.
The Employing Companies may purchase at their own expense sufficient liability
insurance for the Administrative Committee to cover any and all claims, losses,
damages, and expenses arising from any action or omission in connection with the
execution of the duties as the Administrative Committee.
ARTICLE 5 - ARBITRATION
5.1 General. Any dispute, controversy or claim arising out of or
relating to the Company's obligations to pay severance benefits under this Plan,
or the breach thereof, shall be settled and resolved solely by arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") except as otherwise provided herein. The arbitration shall
be the sole and exclusive forum for resolution of any such claim for severance
benefits and the arbitrators' award shall be final and binding. The provisions
of this Article 5 are not intended to apply to any other disputes, claims or
controversies arising out of or relating to a Participant's employment by an
Employing Company or the termination thereof.
5.2 Demand for Arbitration. Arbitration shall be initiated by serving a
written notice of demand for arbitration to the Participant, in the case of an
Employing Company, or to the Administrative Committee, in the case of a
Participant.
5.3 Law and Venue. The arbitrators shall apply the laws of the State of
Georgia, except to the extent pre-empted by federal law, excluding any law which
would require the use of the law of another state. The arbitration shall be held
in Atlanta, Georgia.
5.4 Appointment of Arbitrators. Arbitrators shall be appointed within
fifteen (15) business days following service of the demand for arbitration. The
number of arbitrators shall be three. One arbitrator shall be appointed by the
Participant, one arbitrator shall be appointed by the Employing Company, and the
two arbitrators shall appoint a third. If the arbitrators cannot agree on a
third arbitrator within thirty (30) business days after the service of demand
for arbitration, the third arbitrator shall be selected by the AAA.
5.5 Costs. The arbitration filing fee shall be paid by the Participant.
All other costs of arbitration shall be borne equally by the Participant and his
Employing Company, provided, however, that such Employing Company shall
reimburse such fees and costs in the event any material issue in such dispute is
finally resolved in the Participant's favor and the Participant is reimbursed
legal fees under Section 3.7 hereof.
5.6 Interim and Injunctive Relief. Nothing in this Article 5 is
intended to preclude, upon application of either party, any court having
jurisdiction from issuing and enforcing in any lawful manner such temporary
restraining orders, preliminary injunctions, and other interim measures of
relief as may be necessary to prevent harm to either party's interests or as
otherwise may be appropriate pending the conclusion of arbitration proceedings
pursuant to this Article 5 and nothing herein is intended to prevent any court
from entering and enforcing in any lawful manner such judgments for permanent
equitable relief as may be necessary to prevent harm to a party's interests or
as otherwise may be appropriate following the issuance of arbitral awards
pursuant to this Article 5.
ARTICLE 6 - MISCELLANEOUS
6.1 Funding of Benefits. Unless the Board of Directors in its
discretion determines 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, the Plan may not be
amended in any material of respect or terminated within the two (2) year period
following a Change in Control nor shall any amendment or termination impair the
rights of any Participant which have accrued hereunder prior to any such
amendment or termination.
6.5 Pooling Accounting. Notwithstanding anything to the contrary
herein, if, but for any provision of this Plan, a Change in Control transaction
would otherwise be accounted for as a pooling-of-interests under APB No.16
("Pooling Accounting") (after giving effect to any and all other facts and
circumstances affecting whether such Change in Control transaction would use
Pooling Accounting), such provision or provisions of this Plan which would
otherwise cause the Change in Control transaction to be ineligible for Pooling
Accounting shall be void and ineffective in such a manner and to the extent that
by eliminating such provision or provisions of this Plan, Pooling Accounting
would be required for such Change in Control transaction.
IN WITNESS WHEREOF, this Southern Company Change in Control Severance
Plan has been executed by the Company through its duly authorized officer, this
____ day of ___________, 1999, to be effective as provided herein.
SOUTHERN COMPANY SERVICES, INC.
By:
Christopher C. Womack
Senior Vice President
Exhibit A
SOUTHERN COMPANY
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 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 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 Communication Services, Inc., Southern Company Services, Inc., Southern
Energy Resources, Inc., Southern Company Energy Solutions, 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. 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.
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.
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 Administrative Committee of the Southern
Company Change in Control Severance Plan.
By:
Date:
Attachment to Exhibit A
TO: All Eligible Employees under the Southern Company Change in Control
Severance Plan
FROM: _____________________
RE: ADEA Information Notice
DATE: _____________________
A severance plan known as the Southern Company 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.
o The purpose of the Plan is to provide benefits to certain
employees of The Southern Company and certain subsidiaries of The
Southern Company ("Employing Companies") whose employment is
terminated subsequent to a change in control of The Southern
Company or their respective Employing Company. A full description
of the benefits under the Plan as well as any restrictions or
limitations that may be applicable can be found in the Summary
Plan Description you have been given.
o Each active exempt and non-exempt employee of an Employing Company
of Grade 9 or below (or, if the Grade System is not used, below
$130,000 of annual base salary rate for the 12 month period
immediately preceding the change in control) not covered by a
collective bargaining agreement is generally eligible to
participate in the Plan if during the two year period following a
change in control: (i) his employment is involuntarily terminated
for reasons other than cause, or (ii) he voluntarily terminates
his employment for good reason.
o All eligible employees may elect to receive severance benefits
under the Plan by signing an Election Form and Waiver Agreement no
later than 45 calendar days from the date it is received. The
Agreement will remain revocable by you for a seven day period
after you sign it.
o 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 Election Form and Waiver Agreement 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
- - - - - - - ------------------------------------------------------------ ---------------------------------------------------------
Job Title, Classification Age of
or Category of Eligible Employees Eligible Employees
- - - - - - - ------------------------------------------------------------ ---------------------------------------------------------
- - - - - - - ------------------------------------------------------------ ---------------------------------------------------------
- - - - - - - ------------------------------------------------------------ ---------------------------------------------------------
- - - - - - - ------------------------------------------------------------ ---------------------------------------------------------
[List job classification, title or category of all [List corresponding age of each eligible employee]
eligible employees]
- - - - - - - ------------------------------------------------------------ ---------------------------------------------------------
- - - - - - - ------------------------------------------------------------ ---------------------------------------------------------
Job Title, Classification Age of
or Category of Ineligible Employees Ineligible Employees
- - - - - - - ------------------------------------------------------------ ---------------------------------------------------------
- - - - - - - ------------------------------------------------------------ ---------------------------------------------------------
- - - - - - - ------------------------------------------------------------ ---------------------------------------------------------
- - - - - - - ------------------------------------------------------------ ---------------------------------------------------------
[List job classification, title or category of all [List corresponding age of each ineligible employee]
ineligible employees]
- - - - - - - ------------------------------------------------------------ ---------------------------------------------------------
Exhibit B
SOUTHERN COMPANY
CHANGE IN CONTROL
SEVERANCE PLAN
Short Term Incentive Compensation Plans