1
Exhibit 10(z)
MOBILE GAS SERVICE CORPORATION
NON-EMPLOYEE DIRECTORS DEFERRED FEE PLAN
1. Establishment of the Plan
The Mobile Gas Service Corporation Non-Employee Directors Deferred Fee
Plan ("Plan") is hereby adopted as of January 27th, 1995 by the Board of
Directors of Mobile Gas Service Corporation (the "Company"), to provide a
method for attracting and retaining qualified non-employee directors for the
Company, and to encourage them to devote their best efforts to the business of
the Company, thereby advancing the interests of the Company and its
stockholders.
2. Administration of the Plan
The Plan shall be administered by the Executive Committee or such
other Committee (the "Committee") as may be from time to time appointed by the
Board of Directors of the Company (the "Board"). The Committee is authorized
to interpret the Plan and may from time to time adopt such rules and
regulations, consistent with the provisions of the Plan, as it may deem
advisable to carry out the Plan. The Plan shall be interpreted in view of the
intention that the acquisition of shares of phantom stock through the Plan is
intended to qualify as an exempt transaction under Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act"). All decisions made by
the
Page 21 of 33
2
Committee shall be final. All expenses incurred in connection with the
administration of the Plan shall be borne by the Company.
3. Participation in the Plan
(a) Participation. Each director of the Company who is not an
employee of the Company or any of its subsidiaries may become a participant in
the Plan ("Participant").
(b) Deferral of Director's Fees. A Participant may elect to defer
director's fees (whether quarterly, per-meeting, special or otherwise) to be
paid to such Participant for services as a member of the Board by filing with
the Committee an election to defer receipt of all of such fees. A Participant
may elect to have all of such deferred fees credited to his or her Plan
Account, as described in Section 4(a), in either of: (i) Phantom Stock as
described in Section 5, or (ii) cash as described in Section 6.
(c) Time and Manner of Making Elections. Any deferral election
which may be made by a Participant under the Plan shall be made with respect to
a period between successive annual meetings of the stockholders of the Company
(a "Service Year") and must be made not later than thirty days after an annual
meeting of stockholders of the Company. All elections shall be made in the
manner and form prescribed by the Committee, and shall become effective on the
first day of the first fiscal quarter following such election.
Page 22 of 33
3
(d) Nature of Elections. A Participant's election to defer
receipt of all of his or her director fees shall continue in force and effect
for future Service Years unless modified or revoked by such Participant. Any
such modification or revocation shall be made not later than December 31, shall
be effective as of the first day of the following Service Year, and shall be
effective only as to fees to be earned in the future. A modification or
revocation of an existing deferral election shall be made in the manner and
form prescribed by the Committee. Any deferral election (whether in the nature
of an initial election, an unrevised continuing election or a revised
continuing election) shall become irrevocable upon becoming effective.
4. Crediting of Deferred Fees to Plan Accounts
(a) Establishment of Plan Accounts. The Committee shall cause to
be established a memorandum bookkeeping account (the "Plan Account") for each
Participant in the Plan. During each fiscal quarter within a Service Year,
there shall be credited to each Participant's Plan Account the Participant's
deferred fees as of the date such fees are payable to the Participant, with
such deferred fees allocated to cash or Phantom Stock. Such Plan Account shall
also be credited with interest or dividend credits, as described in Sections 5
and 6, and debited for payments made as described in Section 7(h).
(b) Subaccounts. Within each Participant's Plan Account, separate
subaccounts shall be maintained to the extent necessary for the administration
of the Plan. For
Page 23 of 33
4
example, it may be necessary to maintain separate subaccounts where the
Participant has specified different payment commencement dates, different modes
of payment, or different elections of Phantom Stock and/or cash.
(c) Statement of Account. At least once per year, each
Participant shall be provided with a statement of his or her Plan Account.
5. Stock Election; Dividend Credits
(a) Election of Phantom Stock Units. To the extent a Participant
has elected to defer fees in the form of Phantom Stock, there shall be credited
to such Participant's Plan Account a number of hypothetical shares of stock
("Phantom Stock Units") equal to the number of shares (rounded to the fourth
decimal place) of $2.50 par value common stock of the Company ("Common Stock")
which could have been purchased with such deferred fees, based upon the average
of the closing price of Common Stock on the ten trading days preceding such
date.
(b) Cash Dividend Credits. As of each date on which dividends
other than stock dividends are paid to holders of Common Stock, there shall be
credited to a Participant's Plan Account that number of additional Phantom
Stock Units which is equal to the number of shares of Common Stock (rounded to
the fourth decimal place) which could have been purchased with such cash
dividends (or the fair market value of dividends paid
Page 24 of 33
5
in property other than dividends payable in Common Stock of the Company), based
upon the average of the closing price of Common Stock on the ten trading days
preceding such date, which the Participant would have received if the
Participant had been the owner of a number of shares of Common Stock equal to
the number of Phantom Stock Units in the Participant's Plan Account.
(c) Changes in Capitalization. If the outstanding shares of
Common Stock are increased, decreased or exchanged for a different number or
kind of shares or other securities, or if additional shares or other property
(other than ordinary dividends) are distributed with respect to such shares of
Common Stock or other securities, through merger, consolidation, sale of all or
substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, dividend, stock split, spin-off, split-off
or other distribution with respect to such shares of Common Stock, an
appropriate and proportionate adjustment shall be made in the number of Phantom
Stock Units in Participant's Plan Accounts.
6. Cash Election; Interest
To the extent a Participant has elected to defer fees in the form of
cash, as of the last day of each fiscal quarter in which a Participant has a
cash balance credited to his or her Plan Account, there shall be credited to
such Participant's Plan Account a dollar amount equal to simple interest on the
cash amount then in such Plan Account (excluding
Page 25 of 33
6
any amounts credited during such quarter) computed at a per annum rate equal to
the prime rate published in The Wall Street Journal under the caption "Money
Rates" on the last business day of such quarter (or, if such publication is
discontinued, such other rate or index as may be selected by the Board in its
sole discretion).
7. Payment of Deferred Fees
(a) Payment Election Generally. A Participant may elect the time
and the mode (which may either be a lump sum payment or annual installment
payments, not to exceed five installments) for payment of amounts credited to
his or her Plan Account. Any such elections regarding the time and mode of
payment of amounts credited to a Participant's Plan Account shall be
irrevocable once made. In the absence of direction by a Participant regarding
the time or mode of payment of amounts credited to his or her Plan Accounts,
such amounts shall be distributed in a lump sum within six months of the date
such amounts become payable. Distribution in the mode elected by the
Participant shall commence immediately upon the occurrence of any of the
following events: death, retirement, disability, or termination, if such event
occurs prior to the distribution date elected by the Participant.
(b) Payment Upon Death. In the event of a Participant's death,
the balance of such Participant's Plan Account, computed as of the date of his
death, shall be paid in one lump sum to his or her designated beneficiary
within the first six months following the
Page 26 of 33
7
date of such Participant's death. A Participant, by written instrument filed
with the Committee in such manner and form as it may prescribe, may designate
one or more beneficiaries to receive payment of the amounts credited to his
Plan Accounts in the event of his death. Any such beneficiary designation may
be changed from time to time prior to the death of the Participant without the
consent of any prior beneficiaries. In the absence of a beneficiary
designation on file with the Committee at the time of a Participant's death or
the death of a designated beneficiary without a designated successor,
Participant's estate shall be deemed to be the Participant's designated
beneficiary.
(c) Payment Upon Plan Termination. In the event the Plan is
terminated by the Company, the balance of each Participant's Plan Accounts,
computed as of the date of such Plan termination, shall be paid to such
Participant within three months of such date.
(d) Valuation of Plan Accounts for Purposes of Payment. For
purposes of payment from a Plan Account: (i) to the extent a Participant has
cash in his or her Plan Account, the value of his or her Plan Account shall be
determined by crediting interest on the cash portion of the Plan Account
through the day before the date payment is due to the Participant; and (ii) to
the extent a Participant has Phantom Stock in his or her Plan Account, the
value of his or her Plan Account shall be based upon the average of the closing
prices of Common Stock on the ten trading days preceding such date.
Page 27 of 33
8
(e) Lump Sum Payments. To the extent a Participant elects to have
his or her Plan Account distributed in a lump sum, such payment shall be made
not more than three months after the date of the event giving rise to such
payment.
(f) Installment Payments. To the extent a Participant elects to
have his or her Plan Account distributed in installments, the amount of the
first installment shall be a fraction of the value of the Participant's Plan
Account, the numerator of which shall be one and the denominator of which shall
be the total number of annual installments elected, and the amount of each
subsequent installment shall be a fraction of the value of the Participant's
Plan Account (including interest and/or dividends credited pursuant to Sections
5 and 6) on the date preceding each subsequent payment, the numerator of which
shall be one and the denominator of which shall be the number of unpaid
installments.
(g) Form of Payment. All payments under the Plan shall be solely
in the form of cash. Without limiting the generality of the foregoing, nothing
in the Plan shall be construed as giving any Participant any rights as a holder
of Common Stock or any other equity security of the Company as a result of such
Participant's participation in this Plan or his or her election to credit his
or her Plan Account with Phantom Stock.
(h) Debiting of Plan Accounts. Once an amount has been paid to a
Participant or his or her beneficiary, such amount or the Phantom Stock
equivalent thereof shall be
Page 28 of 33
9
debited from the Participant's Plan Account. In the case of installment
payments or other distribution of less than all of the balance of a Plan
Account, interest and/or dividend credits shall continue to be credited on the
balance remaining in the Plan Account in accordance with Sections 5 and 6.
8. Prohibition Against Attachment, Assignment or Encumbrance
To the extent permitted by law, no right, title, interest or benefit
hereunder shall ever be liable for or charged with any of the torts or
obligations of a Participant or a person claiming under a Participant, or be
subject to attachment, seizure or other legal process by any creditor of a
Participant or any person claiming under a Participant. Except as specifically
provided by the Plan, no Participant or any person claiming under a Participant
shall have the power to transfer, assign, mortgage, pledge, grant a security
interest in, encumber, anticipate or dispose of any right, title, interest or
benefit hereunder.
9. Nature of the Plan
(a) The Plan and any election agreements executed thereunder
constitute an unfunded, unsecured liability of the Company to make payments in
accordance with the provisions hereof, neither a Participant nor any person
claiming under the Participant shall have any security or other interest in any
specific assets of the Company by virtue of this Plan, and the right of any
person to receive any distribution hereunder shall be no greater than the right
of any unsecured general creditor of the Company. Neither the
Page 29 of 33
10
establishment of the Plan, the crediting of amounts to Plan Accounts nor the
setting aside of any funds shall be deemed to create a trust of any kind or
create any fiduciary relationship on the part of the Company. The Company at
its election may, but shall not be required to, fund the payment of benefits
under the Plan by setting aside and investing, in an account on the Company's
books, such funds as the Company may from time to time determine. Legal and
equitable title to any funds so set aside shall remain in the Company, and no
Participant shall have any security or other interest in such funds, and any
funds so set aside shall remain subject to the claims of the general creditors
of the Company, present and future.
(b) Neither the Plan nor any action taken pursuant to the Plan
shall constitute evidence of any agreement or understanding, express or
implied, that the Company will retain a Participant as a director for any
period of time, or at any particular rate of compensation.
(c) No member of the Board or the Committee and no officer or
employee of the Company shall be liable to any person for any action taken or
omitted in connection with the administration of the Plan, unless attributable
to his or her own fraud or willful misconduct, nor shall the Company be liable
to any person for any such action unless attributable to fraud or willful
misconduct on the part of a director, officer or employee of the Company.
Page 30 of 33
11
10. Amendment and Termination of Plan
The Company shall have the right to alter or amend the Plan or any
part thereof from time to time, except the Company shall not make any
alteration or amendment which would impair the rights of a Participant with
respect to amounts theretofore credited to that Participant's Plan Account.
Notice of any such change shall be given to each Participant. The Company may
terminate the Plan at any time. If not sooner terminated under the provisions
of this paragraph, the Plan shall terminate as of the date on which all amounts
theretofore credited to Plan Accounts have been paid.
11. Miscellaneous
(a) The Plan and any documents executed in connection therewith
shall be construed in accordance with and governed by the laws of the State of
Alabama.
(b) Failure to insist upon strict compliance with any of the
terms, covenants, or conditions hereof shall not be deemed a waiver of such
term, covenant, or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
(c) The invalidity or unenforceability of any provision hereof
shall in no way affect the validity or enforceability of any other provision.
Page 31 of 33
12
(d) Except as otherwise provided herein, this Plan shall inure to
the benefit of and be binding upon each Participant, his or her heirs,
executors, and administrators and upon the Company, its successors and assigns,
including but not limited to any corporation which may acquire all or
substantially all of the Company's assets and business or with or into which
the Company may be consolidated or merged.
This Plan adopted by the Board of Directors of Mobile Gas Service
Corporation on the 27th day of January, 1995.
MOBILE GAS SERVICE CORPORATION
By /s/ William J. Hearin
Chairman of the Board of Directors
Page 32 of 33