Exhibit 10(a)103
CHANGE IN CONTROL AGREEMENT
THIS CHANGE IN CONTROL AGREEMENT ("Agreement") made and entered into by
and between The Southern Company ("Southern"), Southern Energy Resources, Inc.
(the "Company") and Ms. S. ▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇") is effective December 10,
1998.
W I T N E S S E T H:
WHEREAS, ▇▇. ▇▇▇▇▇▇ is the Executive Vice President of the Company;
WHEREAS, the Company wishes to provide to ▇▇. ▇▇▇▇▇▇ certain severance
benefits under certain circumstances following a change in control (as defined
herein) of Southern or the Company;
WHEREAS, the Company previously entered into an Agreement dated
December 10, 1998 with ▇▇. ▇▇▇▇▇▇ providing these benefits; WHEREAS, the Company
desires to clarify that certain additional benefits not set forth in this
previous Agreement but authorized by the Company are available to ▇▇. ▇▇▇▇▇▇
under the Southern Energy Resources, Inc. Deferred Incentive Compensation Plan
in the event of a change in control (as defined herein);
WHEREAS, the parties agree that the prior Agreement dated December 10,
1998 is, therefore, void and that this Agreement supersedes it in its entirety.
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 ▇▇. ▇▇▇▇▇▇'▇ highest
annual base salary rate for the twelve (12) month period immediately
preceding the date of the Change in Control plus market level target
annual bonus as set forth on Exhibit A hereof.
(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 1.(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 ▇▇. ▇▇▇▇▇▇ or any
Group of which ▇▇. ▇▇▇▇▇▇ 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, ▇▇.
▇▇▇▇▇▇, any Group of which ▇▇. ▇▇▇▇▇▇ 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 1.(e)(iv), any acquisition by ▇▇. ▇▇▇▇▇▇, any Group
composed exclusively of employees of the Company, any Group of
which ▇▇. ▇▇▇▇▇▇ 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.
(f) "COBRA Coverage" shall mean any continuation coverage to
which ▇▇. ▇▇▇▇▇▇ or her 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 Southern Energy Resources, Inc., 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) "DIC Plan" shall mean the Southern Energy Resources, Inc.
Deferred Incentive Compensation Plan or replacement thereto, as such
plans may be amended from time to time.
(l) "Effective Date" shall mean the date of execution of this
Agreement.
(m) "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 Employing 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.
(n) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(o) "Good Reason" shall mean, without ▇▇. ▇▇▇▇▇▇'▇ 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 ▇▇. ▇▇▇▇▇▇'▇ position or in the nature or status
of her 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) ▇▇.
▇▇▇▇▇▇'▇ 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 ▇▇. ▇▇▇▇▇▇'▇ annual base salary rate plus target bonus
under the Company's Short Term Plan (except for a less than
ten percent (10%), across-the-board reduction of annual base
salary rate plus target bonus under the Short Term Plan
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 ▇▇. ▇▇▇▇▇▇ participates or is a
party as of the date of the Change in Control or the
elimination of ▇▇. ▇▇▇▇▇▇'▇ 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
1.(o), 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 ▇▇. ▇▇▇▇▇▇'▇ work
location to a location more than fifty (50) miles from the
office where ▇▇. ▇▇▇▇▇▇ is located at the time of the Change
in Control, unless such new work location is within fifty (50)
miles from ▇▇. ▇▇▇▇▇▇'▇ principal place of residence at the
time of the Change in Control. The acceptance, if any, by ▇▇.
▇▇▇▇▇▇ of employment by the Company at a work location which
is outside the fifty mile radius set forth in this Paragraph
1.(o)(iv) shall not be a waiver of ▇▇. ▇▇▇▇▇▇'▇ right to
refuse subsequent transfer by the Company to a location which
is more than fifty (50) miles from ▇▇. ▇▇▇▇▇▇'▇ 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 ▇▇. ▇▇▇▇▇▇ under the
Company's retirement, life insurance, medical, health and
accident, disability, deferred compensation or savings plans
in which ▇▇. ▇▇▇▇▇▇ was participating immediately prior to the
Change in Control; or the failure by the Company to provide
▇▇. ▇▇▇▇▇▇ with the number of paid vacation days to which ▇▇.
▇▇▇▇▇▇ 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 1.(o), the term
"Executive Employee" shall mean employees of the Company whose
annual base salary is $130,000 or more.
(p) "Group" shall have the meaning set forth in Section 14(d)
of the Exchange Act.
(q) "Group Health Plan" shall mean the group health plan
covering ▇▇. ▇▇▇▇▇▇, as such plan may be amended from time to time.
(r) "Group Life Insurance Plan" shall mean the group life
insurance program covering ▇▇. ▇▇▇▇▇▇, as such plan may be amended from
time to time.
(s) "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.
(t) "Month of Service" shall mean any calendar month during
which ▇▇. ▇▇▇▇▇▇ 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.
(u) "Pension Plan" shall mean The Southern Company Pension
Plan, as such plan may be amended from time to time.
(v) "Performance Dividend Plan" shall mean the Southern
Company Performance Dividend Plan or any replacement
thereto, as such plans may be amended from time to time.
(w) "Performance Stock Plan" shall mean the Southern Company
Performance Stock Plan or any replacement thereto, as such plans may be
amended from time to time.
(x) "Person" shall mean any individual, entity or group within
the meaning of Section 13(d)(3) or 14(d)(2) of Act.
(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 ▇▇. ▇▇▇▇▇▇'▇ employment by the Company upon the
occurrence of any of the following:
(i) The willful and continued failure by ▇▇. ▇▇▇▇▇▇
substantially to perform her duties with the Company (other
than any such failure resulting from ▇▇. ▇▇▇▇▇▇'▇ Total
Disability or from ▇▇. ▇▇▇▇▇▇'▇ retirement or any such actual
or anticipated failure resulting from termination by ▇▇.
▇▇▇▇▇▇ for Good Reason) after a written demand for substantial
performance is delivered to her by the Southern Board, which
demand specifically identifies the manner in which the
Southern Board believes that she has not substantially
performed her duties; or
(ii) The willful engaging by ▇▇. ▇▇▇▇▇▇ 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 ▇▇. ▇▇▇▇▇▇'▇ 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 other 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 her 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 ▇▇. ▇▇▇▇▇▇ shall be deemed
"willful" unless done, or omitted to be done, by ▇▇. ▇▇▇▇▇▇ not in good
faith and without reasonable belief that her action or omission was in
the best interest of the Company.
Notwithstanding the foregoing, ▇▇. ▇▇▇▇▇▇ shall not be deemed
to have been terminated for Cause unless and until there shall have
been delivered to her 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 ▇▇. ▇▇▇▇▇▇
and an opportunity for her, together with counsel, to be heard before
the Southern Board), finding that, in the good faith opinion of the
Southern Board, ▇▇. ▇▇▇▇▇▇ was guilty of conduct set forth above in
clause (i) or (ii) of this Paragraph 1.(bb) and specifying the
particulars thereof in detail.
(cc) "Termination Date" shall mean the date on which ▇▇.
▇▇▇▇▇▇'▇ 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 her retirement pursuant to the
terms of the Pension Plan.
(dd) "Total Disability" shall mean ▇▇. ▇▇▇▇▇▇'▇ total
disability within the meaning of the Pension Plan.
(ee) "Value Creation Plan" shall mean the Southern Energy
Resources, Inc. Value Creation Plan or any replacement thereto, as such
plans may be amended from time to time.
(ff) "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.
(gg) "Waiver and Release" shall mean the Waiver and Release
attached hereto as Exhibit B.
(hh) "Year of Service" shall mean ▇▇. ▇▇▇▇▇▇'▇ 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 ▇▇. ▇▇▇▇▇▇ has a break in her service with the Company, she
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 ▇▇. ▇▇▇▇▇▇'▇ 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 ▇▇. ▇▇▇▇▇▇
voluntarily terminates her employment with the Company for Good Reason
at any time during the two year period following a Change in Control,
▇▇. ▇▇▇▇▇▇ 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, ▇▇. ▇▇▇▇▇▇
shall not be eligible to receive benefits under this Agreement if ▇▇.
▇▇▇▇▇▇:
(i) voluntarily terminates her employment with the
Company for other than Good Reason;
(ii) has her employment terminated by the Company for
Cause;
(iii) accepts the transfer of her 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
maintained by the Company; 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 ▇▇. ▇▇▇▇▇▇ meets the eligibility
requirements of Paragraph 2.(a) hereof, she shall be entitled to a cash
severance benefit in an amount equal to three times her 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 ▇▇. ▇▇▇▇▇▇ an additional amount calculated by
determining the amount of tax under Code Section 4999 that she
otherwise would have paid on any Excess Parachute Payment with respect
to the Change in Control and dividing such amount by a decimal
determined by adding the tax rate under Code Section 4999 ("Excise
Tax"), the hospital insurance tax under Code Section 3101(b) ("HI Tax")
and federal and state income tax measured at the highest marginal rates
("Income Tax") and subtracting such result from the number one (1) (the
"280G Gross-up"); provided, however, that no 280G Gross-up shall be
paid unless the Severance Amount plus all other "parachute payments" to
▇▇. ▇▇▇▇▇▇ under Code Section 280G exceeds three (3) times ▇▇. ▇▇▇▇▇▇'▇
"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 ▇▇. ▇▇▇▇▇▇'▇ Base Amount, less all other "parachute payments"
(as such term is defined under Code Section 280G) received by ▇▇.
▇▇▇▇▇▇, 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 ▇▇. ▇▇▇▇▇▇ 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, she shall be entitled to the
benefits set forth in this Paragraph 2.(c).
(i) ▇▇. ▇▇▇▇▇▇ shall be eligible to participate in
the Company's Group Health Plan, upon payment of both the
Company's and her monthly premium under such plan, for a
period of six (6) months for each of ▇▇. ▇▇▇▇▇▇'▇ Years of
Service, not to exceed five (5) years. If ▇▇. ▇▇▇▇▇▇ elects to
receive this extended medical coverage, she shall also be
entitled to elect coverage under the Group Health Plan for her
dependents who were participating in the Group Health Plan on
▇▇. ▇▇▇▇▇▇'▇ 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 ▇▇. ▇▇▇▇▇▇'▇ 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 ▇▇. ▇▇▇▇▇▇ pursuant to Paragraph 2.(c)(i), as well
as the premiums to be paid by ▇▇. ▇▇▇▇▇▇ 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 ▇▇. ▇▇▇▇▇▇ in
connection with this extended coverage shall be due
on the first day of each month; provided, however,
that if she fails to pay her 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 ▇▇. ▇▇▇▇▇▇ or
her dependent may elect. In the event that ▇▇. ▇▇▇▇▇▇
or her 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
Company's Group Health Plan available to ▇▇. ▇▇▇▇▇▇
or her dependent 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) ▇▇. ▇▇▇▇▇▇ shall be entitled to receive cash in
an amount equal to the Company's and ▇▇. ▇▇▇▇▇▇'▇ 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 ▇▇. ▇▇▇▇▇▇ meets the eligibility
requirements of Paragraph 2.(a) hereof she shall be
entitled to the following benefits under the Company's incentive plans:
(i) Stock Option Plan.
(A) Any of ▇▇. ▇▇▇▇▇▇'▇ Options and Stock
Appreciation Rights under the Performance Stock 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 ▇▇. ▇▇▇▇▇▇ 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 action would result
in liability to ▇▇. ▇▇▇▇▇▇ under Section 16(b) of the
Exchange Act, provided further, that any such actions
not taken as a result of the rules of Section 16(b)
of the Exchange Act shall be effective 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 ▇▇. ▇▇▇▇▇▇'▇
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.
(C) The restrictions and deferral
limitations and other conditions applicable to any
other Awards held by ▇▇. ▇▇▇▇▇▇ 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.
(ii) Performance Dividend Plan. Provided ▇▇. ▇▇▇▇▇▇
is not entitled to benefits under the Performance Dividend
Plan (the defined terms of which are incorporated in this
Paragraph 2.(d)(ii) by reference), if the Performance Dividend
Plan is in place through ▇▇. ▇▇▇▇▇▇'▇ Termination Date and to
the extent ▇▇. ▇▇▇▇▇▇ is entitled to participate therein, ▇▇.
▇▇▇▇▇▇ shall be entitled to receive cash for each Award held
by ▇▇. ▇▇▇▇▇▇ on her Termination Date, based on actual
performance under Section 4.1 of the Performance Dividend Plan
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.
(iii) Value Creation Plan. Any of ▇▇. ▇▇▇▇▇▇'▇
Appreciation Rights or Indexed Rights under the Value Creation
Plan (the defined terms of which are incorporated in this
Paragraph 2.(d)(iii) by reference) which are outstanding as of
the Termination Date and which are not then exercisable and
vested, shall become fully exercisable and fully 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
▇▇. ▇▇▇▇▇▇ following her Termination Date shall be no less
than the Share Value as of the date of the Change in Control
of Southern or the Company, as the case may be.
(iv) Other Short Term Incentive Plans. The provisions
of this Paragraph 2.(d)(i) shall apply if and to the extent
that ▇▇. ▇▇▇▇▇▇ is a participant in any other "short term
compensation plan" not otherwise previously referred to in
this Paragraph 2.(d). Provided ▇▇. ▇▇▇▇▇▇ 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
▇▇. ▇▇▇▇▇▇ is entitled to participate therein, ▇▇. ▇▇▇▇▇▇
shall receive cash in an amount equal to her award under the
Company's "short term incentive plan" for the annual
performance period in which the Termination Date shall have
occurred, at ▇▇. ▇▇▇▇▇▇'▇ target performance level and
prorated by the number of months which have passed since the
beginning of the annual performance period until her
Termination Date. For purposes of this Paragraph 2.(d)(iv) 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.
(v) DIC Plan. Provided ▇▇. ▇▇▇▇▇▇ is not entitled to
benefits under Article V of the DIC Plan (the defined terms of
which are incorporated into this Paragraph 2(d)(v) by
reference), if the DIC Plan is in place through ▇▇. ▇▇▇▇▇▇'▇
Termination Date and to the extent that ▇▇. ▇▇▇▇▇▇ is entitled
to participate therein, any of ▇▇. ▇▇▇▇▇▇'▇ Awards as of the
Termination Date which are not then vested shall become fully
vested and ▇▇. ▇▇▇▇▇▇ shall be entitled to receive cash in the
amount equal to ▇▇. ▇▇▇▇▇▇'▇ Account as of her Termination
Date. Notwithstanding anything in the DIC Plan to the
contrary, the investment return on the Awards determined in
accordance with Section 3.1 of the DIC Plan for any Plan Year
following a Change in Control shall be no less than the
investment return determined in accordance with Section 3.1 of
the DIC Plan as of the date of such Change in Control with
respect to those Accounts which are outstanding as of the date
of such Change in Control.
(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) ▇▇. ▇▇▇▇▇▇'▇ Termination Date,
or (ii) upon ▇▇. ▇▇▇▇▇▇'▇ tender of an effective Waiver and Release to
the Company in the form of Exhibit B 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 ▇▇.
▇▇▇▇▇▇'▇ death prior to the payment of all amounts due under this
Agreement, ▇▇. ▇▇▇▇▇▇'▇ 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 ▇▇. ▇▇▇▇▇▇
and the Company with regard to any amounts due hereunder, if any
material issue in such dispute is finally resolved in ▇▇. ▇▇▇▇▇▇'▇
favor, the Company shall reimburse ▇▇. ▇▇▇▇▇▇'▇ 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. ▇▇. ▇▇▇▇▇▇ shall be
eligible to participate in the Employee Outplacement Program, which
program shall not be less than six (6) months duration measured from
▇▇. ▇▇▇▇▇▇'▇ Termination Date.
(i) Non-qualified Retirement and Deferred Compensation Plans.
The Parties agree that subsequent to a Change in Control, any claims by
▇▇. ▇▇▇▇▇▇ 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 ▇▇. ▇▇▇▇▇▇'▇ favor, the Company shall
reimburse ▇▇. ▇▇▇▇▇▇'▇ legal fees in the manner provided in Paragraph
2.(g) hereof.
3. Transfer of Employment. In the event that ▇▇. ▇▇▇▇▇▇'▇ employment by
the Company is terminated during the two year period following a Change in
Control and ▇▇. ▇▇▇▇▇▇ 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 ▇▇. ▇▇▇▇▇▇ is otherwise eligible to receive
benefits under Paragraph 2 of this Agreement, she shall have no duty or
obligation to seek other employment following her Termination Date and, except
as otherwise provided in Paragraph 2.(a)(iii) hereof, the amounts due ▇▇. ▇▇▇▇▇▇
hereunder shall not be reduced or suspended if ▇▇. ▇▇▇▇▇▇ 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 ▇▇. ▇▇▇▇▇▇'▇
employment by the Company or the termination thereof.
(b) Arbitration shall be initiated by serving a written notice
of demand for arbitration to ▇▇. ▇▇▇▇▇▇, in the case of the Company, or
to the Southern Board, in the case of ▇▇. ▇▇▇▇▇▇.
(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 ▇▇. ▇▇▇▇▇▇, 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 ▇▇. ▇▇▇▇▇▇.
All other costs of arbitration shall be borne equally by ▇▇. ▇▇▇▇▇▇ 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 ▇▇. ▇▇▇▇▇▇'▇ favor and ▇▇. ▇▇▇▇▇▇ 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 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
Agreement.
6. Miscellaneous.
(a) Funding of Benefits. Unless the Board in its discretion
shall determine otherwise, the benefits payable to ▇▇. ▇▇▇▇▇▇ 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 ▇▇. ▇▇▇▇▇▇.
(c) Assignment. ▇▇. ▇▇▇▇▇▇ 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.
(f) Pooling Accounting. Notwithstanding anything to the
contrary herein, if, but for any provision of this Agreement, a Change
in Control transaction would otherwise be accounted for as a
pooling-of-interests under ▇▇▇ ▇▇.▇▇ ("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 Agreement 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 Agreement, Pooling Accounting would be required for
such Change in Control transaction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this ____ day of __________________, 199__.
THE SOUTHERN COMPANY
By: ____________________________________
SOUTHERN ENERGY RESOURCES,
INC.
By: ____________________________________
▇▇. ▇▇▇▇▇▇
------------------------------------
S. ▇▇▇▇▇ ▇▇▇▇▇▇
Exhibit A
CHANGE IN CONTROL AGREEMENT
Target Annual Bonus for
Ms. S. ▇▇▇▇▇ ▇▇▇▇▇▇
50%
Exhibit B
CHANGE IN CONTROL AGREEMENT
Waiver and Release
The attached Waiver and Release is to be given to Ms. S. ▇▇▇▇▇ ▇▇▇▇▇▇
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, S. ▇▇▇▇▇ ▇▇▇▇▇▇, 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 Southern Energy Resources,
Inc. (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 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. 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 _____.
S. ▇▇▇▇▇ ▇▇▇▇▇▇
Sworn to and subscribed to me this ____ day of ____________, _____.
Notary Public
My Commission Expires:
(Notary Seal)
Acknowledged and Accepted by the Company, as defined in the Waiver.
By: _________
Date: _________
FIRST AMENDMENT TO CHANGE IN CONTROL AGREEMENT
THIS FIRST AMENDMENT TO CHANGE IN CONTROL AGREEMENT ("Amendment") made
and entered into by and between The Southern Company ("Southern"), Southern
Energy Resources, Inc. (the "Company"), and Ms. S. ▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇. ▇▇▇▇▇▇"),
effective as of the 20th day of July, 1999.
W I T N E S S E T H:
WHEREAS, the parties entered into that certain Change in Control
Agreement (the "Agreement") effective December 10, 1998;
WHEREAS, ▇▇. ▇▇▇▇▇▇ was promoted to Chief Executive Officer of the
Company effective July 20, 1999;
WHEREAS, the parties wish to amend the Agreement in connection with
such promotion;
NOW, THEREFORE, in consideration of the premises, and the agreements of
the parties set forth in this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1. Exhibit A of the Agreement is deleted in its entirety and
the attached new Exhibit A is substituted in its place.
IN WITNESS WHEREOF, this First Amendment to Change in Control Agreement
has been executed by the parties, this ___ day of _____________, 1999.
THE SOUTHERN COMPANY
By: ______________________________
SOUTHERN ENERGY RESOURCES, INC.
By:
▇▇. ▇▇▇▇▇▇
------------------------------
S. ▇▇▇▇▇ ▇▇▇▇▇▇
Exhibit A
CHANGE IN CONTROL AGREEMENT
Target Annual Bonus for
Ms. S. ▇▇▇▇▇ ▇▇▇▇▇▇
65%
Exhibit B
Deferred Compensation Agreement
Annual Documentation of Profitability Goals
For Performance Period
