CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT ("Agreement")
made and entered into by and between The Southern Company ("Southern"), Southern
Energy, Inc. ("SEI"), Southern Energy Resources, Inc. (the "Company") and Ms. S.
Marce Fuller ("Ms. Fuller") (hereinafter collectively referred to as the
"Parties") is effective as of the date of execution of this Agreement unless
otherwise provided herein.
W I T N E S S E T H:
WHEREAS, Ms. Fuller is the Chief Executive Officer of SEI and the
Company, and the Company serves as the employer with respect to assets held
by SEI;
WHEREAS, the Parties entered into a Change in Control Agreement
effective December 10, 1998 (the "Original Agreement") to provide to Ms.
Fuller certain severance benefits under certain circumstances following a
change in control (as defined herein) of Southern or the Company;
WHEREAS, the parties subsequently entered into a Change in Control
Agreement, effective December 10, 1998 and executed June 17, 1999,
which superseded the Original Agreement (the "Second Agreement") to
clarify benefits under this Agreement related to the Southern Energy
Resources, Inc. Deferred Incentive Compensation Plan;
WHEREAS, pursuant to Section 6(d) of the Second Agreement, the Parties
may amend the Second Agreement by written agreement;
WHEREAS, the Parties wish to enter into this Amended and Restated
Change in Control Agreement pursuant to the provisions of such Section 6(d),
to (i) change certain references from normal market bonus to target bonus,
(ii) incorporate by reference the definition of "change in control" as
provided under the Change in Control Benefit Plan Determination Policy
adopted by the board of directors of SEI, (iii) reflect SEI's guarantee of
benefits under the Agreement, (iv) reference an Omnibus Incentive
Compensation Plan which may be adopted by SEI in the future, and (v) certain
other technical and miscellaneous modifications;
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 Ms. Fuller's highest annual base
salary rate for the twelve (12) month period immediately preceding the date
of the Change in Control plus target bonus.
(b) "Board" shall mean the board of directors of the Company.
(c) "Change in Control" shall have the meaning of such term as set
forth in the Change in Control Benefit Plan Determination Policy, as
approved by the board of directors of SEI, as such Policy may be amended
from time to time in accordance with the provisions therein. However, any
amendment to the Policy which causes the definition of "Change in Control"
to be more restrictive than such definition in effect on the Effective Date
shall not be taken into account for purposes of this Agreement, unless
approved by the board of directors of SEI or a compensation committee
thereof and agreed to in writing by Ms. Fuller.
(d) "COBRA Coverage" shall mean any continuation coverage to which
Ms. Fuller or her dependents may
be entitled pursuant to Code Section 4980B.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Company" shall mean Southern Energy Resources, Inc., its
successors and assigns.
(g) "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.
(h) "Effective Date" shall mean the date of execution of this
Agreement, unless otherwise provided herein.
(i) "Employee Outplacement Program" shall mean the program established
by the Company from time to time for the purpose of assisting participants
covered by the plan in finding employment outside of the Company which
provides for the following services:
(i) self-assessment, career decision and goal setting;
(ii) job market research and job sources;
(iii) networking and interviewing skills;
(iv) planning and implementation strategy;
(v) resume writing, job hunting methods and salary negotiation;
and
(vi) office support and job search resources.
(j "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(k) "Good Reason" shall mean, without Ms. Fuller's express written
consent, after written notice to the Board, and after a thirty (30) day
opportunity for the Board to cure, the continuing occurrence of any of the
following events:
(i) Inconsistent Duties. A meaningful and detrimental
alteration in Ms. Fuller's 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) Ms. Fuller's annual base salary rate as in effect
immediately prior to the Change in Control (except for a less than
ten percent (10%), across-the-board annual base salary rate
reduction similarly affecting at least ninety-five percent
(95%) of the Executive Employees of the Company); or
(ii) the sum of Ms. Fuller's 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 Ms. Fuller participates or is a party
as of the date of the Change in Control or the elimination of
Ms. Fuller's participation therein, (except for across-the-board
plan changes or terminations similarly affecting at least
ninety-five percent (95%) of the Executive Employees of the
Company); For purposes of this Paragraph 1.(k), 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 Ms. Fuller's work location
to a location more than fifty (50) miles from the office
where Ms. Fuller is located at the time of the Change in Control,
unless such new work location is within fifty (50) miles from Ms.
Fuller's principal place of residence at the time of the Change
in Control. The acceptance, if any, by Ms. Fuller of employment
by the Company at a work location which is outside the fifty
mile radius set forth in this Paragraph 1.(k)
(iv) shall not be a waiver of Ms.Fuller's right to refuse
subsequent transfer by the Company to a location which is more
than fifty (50) miles from Ms.Fuller's principal place of
residence at the time of the Change in Control, and
such subsequent unconsented transfer shall be "Good Reason"
under this Agreement; or
(v) Benefits and Perquisites. The taking of any action by
the Company which would directly or indirectly materially
reduce the benefits enjoyed by Ms. Fuller under the Company's
retirement, life insurance, medical, health and accident,
disability, deferred compensation or savings plans in which Ms.
Fuller was participating immediately prior to the Change in
Control; or the failure by the Company to provide Ms.
Fuller with the number of paid vacation days to which Ms. Fuller
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.(k), the term
"Executive Employee" shall mean employees of the Company
whose annual base salary is $130,000 or more.
(l) "Group Health Plan" shall mean the group health plan covering
Ms. Fuller, as such plan may be amended from time to time.
(m) "Group Life Insurance Plan" shall mean the group life insurance
program covering Ms. Fuller, as such plan may be amended from time to time.
(n) "Month of Service" shall mean any calendar month during which Ms.
Fuller 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.
(o) "Pension Plan" shall mean The Southern Company Pension Plan, as
such plan may be amended from time to time.
(p) "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.
(q) "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.
(r) "Southern" shall mean The Southern Company, its successors and
assigns.
(s) "Southern Board" shall mean the board of directors of Southern.
(t) "SEI" shall mean Southern Energy, Inc., its successors and assigns.
(u) "Southern Subsidiary" shall mean any corporation or other entity
Controlled by Southern.
(v) "Termination for Cause" or "Cause" shall mean the termination of
Ms. Fuller's employment by the Company upon the occurrence of any of
the following:
(i) The willful and continued failure by Ms. Fuller substantially
to perform her duties with the Company (other than any such
failure resulting from Ms. Fuller's Total Disability or from Ms.
Fuller's retirement or any such actual or anticipated failure
resulting from termination by Ms. Fuller 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 Ms. Fuller 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 Ms. Fuller's employment by the
Company;
(B) the willful carrying out of any activity or the
making of any statement which would materially prejudice or
impair the good name and standing of the Company, SEI, Southern
or any Southern Subsidiary or would bring the Company, SEI,
Southern or any other Southern Subsidiary into
contempt, ridicule or would reasonably shock or offend any
community in which the Company, SEI, 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 Ms. Fuller shall be deemed "willful"
unless done, or omitted to be done, by Ms. Fuller not in good faith and
without reasonable belief that her action or omission was in the best
interest of the Company.
Notwithstanding the foregoing, Ms. Fuller 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 Ms. Fuller
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, Ms. Fuller was guilty of conduct set forth above in
clause (i) or (ii) of this Paragraph 1.(v) and specifying the
particulars thereof in detail.
(w) "Termination Date" shall mean the date on which Ms.
Fuller's employment with the Company is terminated; provided, however,
that solely for purposes of Paragraph 2.(c) hereof, the Termination
Date shall be the effective date of her retirement pursuant to the
terms of the Pension Plan.
(x) "Total Disability" shall mean Ms. Fuller's total disability
within the meaning of the Pension Plan.
(y) "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.
(z) "Waiver and Release" shall mean the Waiver and Release attached
hereto as Exhibit A.
(aa) "Year of Service" shall mean Ms. Fuller'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 Ms.
Fuller 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 Ms. Fuller's employment is involuntarily terminated
by the Company at any time during the two year period following a
Change in Control for reasons other than Cause, or if Ms. Fuller
voluntarily terminates her employment with the Company for Good Reason
at any time during the two year period following a Change in Control,
Ms. Fuller 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, Ms. Fuller
shall not be eligible to receive benefits under this Agreement if Ms.
Fuller:
(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 SEI,
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 SEI,
Southern, or any Southern Subsidiary under circumstances where
such refusal would not amount to Good Reason for voluntary
termination of employment; or
(v) elects to receive the benefits of any other
voluntary or involuntary severance or separation program, plan
or agreement maintained by the Company in lieu of benefits
under this Agreement; provided however, that the receipt of
benefits under the terms of any retention plan or agreement
shall not be deemed to be the receipt of severance or
separation benefits for purposes of this Agreement.
(b) Severance Benefits. If Ms. Fuller 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 Ms. Fuller 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
Ms. Fuller under Code Section 280G exceeds three (3) times Ms. Fuller's
"base amount" (as such term is defined under Code Section 280G ("Base
Amount")) by ten percent (10%) or more; provided further, that if no
280G Gross-up is paid, the Severance Amount shall be capped at three
(3) times Ms. Fuller's Base Amount, less all other "parachute payments"
(as such term is defined under Code Section 280G) received by Ms.
Fuller, 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 Ms. Fuller 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) Ms. Fuller shall be eligible to participate for a
period not to exceed five (5) years 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 Ms. Fuller's Years of Service. If Ms.
Fuller 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 Ms. Fuller'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 Ms. Fuller's
extended medical coverage under this Paragraph 2.(c)(i) to the
extent such dependents remain eligible for dependent coverage
under the terms of the Group Health Plan.
(A) The extended medical coverage afforded
to Ms. Fuller pursuant to Paragraph 2.(c)(i), as well
as the premiums to be paid by Ms. Fuller 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 Ms. Fuller 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 Ms. Fuller or
her dependent may elect. In the event that Ms. Fuller
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 Ms. Fuller
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) Ms. Fuller shall be entitled to receive
cash in an amount equal to the Company's and Ms. Fuller's
cost of premiums for three (3) years of coverage under
the Group Health Plan and Group Life Insurance Plan in
accordance with the terms of such plans as of the date of
the Change in Control.
(d) Incentive Plans. If Ms. Fuller 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 Ms. Fuller's 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 Ms. Fuller 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 Ms. Fuller 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 Ms. Fuller'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.
(C) The restrictions and deferral
limitations and other conditions applicable to any
other Awards held by Ms. Fuller 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 Ms. Fuller
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 Ms. Fuller's Termination Date and to
the extent Ms. Fuller is entitled to participate therein, Ms.
Fuller shall be entitled to receive cash for each Award held
by Ms. Fuller 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 Ms. Fuller's
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
Ms. Fuller following her Termination Date shall be no less
than the Share Value as of the date of the Change in Control
of Southern or SEI, as the case may be. In addition,
notwithstanding any provision in this Agreement to the
contrary, Ms. Fuller's rights and benefits under the terms of
the Value Creation Plan will not be prejudiced by execution of
this Agreement.
(iv) Other Short Term Incentive Plans. The provisions
of this Paragraph 2.(d)(iv) shall apply if and to the extent
that Ms. Fuller is a participant in any other "short term
compensation plan" not otherwise previously referred to in
this Paragraph 2.(d). Provided Ms. Fuller 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
Ms. Fuller is entitled to participate therein, Ms. Fuller
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 Ms. Fuller's 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 Ms. Fuller 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 Ms. Fuller's
Termination Date and to the extent that Ms. Fuller is entitled
to participate therein, any of Ms. Fuller's Awards as of the
Termination Date which are not then vested shall become fully
vested and Ms. Fuller shall be entitled to receive cash in the
amount equal to Ms. Fuller's 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.
(vi) Omnibus Incentive Compensation Plan. In the event
of an initial public offering of SEI and the adoption of the
Southern Energy, Inc. Omnibus Incentive Compensation Plan (the
"Omnibus Plan"), Ms. Fuller's right to receive incentive
compensation under the Omnibus Plan in the event of a "change in
control," as defined therein, shall be governed by the terms of
such Omnibus Plan and the award(s) granted thereunder.
(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) Ms. Fuller's Termination Date,
or (ii) upon Ms. Fuller's tender of an effective Waiver and Release to
the Company in the form of Exhibit A attached hereto and the
expiration of any applicable revocation period for such waiver.
In the event of a dispute with respect to liability or amount of
any benefit due hereunder, an effective Waiver and Release
shall be tendered at the time of final resolution of any such
dispute when payment is tendered by the Company.
Effective May 10, 2000, if the Company fails or refuses to make
payments under the Agreement, Ms. Fuller may have the right to obtain
payment by SEI pursuant to the terms of the "Guarantee Agreement
Concerning Southern Energy Resources, Inc. Compensation and Benefit
Arrangements" entered into by the Company and SEI. Ms. Fuller's right
to payment is not increased as a result of this SEI Guarantee. She has
the same right to payment from SEI as she would have from the Company.
Any demand to enforce this SEI Guarantee should be made in writing and
should reasonably and briefly specify the manner and the amount the
Company has failed to pay. Such writing given by personal delivery or
mail shall be effective upon actual receipt. Any writing given by
telegram or telecopier shall be effective upon actual receipt if
received during SEI's normal business hours, or at the beginning of the
next business day after receipt, if not received during SEI's normal
business hours. All arrivals by telegram or telecopier shall be
confirmed promptly after transmission in writing by certified mail or
personal delivery.
(f) Benefits in the Event of Death. In the event of Ms.
Fuller's death prior to the payment of all amounts due under this
Agreement, Ms. Fuller's estate shall be entitled to receive as due any
amounts not yet paid under this Agreement upon the tender by the
executor or administrator of the estate of an effective Waiver and
Release.
(g) Legal Fees. In the event of a dispute between Ms. Fuller
and the Company with regard to any amounts due hereunder, if any
material issue in such dispute is finally resolved in Ms. Fuller's
favor, the Company shall reimburse Ms. Fuller's legal fees incurred
with respect to all issues in such dispute in an amount not to exceed
fifty thousand dollars ($50,000).
(h) Employee Outplacement Services. Ms. Fuller shall be eligible
to participate in the Employee Outplacement Program, which program
shall not be less than six (6) months duration measured
from Ms. Fuller's Termination Date.
(i) Non-qualified Retirement and Deferred Compensation Plans.
The Parties agree that subsequent to a Change in Control, any claims by
Ms. Fuller 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 Ms. Fuller's favor, the Company shall
reimburse Ms. Fuller's legal fees in the manner provided in Paragraph
2.(g) hereof.
3. Transfer of Employment. In the event that Ms. Fuller's employment by
the Company is terminated during the two year period following a Change in
Control and Ms. Fuller accepts employment by Southern, a Southern Subsidiary, or
any employer that succeeds to all or substantially all of the assets of SEI,
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 Ms. Fuller 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 Ms. Fuller
hereunder shall not be reduced or suspended if Ms. Fuller 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 Ms. Fuller's
employment by the Company or the termination thereof.
(b) Arbitration shall be initiated by serving a written notice of
demand for arbitration to Ms. Fuller, in the case of the Company, or
to the Southern Board, in the case of Ms. Fuller.
(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 Ms. Fuller, 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 Ms. Fuller.
All other costs of arbitration shall be borne equally by Ms. Fuller 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 Ms. Fuller's favor and Ms. Fuller 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 Ms. Fuller 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 Ms. Fuller.
(c) Assignment. Ms. Fuller 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 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 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 __________________, 2000.
THE SOUTHERN COMPANY
By: ____________________________________
SOUTHERN ENERGY RESOURCES, INC.
By: ____________________________________
SOUTHERN ENERGY, INC.
By: ____________________________________
MS. FULLER
-----------------------------
/s/ Marce Fuller
S. Marce Fuller
marcefuller
25
Exhibit A
CHANGE IN CONTROL AGREEMENT
Waiver and Release
The attached Waiver and Release is to be given to Ms. S. Marce Fuller
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. Marce Fuller, 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/ S. Marce Fuller
S. Marce Fuller
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:
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Change in Control Agreement - The Southern Co., Southern Energy Inc., Southern Energy Resources Inc. and S. Marce Fuller
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