Change in Control Agreement - The Southern Co., Southern Energy Inc., Southern Energy Resources Inc. and Raymond Dunlap Hill
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT ("Agreement")
made and entered into by and between The Southern Company ("Southern"), Southern
Energy, Inc. ("SEI"), Southern Energy Resources, Inc. (the "Company") and Mr.
Raymond Dunlap Hill ("Mr. Hill") (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, Mr. Hill is the Executive Vice President and Chief Financial
Officer of the Company which serves as the employer with respect to assets held
WHEREAS, the Parties entered into a Change in Control Agreement
effective December 10, 1998 (the "Original Agreement") to provide to Mr. Hill
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superseded the Original Agreement (the "Second Agreement") to clarify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 Mr. Hill's highest annual
base salary rate for the twelve (12) month
period immediately preceding the date of the Change in Control plus
(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
(d) "COBRA Coverage" shall mean any continuation coverage to which
Mr. Hill or his dependents may be entitled pursuant to Code Section
(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
(i) self-assessment, career decision and goal
(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;
(vi) office support and job search resources.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934,
(k) "Good Reason" shall mean, without Mr. Hill's express
written consent, after written notice to the Board, and after a thirty
(30) day opportunity for the Board to cure, the continuing occurrence
of any of the following events:
(i) Inconsistent Duties. A meaningful and detrimental
alteration in Mr. Hill's position or in the nature or status of
his responsibilities from those in effect immediately prior to the
Change in Control;
(ii) Reduced Salary. A reduction of five percent (5%)
or more by the Company in either of the following: (i) Mr.
Hill's annual base salary rate as in effect immediately prior
to the Change in Control (except for a less than ten percent
(10%), across-the-board annual base salary rate reduction
similarly affecting at least ninety-five percent (95%) of the
Executive Employees of the Company); or (ii) the sum of Mr.
Hill'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 Mr. Hill participates or is a party
as of the date of the Change in Control or the elimination of
Mr. Hill'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
(iv) Relocation. A change in Mr. Hill's work location
to a location more than fifty (50) miles from the office where
Mr. Hill is located at the time of the Change in Control,
unless such new work location is within fifty (50) miles from
Mr. Hill's principal place of residence at the time of the
Change in Control. The acceptance, if any, by Mr. Hill 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 Mr. Hill's right to refuse subsequent
transfer by the Company to a location which is more than fifty
(50) miles from Mr. Hill's principal place of residence at the
time of the Change in Control, and such subsequent unconsented
transfer shall be "Good Reason" under this Agreement; or
(v) Benefits and Perquisites. The taking of any
action by the Company which would directly or indirectly
materially reduce the benefits enjoyed by Mr. Hill under the
Company's retirement, life insurance, medical, health and
accident, disability, deferred compensation or savings plans
in which Mr. Hill was participating immediately prior to the
Change in Control; or the failure by the Company to provide
Mr. Hill with the number of paid vacation days to which Mr.
Hill 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 Mr. Hill, as such plan may be amended from time to time.
(m) "Group Life Insurance Plan" shall mean the group life
insurance program covering Mr. Hill, as such plan may be amended from
time to time.
(n) "Month of Service" shall mean any calendar month during
which Mr. Hill 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
(s) "Southern Board" shall mean the board of directors of Southern.
(t) "SEI" shall mean Southern Energy, Inc., its successors and
(u) "Southern Subsidiary" shall mean any corporation or other entity
Controlled by Southern.
(v) "Termination for Cause" or "Cause" shall mean the termination of
Mr. Hill's employment by the Company upon the occurrence of any of the
(i) The willful and continued failure by Mr. Hill
substantially to perform his duties with the Company (other
than any such failure resulting from Mr. Hill's Total
Disability or from Mr. Hill's retirement or any such actual or
anticipated failure resulting from termination by Mr. Hill for
Good Reason) after a written demand for substantial
performance is delivered to him by the Southern Board, which
demand specifically identifies the manner in which the
Southern Board believes that he has not substantially
performed his duties; or
(ii) The willful engaging by Mr. Hill in conduct that
is demonstrably and materially injurious to the Company,
monetarily or otherwise, including, but not limited to any of
(A) any willful act involving fraud or dishonesty in the
course of Mr. Hill'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
(C) attendance at work in a state of
intoxication or otherwise being found in possession
at his workplace of any prohibited drug or substance,
possession of which would amount to a criminal
(D) violation of the Company's policies on
drug and alcohol usage, fitness for duty requirements
or similar policies as may exist from time to time as
adopted by the Company's safety officer;
(E) assault or other act of violence against
any person during the course of employment; or
(F) indictment of any felony or any misdemeanor
involving moral turpitude.
No act or failure to act by Mr. Hill shall be deemed "willful"
unless done, or omitted to be done, by Mr. Hill not in good faith and
without reasonable belief that his action or omission was in the best
interest of the Company.
Notwithstanding the foregoing, Mr. Hill shall not be deemed to
have been terminated for Cause unless and until there shall have been
delivered to him a copy of a resolution duly adopted by the affirmative
vote of not less than three quarters of the entire membership of the
Southern Board at a meeting of the Southern Board called and held for
such purpose (after reasonable notice to Mr. Hill and an opportunity
for him, together with counsel, to be heard before the Southern Board),
finding that, in the good faith opinion of the Southern Board, Mr. Hill
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 Mr. Hill's
employment with the Company is terminated; provided, however, that
solely for purposes of Paragraph 2.(c) hereof, the Termination Date
shall be the effective date of his retirement pursuant to the terms of
the Pension Plan.
(x) "Total Disability" shall mean Mr. Hill'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 Mr. Hill's Months
of Service divided by twelve (12) rounded to the nearest
whole year, rounding up if the remaining number of months is seven (7)
or greater and rounding down if the remaining number of months is less
than seven (7). If Mr. Hill has a break in his service with the Company,
he will receive credit under this Agreement for service prior to the
break in service only if the break in service is less than five years.
2. Severance Benefits.
(a) Eligibility. Except as otherwise provided in this
Paragraph 2.(a), if Mr. Hill's employment is involuntarily terminated
by the Company at any time during the two year period following a
Change in Control for reasons other than Cause, or if Mr. Hill
voluntarily terminates his employment with the Company for Good Reason
at any time during the two year period following a Change in Control,
Mr. Hill shall be entitled to receive the benefits described in this
Agreement upon the Company's receipt of an effective Waiver and
Release. Notwithstanding anything to the contrary herein, Mr. Hill
shall not be eligible to receive benefits under this Agreement if Mr.
(i) voluntarily terminates his employment with the
Company for other than Good Reason;
(ii) has his employment terminated by the Company for Cause;
(iii) accepts the transfer of his employment to Southern,
any Southern Subsidiary or any employer that
succeeds to all or substantially all of the assets of 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 Mr. Hill meets the eligibility
requirements of Paragraph 2.(a) hereof, he shall be entitled to a cash
severance benefit in an amount equal to three times his Annual
Compensation (the "Severance Amount"). If any portion of the Severance
Amount constitutes an "excess parachute payment" (as such term is
defined under Code Section 280G ("Excess Parachute Payment")), the
Company shall pay to Mr. Hill an additional amount calculated by
determining the amount of tax under Code Section 4999 that he otherwise
would have paid on any Excess Parachute Payment with respect to the
Change in Control and dividing such amount by a decimal determined by
adding the tax rate under Code Section 4999 ("Excise Tax"), the
hospital insurance tax under Code Section 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
Mr. Hill under Code Section 280G exceeds three (3) times Mr. Hill's
"base amount" (as such term is defined under Code Section 280G ("Base
Amount")) by ten percent (10%) or more; provided further, that if no
280G Gross-up is paid, the Severance Amount shall be capped at three
(3) times Mr. Hill's Base Amount, less all other "parachute payments"
(as such term is defined under Code Section 280G) received by Mr. Hill,
less one dollar (the "Capped Amount"), if the Capped Amount, reduced by
I 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
(c) Welfare Benefits. If Mr. Hill meets the eligibility requirements
of Paragraph 2.(a) hereof and is no otherwise eligible to receive retiree
medical and life insurance benefits provided to certain retirees pursuant
to the terms of the Pension Plan, the Group Health Plan and the Group Life
Insurance Plan, he shall be entitled to the benefits set forth in this
(i) Mr. Hill 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 his
monthly premium under such plan, for a period of six (6)
months for each of Mr. Hill's Years of Service. If Mr. Hill
elects to receive this extended medical coverage, he shall
also be entitled to elect coverage under the Group Health Plan
for his dependents who were participating in the Group Health
Plan on Mr. Hill's Termination Date (and for such other
dependents as may be entitled to coverage under the provisions
of the Health Insurance Portability and Accountability Act of
1996) for the duration of Mr. Hill's extended medical coverage
under this Paragraph 2.(c)(i) to the extent such dependents
remain eligible for dependent coverage under the terms of the
Group Health Plan.
(A) The extended medical coverage afforded
to Mr. Hill pursuant to Paragraph 2.(c)(i), as well
as the premiums to be paid by Mr. Hill in connection
with such coverage shall be determined in accordance
with the terms of the Group Health Plan and shall be
subject to any changes in the terms and conditions of
the Group Health Plan as well as any future increases
in premiums under the Group Health Plan. The premiums
to be paid by Mr. Hill in connection with this
extended coverage shall be due on the first day of
each month; provided, however, that if he fails to
pay his premium within thirty (30) days of its due
date, such extended coverage shall be terminated.
(B) Any Group Health Plan coverage provided
under Paragraph 2.(c)(i) shall be a part of and not
in addition to any COBRA Coverage which Mr. Hill or
his dependent may elect. In the event that Mr. Hill
or his dependent becomes eligible to be covered, by
virtue of re-employment or otherwise, by any
employer-sponsored group health plan or is eligible
for coverage under any government-sponsored health
plan during the above period, coverage under the
Company's Group Health Plan available to Mr. Hill or
his 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
(ii) Mr. Hill shall be entitled to receive cash in an
amount equal to the Company's and Mr. Hill's cost of premiums
for three (3) years of coverage under the Group Health Plan
and Group Life Insurance Plan in accordance with the terms of
such plans as of the date of the Change in Control.
(d) Incentive Plans.
If Mr. Hill meets the eligibility requirements of Paragraph 2.(a) hereof
he shall be entitled to the following benefits under the Company's incentive
(i) Stock Option Plan.
(A) Any of Mr. Hill'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 Mr. Hill 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 Mr. Hill 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 Mr. Hill'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
(C) The restrictions and deferral
limitations and other conditions applicable to any
other Awards held by Mr. Hill 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 Mr. Hill 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 Mr. Hill's Termination Date and to the extent
Mr. Hill is entitled to participate therein, Mr. Hill shall be
entitled to receive cash for each Award held by Mr. Hill on
his 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
(iii) Value Creation Plan. Any of Mr. Hill'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
Mr. Hill following his 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, Mr. Hill's rights and benefits under the terms of
the Value Creation Plan will not be prejudiced by execution of
(iv) Other Short Term Incentive Plans. The provisions
of this Paragraph 2.(d)(iv) shall apply if and to the extent
that Mr. Hill is a participant in any other "short term
compensation plan" not otherwise previously referred to in
this Paragraph 2.(d). Provided Mr. Hill is not otherwise
entitled to a plan payout under any change of control
provisions of such plans, if the "short term compensation
plan" is in place as of the Termination Date and to the extent
Mr. Hill is entitled to participate therein, Mr. Hill shall
receive cash in an amount equal to his award under the
Company's "short term incentive plan" for the annual
performance period in which the Termination Date shall have
occurred, at Mr. Hill's target performance level and prorated
by the number of months which have passed since the beginning
of the annual performance period until his Termination Date.
For purposes of this Paragraph 2.(d)(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 Mr. Hill 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 Mr. Hill's
Termination Date and to the extent that Mr. Hill is entitled
to participate therein, any of Mr. Hill's Awards as of the
Termination Date which are not then vested shall become fully
vested and Mr. Hill shall be entitled to receive cash in the
amount equal to Mr. Hill's Account as of his 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
(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"),
Mr. Hill'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)
(e) Payment of Benefits. Any amounts due under this Agreement shall be
paid in one (1) lump sum payment as soon as administratively practicable
following the later of: (i) Mr. Hill's Termination Date, or (ii) upon Mr.
Hill'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, Mr. Hill 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. Mr. Hill's right to payment is not increased
as a result of this SEI Guarantee. He has the same right to payment
from SEI as he 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 Mr. Hill's
death prior to the payment of all amounts due under this Agreement, Mr.
Hill's estate shall be entitled to receive as due any amounts not yet
paid under this Agreement upon the tender by the executor or
administrator of the estate of an effective Waiver and Release.
(g) Legal Fees. In the event of a dispute between Mr. Hill and
the Company with regard to any amounts due hereunder, if any material
issue in such dispute is finally resolved in Mr. Hill's favor, the
Company shall reimburse Mr. Hill's legal fees incurred with respect to
all issues in such dispute in an amount not to exceed fifty thousand
(h) Employee Outplacement Services. Mr. Hill shall be eligible to
participate in the Employee Outplacement Program, which program shall not
be less than six (6) months duration measured from Mr. Hill's Termination
(i) Non-qualified Retirement and Deferred Compensation Plans.
The Parties agree that subsequent to a Change in Control, any claims by
Mr. Hill for benefits under any of the Company's non-qualified
retirement or deferred compensation plans shall be resolved through
binding arbitration in accordance with the provisions and procedures
set forth in Paragraph 5 hereof and if any material issue in such
dispute is finally resolved in Mr. Hill's favor, the Company shall
reimburse Mr. Hill's legal fees in the manner provided in Paragraph
3. Transfer of Employment. In the event that Mr. Hill's employment by
the Company is terminated during the two year period following a Change in
Control and Mr. Hill 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
4. No Mitigation. If Mr. Hill is otherwise eligible to receive
benefits under Paragraph 2 of this Agreement, he shall have no duty or
obligation to seek other employment following his Termination Date and,
except as otherwise provided in Paragraph 2.(a)(iii) hereof, the amounts
due Mr. Hill hereunder shall not be reduced or suspended if Mr. Hill
accepts such subsequent employment.
(a) Any dispute, controversy or claim arising out of or
relating to the Company's obligations to pay severance benefits under
this Agreement, or the breach thereof, shall be settled and resolved
solely by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA") except as
otherwise provided herein. The arbitration shall be the sole and
exclusive forum for resolution of any such claim for severance benefits
and the arbitrators' award shall be final and binding. The provisions
of this Paragraph 5 are not intended to apply to any other disputes,
claims or controversies arising out of or relating to Mr. Hill's
employment by the Company or the termination thereof.
(b) Arbitration shall be initiated by serving a written notice of demand
for arbitration to Mr. Hill, in the case of the Company, or to the Southern
Board, in the case of Mr. Hill.
(c) The arbitration shall be held in Atlanta, Georgia. The
arbitrators shall apply the law of the State of Georgia, to the extent
not preempted by federal law, excluding any law which would require the
application of the law of another state.
(d) The parties shall appoint arbitrators within fifteen (15)
business days following service of the demand for arbitration. The
number of arbitrators shall be three. One arbitrator shall be appointed
by Mr. Hill, one arbitrator shall be appointed by the Company, and the
two arbitrators shall appoint a third. If the arbitrators cannot agree
on a third arbitrator within thirty (30) business days after the
service of demand for arbitration, the third arbitrator shall be
selected by the AAA.
(e) The arbitration filing fee shall be paid by Mr. Hill. All
other costs of arbitration shall be borne equally by Mr. Hill and the
Company, provided, however, that the Company shall reimburse such fees
and costs in the event any material issue in such dispute is finally
resolved in Mr. Hill's favor and Mr. Hill 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
(a) Funding of Benefits. Unless the Board, in its discretion
shall determine otherwise, the benefits payable to Mr. Hill under this
Agreement shall not be funded in any manner and shall be paid by the
Company out of its general assets, which assets are subject to the
claims of the Company's creditors.
(b) Withholding. There shall be deducted from the payment of any benefit
due under this Agreement the amount of any tax required by any governmental
authority to be withheld and paid over by the Company to such governmental
authority for the account of Mr. Hill.
Mr. Hill 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 __________________,______.
THE SOUTHERN COMPANY
SOUTHERN ENERGY RESOURCES, INC.
SOUTHERN ENERGY, INC.
/s/ Raymond Dunlap Hill
Raymond Dunlap Hill
CHANGE IN CONTROL AGREEMENT
Waiver and Release
The attached Waiver and Release is to be given to Mr. Raymond Dunlap
Hill 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, Raymond Dunlap Hill, 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
IN WITNESS WHEREOF, the undersigned hereby executes this Waiver
this ____ day of ____________________, in the year _____.
/s/ Raymond Dunlap Hill
Raymond Dunlap Hill
Sworn to and subscribed to me this
____ day of ____________, _____.
My Commission Expires:
Acknowledged and Accepted by the Company, as defined in the Waiver.