Employee Retention Agreement - Southern Energy Resources Inc. and Barney Rush
EMPLOYMENT RETENTION AGREEMENT
THIS EMPLOYMENT RETENTION AGREEMENT ("Agreement") made and entered into
by and between Southern Energy Resources, Inc. ("SERI") and Barney Rush (the
"Employee") on January 7, 2000, to be effective as of December 9, 1999 (the
WHEREAS, the Employee is the CEO, Europe of SERI; and
WHEREAS, SERI wishes to encourage the Employee to remain with SERI and
to provide the Employee with an interest in SERI's overall profitability.
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. General Award. Subject to the terms and conditions of this
Agreement, SERI shall pay to the Employee an amount equal to $100,000 (the "Base
Award") plus an additional amount calculated as provided in Section 3 below (the
"Value Award") (collectively referred to as the "Award Amount").
2. Vesting of Award Amount. Payment of the Award Amount is
subject to Employee satisfying the following vesting requirements. The Award
Amount shall vest on the earlier of: (1) January 1, 2003 (the "Vesting Period"),
provided the Employee is then an employee of SERI, or an affiliate or subsidiary
of the Southern Company; or (2) upon a Change of Control as defined in the
Southern Company Executive Change in Control Severance Plan (collectively the
3. Value Award. The Value Award shall be calculated by
multiplying the Base Award times a percentage that is equal to the increase
(expressed as a percentage) in the Share Value of Southern Energy, Inc.
("Southern Energy") as determined first on the most recent Valuation Date
preceding the Effective Date and then again on the most recent Valuation Date
preceding the Vesting Date. Notwithstanding the above, in the event of
termination of employment under Section 6, the Employee, or his estate in the
event of death, shall be entitled to a partial payment of the Value Award (the
"Partial Value Award"). The Partial Value Award shall be calculated by
multiplying the Base Award by a percentage that is equal to the increase
(expressed as a percentage) in the Share Value of Southern Energy as determined
first on the most recent Valuation Date preceding the Effective Date and then
again on the most recent Valuation Date preceding the date of termination of
employment. Notwithstanding the above, the payment of any Value Award or Partial
Value Award under this Section 3 is expressly conditioned upon the determination
that the Share Value of Southern Energy immediately preceding the Vesting Date
or the date of termination of employment, whichever is applicable, is greater
than the Share Value of Southern Energy on the Effective Date. The terms "Share
Value" and "Valuation Date" shall have the meaning set forth in the Amended and
Restated Southern Energy Resources, Inc. Value Creation Plan (the "SERI Value
Plan"), the defined terms of which are incorporated in this Section 3 by
4. Payment of Account Balance. Provided that the Employee is then
an employee of SERI, or an affiliate or subsidiary of the Southern Company, SERI
shall pay to the Employee the value of his Award Amount, in cash, within ten
(10) days of the Vesting Date.
5. Election to Defer. If eligible and permitted under The
Southern Company Deferred Compensation Plan, by written election timely filed
with the Deferred Compensation
Plan Committee, the Employee may defer all or a portion of the amount to be
received under this Agreement, by having such amount contributed on his account
in accordance with the terms and conditions of such Plan.
6. Death, Permanent Disability or Termination Without Cause. In
the event of the Employee's termination of employment with SERI, prior to the
payout of the Award Amount, for reasons of death, permanent disability or
termination by SERI without Cause (as defined in Section 7), SERI shall pay,
within a reasonable time after such event, to the Employee, or his estate in the
event of death, the Base Amount and the applicable Partial Value Amount
determined under Section 3 as of the date of such termination.
7. Termination for Cause or Resignation by Employee. In the
event of the Employee's termination of employment for Cause, or the Employee's
resignation (which includes the Employee's retirement), prior to the Vesting
Date, the Employee shall forfeit the entire Award Amount and SERI shall have no
further obligations with respect to any amount under this Agreement. As used in
this Agreement, the term "Cause" shall mean gross negligence or willful
misconduct in the performance of the duties and services required in the course
of employment by SERI; the final conviction of a felony or misdemeanor involving
moral turpitude; the carrying out of any activity or the making of any statement
which would prejudice the good name and standing of SERI, or an affiliate or
subsidiary of the Southern Company (collectively "Southern") or would bring
Southern into contempt, ridicule or would reasonably shock or offend any
community in which Southern is located; a material breach of the fiduciary
obligations owed by an officer and an employee to Southern; or the Employee's
unsatisfactory performance of the duties and services required by his or her
employment provided that SERI has given the Employee notice of his
unsatisfactory performance and the actions required on the part of the Employee
to make such
performance satisfactory and the Employee has not improved his or her
performance to a satisfactory level within a ninety (90) day period.
8. Confidentiality and Legal Process. The Employee represents and
agrees that he will keep the terms, amount and fact of this Agreement
confidential and that he will not hereafter disclose any information concerning
this Agreement to anyone other than his personal agents, including, but not
limited to, any past, present, or prospective employee or applicant for
employment with SERI, the Southern Company, or its affiliates. Notwithstanding
the foregoing, nothing in this Agreement is intended to prohibit the Employee
from performing any duty or obligation that shall arise as a matter of law.
Specifically, the Employee shall continue to be under a duty to truthfully
respond to matters of law. Specifically, the Employee shall continue to be under
a duty to truthfully respond to any legal and valid subpoena or other legal
process. This Agreement is not intended in any way to proscribe the Employee's
right and ability to provide information to any federal, state or local
government in the lawful exercise of such government's governmental functions.
9. Assignability. Neither the Employee, his estate, his
beneficiaries, nor his legal representative shall have any rights to commute,
sell, assign, transfer or otherwise convey the right to receive any payments
hereunder, which payments and the rights thereto are expressly declared to be
nonassignable and nontransferable. Any attempt to assign or transfer the right
to payments of this Agreement shall be void and have no effect.
10. Unsecured General Creditor. SERI shall neither reserve nor
specifically set aside funds for the payment of its obligations under this
Agreement, and such obligations shall be paid solely from the general assets of
SERI. Notwithstanding that the Employee may be entitled to
receive the Award Amount under the terms and conditions of this Agreement, the
assets from which such amount may be paid shall at all times be subject to the
claims of SERI's creditors.
11. Amendment; Modification; Termination. Except as otherwise
provided herein, this Agreement may be amended, modified, or terminated only by
a writing executed by the parties hereto.
12. No Effect On Other Arrangements. It is expressly understood
and agreed that the payments made in accordance with this Agreement are in
addition to any other benefits or compensation to which the Employee may be
entitled or for which he may be eligible, whether funded or unfunded, by reason
of his employment with the SERI.
13. Tax Withholding. There shall be deducted from each payment
under this Agreement the amount of any tax required by any governmental
authority to be withheld and paid over by SERI to such governmental authority
for the account of the Employee.
14. Compensation. Any compensation contributed on behalf of the
Employee under this Agreement shall not be considered "compensation," as the
term is defined in The Southern Company Employee Savings Plan, The Southern
Company Employee Stock Ownership Plan, The Southern Company Performance Sharing
Plan, or The Southern Company Pension Plan. Distributions from the Employee's
Account shall not be considered wages, salaries or compensation under any other
employee benefit plan.
15. No Guarantee of Employment. No provision of this Agreement
shall be construed to affect in any manner the existing rights of SERI to
suspend, terminate, alter, modify, whether or not for Cause, the employment
relationship of the Employee and SERI.
16. Transfer of Employment to Southern or a Southern Subsidiary or
an Affiliate. In the event that the Employee's employment by SERI is terminated
during the Vesting Period and the Employee shall become immediately re-employed
by the Southern Company or a subsidiary or an affiliate of the Southern Company,
SERI shall assign this Agreement to the Southern Company or such subsidiary or
affiliate; the Southern Company or such subsidiary or affiliate shall accept
such assignment or cause such affiliate or subsidiary to accept such assignment;
such assignee shall become "SERI" for all purposes hereunder; and this Agreement
shall be amended to appropriately reflect the performance of such assignee. In
the event of such assignment, the expense of this Agreement shall be the sole
responsibility of SERI.
17. Governing Law. This Agreement, and all its rights under it,
shall be governed by and construed in accordance with the laws of the State of
IN WITNESS WHEREOF, this Agreement has been executed by the parties
first listed above on the date first listed above, to be effective as of the
SOUTHERN ENERGY RESOURCES, INC.
By: /s/ V. N. Booker
/s/ Barney Rush
By: /s/ Marjorie O. Shaw