AMENDED AND RESTATED CHANGE IN CONTROL AGREEMENT

Exhibit 10(a)8

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 Company Services, Inc. (the "Company") and Mr. G. Edison Holland ("Mr. Holland") (hereinafter collectively referred to as the "Parties") is effective December 31 , 2008. This Agreement amends and restates the Amended and Restated Change in Control Agreement entered into by Mr. Holland, Southern and the Company, effective January 1, 2007.

 

WITNESSETH :

 

WHEREAS, Mr. Holland is the Executive Vice President and General Counsel of the Company;

WHEREAS, the Company wishes to provide to Mr. Holland certain severance benefits under certain circumstances following a change in control (as defined herein) of Southern or the Company;

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:

 

 

ARTICLE I – DEFINITIONS.

For purposes of this Agreement, the following terms shall have the following meanings:

 

1.1        “ Annual Compensation ” shall mean Mr. Holland’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan.

1.2        “ Base Salary ” shall mean Mr. Holland’s highest annual base salary rate during the twelve (12) month period immediately preceding the date the Change in Control is Consummated.

1.3        “ Beneficial Ownership ” shall mean beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act.

1.4        “ Benefit Index ” shall mean the Hewitt Associates’ Benefit Index(r), or if such index is no longer available, cannot be used, or if pursuant to Section 1.5 hereof another Benefits Consultant has been chosen by the Compensation Committee, such other comparable index utilized by the Benefits Consultant.

1.5        “ Benefits Consultant ” shall mean Hewitt Associates or such other nationally recognized employee benefits consulting firm as shall be designated in writing by the Compensation Committee upon the occurrence of a Preliminary Change in Control that would result in a Subsidiary Change in Control.

1.6        “ Board of Directors ” shall mean the board of directors of the Company.

1.7        “ Business Combination ” shall mean a reorganization, merger or consolidation of Southern with another corporation or an entity treated as a corporation for United States federal income tax purposes.

 

 

1.8        “ Change in Control ” shall mean,

(a)        with respect to Southern, the occurrence of any of the following:

(i)        The Consummation of an acquisition by any Person of Beneficial Ownership of 20% or more of Southern’s Voting Securities; provided, however, that for purposes of this Section 1.8(a)(i) the following acquisitions of Southern’s Voting Securities shall not constitute a Change in Control:

(A)        any acquisition directly from Southern;

(B)        any acquisition by Southern;

(C)       any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary;

(D)       any acquisition by a qualified pension plan or publicly held mutual fund;

(E)        any acquisition by an employee of Southern or a Southern Subsidiary, or Group composed exclusively of such employees; or

(F)        any Business Combination which would not otherwise constitute a Change in Control because of the application of clauses (A), (B) or (C) of Section 1.8(a)(iii);

(ii)        A change in the composition of the Southern Board whereby individuals who constitute the Incumbent Board cease for any reason to constitute at least a majority of the Southern Board; or

 

 

(iii)       The Consummation of a Business Combination, unless, following such Business Combination, all of the following three conditions are met:

(A)       all or substantially all of the individuals and entities who held Beneficial Ownership, respectively, of Southern’s Voting Securities immediately prior to such Business Combination hold Beneficial Ownership, directly or indirectly, of 65% or more of the combined voting power of the Voting Securities of the corporation surviving or resulting from such Business Combination, (including, without limitation, a corporation which as a result of such Business Combination holds Beneficial Ownership of all or substantially all of Southern’s Voting Securities or all or substantially all of Southern’s assets) (such surviving or resulting corporation to be referred to as “Surviving Company”), in substantially the same proportions as their ownership, immediately prior to such Business Combination, of Southern’s Voting Securities;

(B)       no Person (excluding any qualified pension plan, publicly held mutual fund, Group composed exclusively of Employees or employee benefit plan (or related trust) of Southern, any Southern Subsidiary or Surviving Company) holds Beneficial Ownership, directly or indirectly, of 20% or more of the combined voting power of the then outstanding Voting Securities of Surviving Company except to the extent that such ownership existed prior to the Business Combination; and

 

 

(C)       at least a majority of the members of the board of directors of Surviving Company were members of the Incumbent Board on the date of the Preliminary Change in Control.

(b)       with respect to the Company, the occurrence of any of the following:

(i)         The Consummation of an acquisition by any Person of Beneficial Ownership of 50% or more of the combined voting power of the then outstanding Voting Securities of the Company; provided, however, that for purposes of this Section 1.8(b)(i), any acquisition by Mr. Holland, any other employee of Southern or a Southern Subsidiary, or Group composed entirely of such employees, any qualified pension plan, any publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any Southern Subsidiary shall not constitute a Change in Control;

(ii)        The Consummation of a reorganization, merger or consolidation of the Company with another corporation or an entity treated as a corporation for United States federal income tax purposes (“Company Business Combination”), in each case, unless, following such Company Business Combination, Southern or a Southern Subsidiary Controls the corporation surviving or resulting from such Company Business Combination; or

(iii)       The Consummation of the sale or other disposition of all or substantially all of the assets of the Company to an entity which Southern or a Southern Subsidiary does not Control (“Subsidiary Change in Control”).

 

 

1.9        “ COBRA Coverage ” shall mean any continuation coverage to which Mr. Holland or his dependents may be entitled pursuant to Code Section 4980B.

1.10        “ Code ” shall mean the Internal Revenue Code of 1986, as amended.

1.11        “ Common Stock ” shall mean the common stock of Southern.

1.12        “ Company ” shall mean Southern Company Services, Inc., its successors and assigns.

1.13      “ Compensation Committee ” shall mean the Compensation and Management Succession Committee of the Southern Board.

1.14      “ Consummation ” shall mean the completion of the final act necessary to complete a transaction as a matter of law, including, but not limited to, any required approvals by the corporation’s shareholders and board of directors, the transfer of legal and beneficial title to securities or assets and the final approval of the transaction by any applicable domestic or foreign governments or governmental agencies.

1.15      “ Control ” shall mean, in the case of a corporation, Beneficial Ownership of more than 50% of the combined voting power of the corporation’s Voting Securities, or in the case of any other entity, Beneficial Ownership of more than 50% of such entity’s voting equity interests.

1.16      “ Economic Equivalent ” or “ Economic Equivalence ” shall have the meaning set forth in Section 1.23(f) hereof.

1.17      “ Employee Outplacement Program ” shall mean the program established by the Company from time to time for the purpose of assisting employees in finding employment outside of the Company which provides for the following services:

 

 

(a)      self assessment, career decision and goal setting;

(b)      job market research and job sources;

(c)      networking and interviewing skills;

(d)      planning and implementation strategy;

(e)      resume writing, job hunting methods and salary negotiation; and

(f)      office support and job search resources.

1.18      “ Company ” shall mean Southern Company Services, Inc., its successors and assigns.

1.19      “ Company Business Combination ” shall have the meaning set forth in Section 1.8(b)(ii) hereof.

1.20      “ Equity Based Bonus Plan ” shall mean a plan or arrangement that provides for the grant to participants of stock options, restricted stock, stock appreciation rights, phantom stock, phantom stock appreciation rights or any other similar rights the terms of which provide a participant with the potential to receive the benefit of any increase in value of the underlying equity or notional amount (e.g., number of phantom shares) from the date of grant through a subsequent date.

1.21      “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

1.22      “ Executive Employee ” shall mean those employees of the Company of Grade Level 10 or above.

1.23      “ Good Reason ” shall mean, without Mr. Holland’s express written consent, after written notice to the Company within ninety (90) days of the initial occurrence of the condition giving rise to Good Reason as provided herein, and after a thirty (30) day opportunity for the

 

 

Company to cure, the continuing occurrence of any of the events described in Subsections (a)(i), (b)(i), (c)(i), (d)(i) or (d)(ii) of this Section 1.23. In the case of Mr. Holland claiming benefits under this Agreement upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if Mr. Holland provides to the Compensation Committee a copy of his written offer of employment by the acquiring company within thirty (30) days of such offer along with a written explanation describing how the terms of such offer satisfy the requirements of Subsections (a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) of this Section 1.23. The Compensation Committee shall make a determination of whether such written offer of employment satisfies the requirements of Sections 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof upon consultation with the Benefits Consultant and shall notify Mr. Holland of its decision within thirty (30) days of receipt of Mr. Holland’s written offer of employment. Any dispute regarding the Compensation Committee’s decision shall be resolved in accordance with Article III hereof. This definition of “Good Reason” is intended to constitute an involuntary separation from service as contemplated by Treasury Regulation section 1.409A-1(n)(2).

(a)      Inconsistent Duties.   Change in Control . A meaningful and detrimental alteration in Mr. Holland’s position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control.

(i)          Subsidiary Change in Control . Notwithstanding Section 1.23(a)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Holland is offered employment with the acquiring employer with a job title, duties and status which are materially and detrimentally lower than Mr. Holland’s job title, duties and status in effect at the Company as of the date the offer of employment is received.

 

 

(b)       Reduced Compensation .

(i)          Change in Control . A reduction of five percent (5%) or more by the Company in any of the following amounts of compensation expressed in subparagraphs (A), (B) or (C) hereof, except for a less than ten percent (10%), across-the-board reduction in such compensation amounts similarly affecting ninety-five percent (95%) or more of the Executive Employees eligible for such compensation:

(A)      Mr. Holland’s Base Salary;

(B)      the sum of Mr. Holland’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan, as in effect on the day immediately preceding the day the Change in Control is Consummated; or

(C)      the sum of Mr. Holland’s Base Salary plus Target Bonus under the Company’s Short Term Bonus Plan and Long Term Bonus Plan plus the Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day immediately preceding the day the Change in Control is Consummated.

(ii)         Subsidiary Change in Control . Notwithstanding Section 1.23(b)(i) hereof, in the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Holland is offered Base Salary, Target Bonus under the acquiring company’s Short Term Bonus Plan and Long Term Bonus Plan and Target Bonus under the acquiring company’s Equity Based Bonus Plan that, in the aggregate, is less than ninety percent (95%) of Mr. Holland’s Base Salary plus Target Bonus under the

 

 

Company’s Short Term Bonus Plan and Long Term Bonus Plan, plus Target Bonus under the Company’s Equity Based Bonus Plan, each of which as in effect on the day the offer of employment is received;

(c)       Relocation .

(i)          Company . A change in Mr. Holland’s work location to a location more than fifty (50) miles from the facility where Mr. Holland was located on the day immediately preceding the day the Change in Control is Consummated, unless such new work location is within fifty (50) miles of Mr. Holland’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by Mr. Holland of employment by the Company at a work location which is outside the fifty mile radius set forth in this Section 1.23(c) shall not be a waiver of Mr. Holland’s right to refuse subsequent transfer by the Company to a location which is more than fifty (50) miles from Mr. Holland’s principal place of residence on the day immediately preceding the day the Change in Control is Consummated, and such subsequent nonconsensual transfer shall be “Good Reason” under this Agreement;

(ii)         Subsidiary Change in Control . Notwithstanding Section 1.23(c)(i) hereof, in the case of a Subsidiary Change in Control, Good Reason shall exist if Mr. Holland’s work location under the terms of the offer of employment from the acquiring employer is more than fifty (50) miles from Mr. Holland’s work location at the Company as of the date the offer of employment by the acquiring employer is received.

 

 

(d)       Benefits and Perquisites .

(i)          Change in Control - Retirement and Welfare Benefits . The taking of any action by the Company that would directly or indirectly cause a Material Reduction in the Retirement and Welfare Benefits to which Mr. Holland is entitled under the Company’s Retirement and Welfare Benefit plans in which Mr. Holland was participating on the day immediately preceding the day the Change in Control is Consummated.

(ii)         Vacation and Paid Time Off . The failure by the Company to provide Mr. Holland with at least 95% of the number of paid vacation days or, if applicable, paid time off days to which Mr. Holland is entitled on the basis of years of service with the Company in accordance with the Company’s normal vacation policy or the paid time off program (whichever applicable) in effect on the day immediately preceding the day the Change in Control is Consummated (except for across-the-board vacation policy or paid time off program changes or policy or program terminations similarly affecting at least ninety-five percent (95%) of all Executive Employees of the Company).

(iii)        Subsidiary Change in Control . In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Holland is offered a package of Retirement and Welfare Benefits by the acquiring employer that is not Economically Equivalent, as determined under Sections 1.23(f) and (g) hereof.

(e)       Adoption of Severance Agreement . In the event of a Subsidiary Change in Control, Good Reason shall exist if the offer of employment by the acquiring employer

 

 

does not include an agreement to enter into a severance agreement substantially in the form of Exhibit B attached hereto.

(f)       Economic Equivalence . For purposes of Section 1.23(d)(iii) above, an acquiring employer’s package of Retirement and Welfare Benefits shall be considered Economically Equivalent if, in the written opinion of the Benefits Consultant, the anticipated, employer-provided value of what Mr. Holland is expected to derive from the acquiring employer’s Retirement and Welfare Benefits is equal to or greater than ninety percent (90%) of such value Mr. Holland would have derived from the Company’s Retirement and Welfare Benefits using the Benefit Index.

(g)       Benefit Index Guidelines . For purposes of Section 1.23(f) above, the following guidelines shall be followed by the Company, the acquiring employer and the Benefits Consultant in the performance of the Benefit Index calculations:

(i)         Upon a Preliminary Change in Control that if Consummated would result in a Subsidiary Change in Control, the Company and the acquiring employer shall provide to the Benefits Consultant the applicable benefit plan provisions for the plan year in which the Subsidiary Change in Control is anticipated to occur. Plan provisions for the immediately preceding plan year may be provided if the Benefits Consultant determines that there have been no changes to such plans that would materially affect the determination of Economic Equivalence. If the acquiring employer’s relevant plan provisions have not previously been included in the Benefits Consultant’s Benefit Index database, the acquiring employer shall provide to the Benefits Consultant such plan information as the Benefits Consultant shall

 

 

request in writing as soon as practicable following such request. The Compensation Committees shall take such action as is reasonably required to facilitate the transfer of such information from the acquiring employer to the Benefits Consultant.

(ii)        The standard Benefit Index assumptions for the plan year from which the plan provisions are taken shall be used.

(iii)       The Company shall provide to the Benefit Consultant actual data for its Employees.

(iv)       The determination of whether or not the acquiring employer’s Retirement and Welfare Benefits are Economically Equivalent to the Retirement and Welfare Benefits provided to Mr. Holland by the Company shall be determined on an aggregate basis. All assessments shall consider all benefits in total and no individual-by-individual, plan-by-plan determination of Economic Equivalence shall be made.

1.24      “ Group ” shall have the meaning set forth in Section 14(d) of the Exchange Act.

1.25      “ Group Health Plan ” shall mean the Southern Company Services, Inc. Healthcare Plan for Retirees, as such plan may be amended from time to time.

1.26      “ Group Life Insurance Plan ” shall mean the Retiree Group Life Insurance Plan for Southern Company Services, Inc., as such plan may be amended from time to time.

1.27      “ Incumbent Board ” shall mean those individuals who constitute the Southern Board as of February 23, 2006, plus any individual who shall become a director subsequent to such date whose election or nomination for election by Southern’s shareholders was approved by a vote of at least 75% of the directors then comprising the Incumbent Board. Notwithstanding the foregoing, no

 

 

individual who shall become a director of the Southern Board subsequent to February 23, 2006 whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Regulations promulgated under the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Southern Board shall be a member of the Incumbent Board.

1.28      “ Long Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of more than twelve months.

1.29      “ Month of Service ” shall mean any calendar month during which Mr. Holland has worked at least one (1) hour or was on approved leave of absence while in the employ of the Company or any other Southern Subsidiary.

1.30      “ Material Reduction ” shall mean (i) any change in a retirement plan or arrangement that has the effect of reducing the present value of the projected benefits to be provided to Mr. Holland by five percent (5%) or more, (ii) any five percent (5%) or more reduction in medical, health and accident and disability benefits as a percentage of premiums or premium equivalents in accordance with the Company’s prior practice as measured over a period of the three previous plan years from the date the Change in Control is Consummated, or (iii) any five percent (5%) or more reduction in employer matching funds as a percentage of employee contributions in accordance with the Company’s prior practice measured over a period of the previous three plan years from the date the Change in Control is Consummated.

 

 

1.31      “ Omnibus Plan ” shall mean the Southern Company Omnibus Incentive Compensation Plan, and the Design and Administrative Specifications duly adopted thereunder, as in effect on the date a Change in Control is Consummated.

1.32       “ Pension Plan ” shall mean The Southern Company Pension Plan or any successor thereto, as in effect on the date a Change in Control is Consummated.

1.33      “ Performance Dividend Program ” or “ PDP ” shall mean the Performance Dividend Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.

1.34      “ Performance Pay Program ” or “ PPP ” shall mean the Performance Pay Program under the Omnibus Plan or any replacement thereto, as in effect on the date a Change in Control is Consummated.

1.35      “ Person ” shall mean any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of Exchange Act.

1.36       “ Preliminary Change in Control ” shall mean the occurrence of any of the following as administratively determined by the Southern Committee.

(a)      Southern or the Company has entered into a written agreement, such as, but not limited to, a letter of intent, which, if Consummated, would result in a Change in Control;

(b)     Southern, the Company or any Person publicly announces an intention to take or to consider taking actions which, if Consummated, would result in a Change of Control under circumstances where the Consummation of the announced action or intended action is legally and financially possible; or

 

 

(c)      Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock.

1.37      “ Retirement and Welfare Benefits ” shall mean benefits provided by the following types of plans and arrangements: pension plans, defined contribution plans (matched savings, profit sharing, money purchase, ESOP, and similar plans and arrangements), plans providing for death benefits while employed or retired (life insurance, survivor income, and similar plans and arrangements), plans providing for short-term disability benefits (including accident and sick time), plans providing for long-term disability benefits, plans providing health-care benefits (including reimbursements during active employment or retirement related to expenses for medical, vision, hearing, dental, and similar plans and arrangements).

1.38      “ Separation Date ” shall mean the date on which Mr. Holland’s employment with the Company is terminated; provided, however, that solely for purposes of Section 2.2(c) hereof, if, upon termination of employment with the Company, Mr. Holland is deemed to have retired pursuant to the provisions of Section 2.3 hereof, Mr. Holland’s Separation Date shall be the effective date of his retirement pursuant to the terms of the Pension Plan.

1.39      “ Short Term Bonus Plan ” shall mean any bonus type plan or arrangement designed to provide incentive based compensation to participants upon the achievement of objective or subjective goals that measure performance over a period of twelve months or less.

1.40      “ Southern ” shall mean The Southern Company, its successors and assigns.

1.41      “ Southern Board ” shall mean the board of directors of Southern.

1.42      “ Southern Committee ” shall mean the committee comprised of the Chairman of the Southern Board, the Chief Financial Officer of Southern and the General Counsel of Southern.

 

 

1.43      “ Southern Subsidiary ” shall mean any corporation or other entity Controlled by Southern or another Southern Subsidiary.

1.44      “ Subsidiary Change in Control ” shall have the meaning se