Exhibit 10(b)1
DEFERRED COMPENSATION PLAN FOR
OUTSIDE DIRECTORS OF ALABAMA POWER COMPANY
Amended and Restated Effective
January 1, 2008
SECTION 1
Purpose and Adoption of
Plan
Alabama Power Company previously
established the Deferred Compensation Plan for Directors of Alabama
Power Company. The Plan was last amended and restated April 26,
2002. The Plan has been amended from time to time including this
good faith amendment and restatement effective January 1, 2008 to
comply with Code Section 409A. Except as otherwise provided herein
and consistent with Sections 1.2 and 1.3, the terms of the Plan as
in effect prior to the effective date of this Plan shall continue
to be applicable to deferrals made pursuant to the Plan prior to
January 1, 2008.
Compensation paid to Directors and
deferred under the Plan prior to January 1, 2005 shall be treated
by the Company as not subject to Section 409A of the Code and
therefore “grandfathered.” The Account balance (plus
earnings thereon) of the “grandfathered” deferrals
shall only be subject to the provisions of the Plan in effect prior
to January 1, 2005 as set forth in the Schedule of Provisions for
Pre-2005 Deferrals attached hereto. In accordance with transition
rules under Section 409A of the Code, Internal Revenue Service
Notice 2005-1, and any other applicable guidance from the
Department of Treasury, the provisions of the prior Plan are only
intended to preserve the rights and features of the
“grandfathered” deferrals and are, therefore, not
intended to be “materially modified” with respect to
any aspect of such rights and features. Provisions of the prior
Plan should be so construed whenever necessary or
appropriate.
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1.3
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409A Good Faith
Period
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For the period from January 1, 2005
to December 31, 2008, the Plan shall be administered in good faith
compliance with Section 409A of the Code. At a time and in a manner
determined by the Committee, Directors shall make timely elections
to conform to the Plan’s terms effective on and after January
1, 2008. Such elections shall be made prior to January 1, 2008 and
shall apply to elections to defer Cash Compensation and/or Stock
Retainer subject to Section 409A of the Code on and after January
1, 2005. In particular, such elections shall establish the form and
timing of commencement of distribution of amounts in Deferred
Compensation Accounts pursuant to a new Distribution Election. Such
elections are intended to meet the transition requirements of
Section 409A of the Code, Internal Revenue Service Notice 2005-1
and other related guidance promulgated by the Department of
Treasury.
SECTION 2
Definitions
2.1 “
Beneficial Ownership ” means beneficial ownership
within the meaning of Rule 13d-3 promulgated under the Exchange
Act.
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2.2
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“ Board ” or
“ Board of Directors ” means the Board of
Directors of the Company.
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2.3 “
Business Combination ” means a reorganization, merger
or consolidation or sale of Southern with another corporation or an
entity treated as a corporation for United States federal income
tax purposes.
2.4 “
Cash Compensation ” means the annual retainer fees and
meeting fees payable to a Director.
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2.5
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“ Code ” means
the Internal Revenue Code of 1986, as amended, or any successor
statute.
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2.6 “
Committee ” means the Compensation Committee of the
Board, or such other committee as may be designated by the Board to
be responsible for administering the Plan.
2.7 “
Common Stock ” means the common stock of Southern
including any shares into which it may be split, subdivided, or
combined.
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2.8
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“ Company ” means
Alabama Power Company, or any successor thereto.
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2.9
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“ Company Change in
Control ” means the following:
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(a) 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 2.9, any acquisition by an
Employee, or Group composed entirely of 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
corporation Controlled by Southern shall not constitute a Change in
Control;
(b) Consummation
of a reorganization, merger or consolidation of the Company (a
“Company Business Combination”), in each case, unless,
following such Company Business Combination, Southern Controls the
corporation surviving or resulting from such Company Business
Combination; or
(c) Consummation
of the sale or other disposition of all or substantially all of the
assets of the Company to an entity which Southern does not
Control.
2.10 “
Compensation Payment Date ” means the date on which
compensation, including Cash Compensation, and the Stock Retainer,
is payable to a Director or compensation which would otherwise be
payable to a Director if an election to defer such compensation had
not been made.
2.11 “
Consummation ” means 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 agencies.
2.12 “
Control ” means, 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.
2.13 “
Deferred Cash Trust ” means the Deferred Cash
Compensation Trust for Directors of The Southern Company and its
Subsidiaries.
2.14 “
Deferred Compensation Account ” means the Prime Rate
Investment Account, the Phantom Stock Investment Account, the
Deferred Stock Account and/or the Stock Dividend Investment
Account.
2.15 “
Deferred Stock Account ” means the bookkeeping account
established under Section 7.3 on behalf of a Director and includes
shares of Common Stock credited thereto to reflect the reinvestment
of dividends pursuant to Section 7.3(a)(iii).
2.16 “
Deferred Stock Trust ” means the Deferred Stock Trust
for Directors of The Southern Company and its
Subsidiaries.
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2.17
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“ Director ”
means a member of the Board.
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2.18 “
Distribution Election ” means the designation by a
Director of the manner of distribution of the amounts and
quantities held in the Director’s Deferred Compensation
Accounts upon the director’s termination from the Board
pursuant to Section 6.3.
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2.19
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“ Effective Date
” of the amendment and restatement means January 1,
2008.
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2.20 “
Employee ” means an employee of Southern or any of its
subsidiaries that are “employing companies” as defined
in the Southern Company Deferred Compensation Plan as amended and
restated effective January 1, 2005, and as may be amended from time
to time.
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2.21
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“ Exchange Act ”
means the Securities Exchange Act of 1934, as amended.
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2.22
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“ Funding Change in
Control ” means any of the following:
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(a) The
Consummation of an acquisition by any Person of Beneficial
Ownership (during the 12-month period ending on the date of the
most recent acquisition by such Person) of 35% or more of
Southern’s Voting Securities; provided, however, that for
purposes of this subsection (a), the following acquisitions of
Southern’s Voting Securities shall not constitute a Funding
Change in Control:
(i) any
acquisition directly from Southern;
(ii) any
acquisition by Southern;
(iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Southern or any corporation controlled
by Southern;
(iv) any
acquisition by a qualified pension plan or publicly held mutual
fund;
(v) any
acquisition by an employee of Southern or its subsidiary or
affiliate, or Group composed exclusively of such employees;
or
(vi) any
Business Combination which would not otherwise constitute a Funding
Change in Control because of the application of clauses (i), (ii)
and (iii) of this Section 2.22(a);
(b) The
date a majority of members of the Southern Board is replaced during
any 12-month period by directors whose appointment or election is
not endorsed by a
majority of the members of the Southern Board
before the date of the appointment or election;
(c) The
Consummation of a Business Combination, unless, following such
Business Combination, all of the following three conditions are
met:
(i) all
or substantially all of the individuals and entities who held
Beneficial Ownership, respectively, of Southern’s Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, 50% or more of the
combined voting power of the Voting Securities of the corporation
surviving or resulting from such Business Combination, (including,
without limitation, a corporation which as a result of such
transaction holds Beneficial Ownership of all or substantially all
of Southern’s Voting Securities or all or substantially all
of Southern’s assets) (such surviving or resulting
corporation to be referred to as “Surviving Company”),
in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of Southern’s
Voting Securities;
(ii) no
Person (excluding any corporation resulting from such Business
Combination, any qualified pension plan, publicly held mutual fund,
Group composed exclusively of employees or employee benefit plan
(or related trust) of Southern, its subsidiaries or Surviving
Company) holds Beneficial Ownership, directly or indirectly, of 35%
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
(iii) the
majority of the members of the board of directors of Surviving
Company during the 12-month period following the Business
Combination were members of the Southern Board of Directors at the
earlier of the date of execution of the initial agreement, or of
the action of the Southern Board of Directors, providing for such
Business Combination or such members of the board of directors of
the Surviving Company are directors whose appointment or election
was endorsed by a majority of the members of such Southern Board of
Directors.
(d) The
Consummation of an acquisition by any Person of Beneficial
Ownership (during the 12-month period ending on the date of the
most recent acquisition by such Person) 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
Subsection 2.22(d), any acquisition by an employee of Southern or
its subsidiary or affiliate, or Group composed entirely of such
employees, any qualified pension plan, publicly held mutual fund or
any employee benefit plan (or related trust) sponsored or
maintained by Southern or any corporation Controlled by Southern
shall not constitute a Funding Change in Control;
(e) The
Consummation of a reorganization, merger or consolidation of the
Company with another corporation (a “Funding Subsidiary
Business Combination”), in each case, unless, following such
Funding Subsidiary Business Combination, Southern
Controls the corporation surviving or resulting
from such Funding Subsidiary Business Combination,
or
(f) The
Consummation of the sale or other disposition of all or
substantially all of the assets of the Company to an entity that
Southern does not Control; provided, however, that for purposes of
this subsection (f) the following sales or dispositions otherwise
described herein shall not constitute a Funding Change in
Control:
(i) the
sale or other disposition of all or substantially all of the assets
of the Company to Southern or to a shareholder of Southern in
exchange for or with respect to such shareholder’s stock of
Southern;
(ii) the
sale of other disposition of all or substantially all of the assets
of the Company to a Person that owns, directly or indirectly, 50%
or more of the total value or voting power of the outstanding stock
of Southern; or
(iii) the
sale or other disposition of all or substantially all of the assets
of the Company to an entity Controlled by shareholders of Southern
that hold, directly or indirectly, 50% or more of the total value
or voting power of all of the outstanding stock of
Southern.
For purposes of this Section 2.22(f) “all
or substantially all of the assets” means at least 80% of the
gross value of the assets of the entity immediately before the
acquisition.
2.23 “
Funding Event ” means the occurrence of any of the
following events 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 Funding Change in Control;
(b) Southern,
the Company or any other Person publicly announces an intention to
take or to consider taking actions which, if Consummated, would
result in a Funding Change in Control under circumstances where the
Consummation of the announced action or intended action is legally
and financially possible;
(c) Any
Person acquires Beneficial Ownership of fifteen percent (15%) or
more of the Common Stock; or
(d) The
Southern Board or the Company elects to otherwise fund the Deferred
Cash Trust and Deferred Stock Trust in accordance with the
provisions of Section 9.
2.24 “
Funding Subsidiary Business Combination ” shall have
the meaning set forth in Section 2.22(e) hereof.
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2.25
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“ Group ” has the
meaning set forth in Section 14(d) of the Exchange Act.
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2.26 “
Incumbent Board ” means those individuals who
constitute the Southern board of directors as of January 1, 2008,
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 of directors subsequent to January
1, 2008, 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 of directors shall
be a member of the Incumbent Board.
2.27 “
Market Value ” means the average of the high and low
prices of the Common Stock, as published in the Wall Street Journal
in its report of New York Stock Exchange composite transactions, on
the date such Market Value is to be determined, as specified herein
(or the average of the high and low sale prices on the trading day
immediately preceding such date if the Common Stock is not traded
on the New York Stock Exchange on such date)
2.28 “
Modification Delay ” means that the election shall not
take effect until twelve (12) months after the date the election is
made, the payment which is the subject of the election shall be
deferred five (5) years from the date previously elected by the
Director, and where applicable in the case of a payment made
pursuant to a fixed schedule or specified time, the election must
be made at least twelve (12) months prior to the time payment is
scheduled to be made.
2.29 “
Participant ” means a Director or former Director who
has an unpaid Deferred Compensation Account balance under the
Plan.
2.30 “
Participating Companies ” means those companies that
are affiliated with Southern whose boards of directors have
authorized the establishment of trust(s) for the funding of their
respective directors’ Deferred Compensation Accounts under
their respective Deferred Compensation Plans for Directors,
including the Company.
2.31 “
Person ” means any individual, entity or group within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act.
2.32 “
Phantom Stock Investment Account ” means the
bookkeeping account established pursuant to Section 7.2 in which a
Director may elect to defer Cash Compensation or make investments,
and includes amounts credited thereto to reflect the reinvestment
of dividends.
2.33 “
Plan ” means the Deferred Compensation Plan for
Outside Directors of Alabama Power Company as from time to time in
effect.
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2.34
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“ Plan Period ”
means the period designated in Section 5.
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2.35 “
Preliminary Change in Control ” means the occurrence
of any of the following as 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 Southern Change in Control or a Company Change in
Control, as the case may be;
(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 Southern Change in Control or a Company Change in Control
under circumstances where the
Consummation of the announced action or intended
action is legally and financially possible;
(c) Any
Person becomes the Beneficial Owner of fifteen percent (15%) or
more of the Common Stock; or
(d) The
Southern Board of Directors or the Board of Directors of the
Company has declared that a Preliminary Change in Control has
occurred.
2.36 “
Prime Interest Rate ” means the prime rate of interest
as published in the Wall Street Journal or its successor on
the 1 st day of the quarter.
2.37 “
Prime Rate Investment Account ” means the bookkeeping
account established pursuant to Section 7.1 in which a Director may
elect to defer Cash Compensation or make investments, the
investment return on which is computed at the Prime Interest
Rate.
2.38 “
Separation from Service ” means a ceasing of the
obligation to provide service as a Director.
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2.39
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“ Southern ”
means Southern Company.
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2.40
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“ Southern Board
” means the Board of Directors of Southern.
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2.41
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“ Southern Change in
Control ” means any of the following:
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(a) 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 subsection (a), the
following acquisitions of Southern’s Voting Securities shall
not constitute a Change in Control:
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(i)
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any acquisition directly from
Southern,
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(ii)
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any acquisition by
Southern,
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(iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by Southern or any corporation controlled
by Southern,
(iv) any
acquisition by a qualified pension plan or publicly held mutual
fund,
(v) any
acquisition by an Employee or Group composed exclusively of
Employees, or
(vi) any
Business Combination which would not otherwise constitute a Change
in Control because of the application of clauses (i), (ii) and
(iii) of Section 2.41(a) of this Plan;
(b) A
change in the composition of Southern’s board of directors
whereby individuals who constitute the Incumbent Board cease for
any reason to constitute at least a majority of Southern’s
board of directors; or
(c) Consummation
of a Business Combination, unless, following such Business
Combination, all of the following three conditions are
met:
(i) all
or substantially all of the individuals and entities who held
Beneficial Ownership, respectively, of Southern’s Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, 65% or more of the
combined voting power of the Voting Securities of the corporation
surviving or resulting from such Business Combination, (including,
without limitation, a corporation which as a result of such
transaction holds Beneficial Ownership of all or substantially all
of Southern’s Voting Securities or all or substantially all
of Southern’s assets) (such surviving or resulting
corporation to be referred to as “Surviving Company”),
in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of Southern’s
Voting Securities;
(ii) no
Person (excluding any corporation resulting from such Business
Combination, any qualified pension plan, publicly held mutual fund,
Group composed exclusively of employees or employee benefit plan
(or related trust) of Southern, its subsidiaries, 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
(iii) at
least a majority of the members of the board of directors of
Surviving Company were members of the Incumbent Board at the
earlier of the date of execution of the initial agreement, or of
the action of the Southern board of directors, providing for such
Business Combination.
2.42 “
Southern Committee ” means a committee comprised of
the Chairman of the Southern Board, the Chief Financial Officer of
Southern and the General Counsel of Southern.
2.43 “
Stock Dividend Investment Account ” means the
bookkeeping account(s) established pursuant to Section 7.4 on
behalf of a Director that is credited with shares of stock, other
than Common Stock, paid as a dividend to holders of record on
shares of Common Stock.
2.44 “
Stock Retainer ” means the annual Board retainer fee
that is paid to the Director in the form of Common
Stock.
2.45 “
Transferred Amount ” means an amount (a) equal to
the value of a Director’s accounts under the applicable
deferred compensation plan for directors of Southern, Georgia Power
Company, Gulf Power Company, or Mississippi Power Company and
(b) which has been transferred to the Plan in connection with
the Director’s transfer from the Southern Board or the board
of directors of Georgia Power Company, Gulf Power Company, or
Mississippi Power Company.
2.46 “
Trust Administrator ” means the individual or
committee that is established in the Deferred Stock Trust and the
Deferred Cash Trust, to administer such trusts on behalf of the
Participating Companies.
2.47 “
Voting Securities ” means the outstanding voting
securities of a corporation entitling the holder thereof to vote
generally in the election of such corporation’s
directors.
Where the context requires, words in the
masculine gender shall include the feminine gender, words in the
singular shall include the plural, and words in the plural shall
include the singular.
SECTION
3
Purpose
The Plan provides Directors with an opportunity
to defer compensation paid to them on and after January 1, 2008
until a date following their Separation from Service as a member of
the Board.
SECTION
4
Eligibility
An individual who serves as a Director and is
not otherwise actively employed by the Company or any of its
subsidiaries or affiliates is eligible to participate in the
Plan.
SECTION
5
Plan Periods
Except as pertains to a Director’s initial
Plan Period, all Plan Periods shall be on a calendar year basis.
The initial Plan Period applicable to any person elected to the
Board who was not a Director on the preceding December 31, shall
begin on the first day of the quarter next following the effective
date of the Director’s election to the Board where timing
permits the transfer of Director compensation data for purposes of
administration of an initial deferral election under this Section
5. Notwithstanding the preceding sentence, the initial Plan Period
under this amended and restated Plan for Directors serving as of
the Effective Date shall begin January 1, 2008.
SECTION
6
Elections
(a) Prior
to the beginning of a Plan Period, a Director may direct that
payment of all or any portion of Cash Compensation that otherwise
would be paid to the Director for the Plan Period, be deferred in
amounts as designated by the Director, and credited to (i) a Prime
Rate Investment Account, (ii) a Phantom Stock Investment Account,
or (iii) a Deferred Stock Account. With respect to a
Director’s initial Plan Period, such direction to defer shall
be made in a timely manner prior to the commencement of the Plan
Period
in accordance with requirements established by
the Committee consistent with Section 5. Upon the Director’s
Separation from Service from the Board of Directors, such deferred
compensation and accumulated investment return held in the
Director’s Deferred Compensation Accounts shall be
distributed to the Director in accordance with the Director’s
Distribution Election and the provisions of Section
8.
(b) (i) An
election to defer Cash Compensation is irrevocable for a Plan
Period. Such an election shall continue from Plan Period to Plan
Period unless the Director changes his election to defer Cash
Compensation payable in a future Plan Period prior to the beginning
of such future Plan Period.
(ii) The
Participant may transfer all or a portion of his Deferred
Compensation Account(s) to another Deferred Compensation Account(s)
as provided below. No transfer of amounts between investment
options shall be permitted under the Plan except during a window
period and in accordance with requirements which may be designated
by the Committee. The length and timing of each window period, the
restrictions (including whether an election to transfer is subject
to a Modification Delay) and procedures for transfer, the valuation
of transferred Deferred Compensation Accounts or portions of
Deferred Compensation Accounts, and the effective date of such
transfers shall be determined by the Committee. In no event prior
to a Director’s Separation of Service from the Board may the
Committee permit the transfer of a Participant’s Stock
Retainer. Notwithstanding the preceding sentence, a transfer of a
Participant’s Stock Retainer may occur after a
Director’s Separation from Service from the Board as
determined by the Committee; provided that if the Committee permits
a Participant to transfer such Stock Retainer after a
Director’s Separation from Service from the Board, in order
to avoid any inadvertent change to the time and form of payment of
such Stock Retainer, the initial time and form of payment elected
by the Director in accordance with Section 6.3(a) applicable to the
Stock Retainer shall apply to any transferred
amounts.
(c) Cash
Compensation deferred under this Section 6.1 shall be invested in
Deferred Compensation Accounts as directed by the Director in
accordance with procedures established by the Committee prior to
the Compensation Payment Date.
(a) Prior
to the beginning of a Plan Period, a Director may direct that
payment of all of the Stock Retainer that otherwise would be paid
to the Director for the Plan Period, be deferred by the Director,
and credited to his Deferred Stock Account. Such deferred
compensation and accumulated investment return held in the
Director’s Deferred Stock Account shall be distributed to the
Director in accordance with the Director’s Distribution
Election and the provisions of Section 8.
(b) An
election to defer the Stock Retainer is irrevocable for a Plan
Period. Such an election shall continue from Plan Period to Plan
Period unless the Director changes his election to defer his Stock
Retainer paid in a future Plan Period prior to the beginning of
such future Plan Period.
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6.3
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Distribution
Election
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(a) Except
as set forth in Section 6.3(b), prior to the initial establishment
of a Deferred Compensation Account for a Director, the Director
must elect that upon Separation from Service from the Board of
Directors the values and quantities held in the Directors Deferred
Compensation Accounts be distributed to the Director, pursuant to
the provisions of Section 8 in a single lump sum or in a series of
annual or quarterly installments not to exceed fifteen (15) years;
provided that the Committee may establish in writing alternative
installment payment schedules for any or all of the Deferred
Compensation Accounts. In accordance with this Section 6.3(a),
distributions from the Prime Rate Investment Account and Phantom
Stock Investment Account can be in a lump sum or in annual or
quarterly installments. In accordance with this Section 6.3(a),
distributions from the Deferred Stock Account and Stock Dividend
Investment Account can be lump sum or annual installments. The time
for the commencement of distributions shall be elected by the
Director and shall not be later than the first day of the month
coinciding with or next following the second anniversary of
Separation from Service of Board membership. Notwithstanding the
foregoing, a Director may elect to modify his distribution election
under this Section 6.3 provided that such modification is subject
to the requirements of the Modification Delay.
(b) In
the event of a Director’s Separation from Service from the
Board with Deferred Compensation Accounts established under Section
7.5, the Transferred Amounts and accumulated investment return held
in the Accounts shall be distributed to the Director in accordance
with the Director’s distribution election in effect under the
applicable deferred compensation plan for directors of Alabama
Power Company, Georgia Power Company, Gulf Power Company, or
Mississippi Power Company on the date the Director transferred to
the Board, and the provisions of Section 8, unless such election is
changed pursuant to Section 6.3(a).
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6.4
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Beneficiary
Designation
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A
Director or former Director may designate a beneficiary to receive
distributions from the Plan in accordance with the provisions of
Section 8 upon the death of the Director. The beneficiary
designation may be changed by a Director or former Director at any
time, and without the consent of the prior
beneficiary.
All elections pursuant to the provisions of this
Section 6 of the Plan shall be made in writing to the Secretary of
the Company or Assistant Secretary of the Company or such other
person designated by the Committee on a form or forms available
upon request.
SECTION
7
Accounts
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7.1
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Prime Rate Investment
Account
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A
Prime Rate Investment Account shall be established for each
Director electing deferral of Cash Compensation for investment at
the Prime Interest Rate. The amount directed by the Director to
such account shall be credited to it as of the Compensation Payment
Date, as applicable, and credited thereafter with interest computed
using the Prime Interest Rate. Interest shall be computed from the
date such compensation is credited to the account and compounded
quarterly at the end of each calendar quarter. The Prime Interest
Rate in effect on the first day of a calendar quarter shall be
deemed the Prime Interest Rate in effect for that entire quarter.
Interest shall accrue and compound on any balance until the amount
credited to the account is fully distributed.
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7.2
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Phantom Stock Investment
Account
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The Phantom Stock Investment Account established
for each Director electing deferral of Cash Compensation for
investment at the Common Stock investment rate shall be credited
with the number of shares (including fractional shares rounded to
the nearest ten-thousandth) of Common Stock which could have been
purchased on the Compensation Payment Date, as determined by
dividing the applicable compensation by the Market Value on such
date. On the date of the payment of dividends on the Common Stock,
the Director’s Phantom Stock Investment Account shall be
credited with additional shares (including fractional shares
rounded to the nearest ten-thousandth) of Common Stock, as
follows:
(a) In
the case of cash dividends, such additional shares as would have
been purchased as of the Common Stock dividend record date as if
the credited shares had been outstanding on such date and dividends
reinvested thereon under the Southern Company Southern Investment
Plan;
(b) In
the case of dividends payable in property other than cash or Common
Stock, such additional shares as could be purchased at the Market
Value as of the date of payment with the fair market value of the
property which would have been payable if the credited shares had
been outstanding; and
(c) In
the case of dividends payable in Common Stock, such additional
shares as would have been payable on the credited shares as if they
had been outstanding.
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7.3
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Deferred Stock
Account
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(a)
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A Director’s Deferred Stock
Account will be credited:
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(i) with
the number of shares of Common Stock (rounded to the nearest ten
thousandth of a share) determined by dividing the sum of the amount
of Cash Compensation subject to deferral or investment in the
Deferred Stock Account and the Stock Retainer (that is denominated
in dollars), by the average
price paid by the Trustee of the Deferred Stock
Trust for shares of Common Stock with respect to the Compensation
Payment Date, as reported by the Trustee, or if the Trustee shall
not at such time purchase any shares of Common Stock, by the Market
Value on such date;
(ii) as
of the date on which the Stock Retainer (that is denominated in
shares of Common Stock) is paid, with the number of shares of
Common Stock payable to the Director as his Stock Retainer;
and
(iii) as of
each date on which dividends are paid on the Common Stock, with the
number of shares of Common Stock (rounded to the nearest ten
thousandth of a share) determined by multiplying the number of
shares of Common Stock credited in the Director’s Deferred
Stock Account on the dividend record date, by the dividend rate per
share of Common Stock, and dividing the product by the price per
share of Common Stock attributable to the reinvestment of dividends
on the shares of Common Stock held in the Deferred Stock Trust on
the applicable dividend payment date or, if the Trustee of the
Deferred Stock Trust has not reinvested in shares of Common Stock
on the applicable dividend reinvestment date, the product shall be
divided by the Market Value on the dividend payment
date.
(b) If
Southern enters into transactions involving stock splits, stock
dividends, reverse splits or any other recapitalization
transactions, the number of shares of Common Stock credited to a
Director’s Deferred Stock Account will be adjusted (rounded
to the nearest ten thousandth of a share) so that the
Director’s Deferred Stock Account reflects the same equity
percentage interest in Southern after the recapitalization as was
the case before such transaction. Notwithstanding the preceding
sentence and in any event, any adjustment shall comply with the
requirements of Section 409A of the Code.
(c) If
at least a majority of Southern’s stock is sold or exchanged
by its shareholders pursuant to an integrated plan for cash or
property (including stock of another corporation) or if
substantially all of the assets of Southern are disposed of and, as
a consequence thereof, cash or property is distributed to
Southern’s shareholders, each Director’s Deferred Stock
Account will, to the extent not already so credited under this
Section 7.3, be (i) credited with the amount of cash or property
receivable by a Southern shareholder directly holding the same
number of shares of Common Stock as is credited to such
Director’s Deferred Stock Account and (ii) debited by
that number of shares of Common Stock surrendered by such
equivalent Southern shareholder. Notwithstanding the preceding
sentence and in any event, any adjustment shall comply with the
requirements of Section 409A of the Code.
(d) Each
Director who has a Deferred Stock Account also shall be entitled to
provide directions to the Trust Administrator to vote the Common
Stock in his account in the Deferred Stock Trust with respect to
any matter presented for a vote to the shareholders of Southern.
Such Trust Administrator shall arrange for distribution to all
Directors in a timely manner of all communications directed
generally to the Southern shareholders as to which their votes are
solicited.
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7.4
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Stock Dividend Investment
Account
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(a) A
Director’s Stock Dividend Investment Account will be credited
as of the date on which a dividend is paid in stock other than
Common Stock to the Company’s common stockholders with the
number of shares of such other corporation’s stock receivable
by such Southern common stockholder. Thereafter, if dividends are
paid on the above-described non-Common Stock dividends, such
subsequent dividends shall be credited in the same manner as
described in Section 7.3(a)(iii).
(b) Each
Director who has a Stock Dividend Investment Account also shall be
entitled to provide directions to the Trust Administrator to vote
the applicable corporation’s common stock held by the
Deferred Stock Trust with respect to any matter presented for a
vote to such corporation’s shareholders. The Trust
Administrator shall arrange for distribution to all Directors in a
timely manner of all communications directed generally to the
applicable corporation’s shareholders as to which their votes
are solicited.
(a) As
soon as administratively practicable, the Company shall establish
for a Director transferring to the Board from the Southern Board or
from the board of directors of Georgia Power Company, Gulf Power
Company, or Mississippi Power Company such Deferred Compensation
Accounts as are necessary to implement Section
7.5(b).
(b) Any
Transferred Amounts will be credited to the Deferred Compensation
Account(s) established that are comparable to the deferred
compensation accounts to which such amounts were credited under the
applicable deferred compensation plan for directors of Southern,
Georgia Power Company, Gulf Power Company, or Mississippi Power
Company as soon as administratively practicable following the date
the Transferred Amounts are transferred to the Plan. Thereafter,
the Transferred Amounts shall be credited with investment returns
as applicable under this Section 7 of the Plan.
SECTION
8
Distributions
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8.1
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Manner of
Distribution
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Upon the Separation from Service of a
Director’s membership on the Board the amount credited to a
Director’s Deferred Compensation Accounts will be paid to the
Director or his beneficiary, as applicable, in the following
manner:
(a) the
amount credited to a Director’s Prime Rate Investment Account
and Phantom Stock Investment Account shall be paid in
cash;
(b) the
amount credited to a Director’s Deferred Stock Account shall,
except as otherwise provided in Section 7.3 and Section 10.5, or to
the extent the Company is otherwise, in the reasonable judgment of
the Committee, precluded from doing so, be
paid in shares of Common Stock (with any
fractional share interest therein paid in cash to the extent of the
then Market Value thereof); and
(c) the
amount credited to a Stock Dividend Investment Account shall,
except as otherwise provided in Section 10.5, be paid from the
assets in the Deferred Stock Trust in shares of the applicable
corporation, provided however if there is not a sufficient number
of shares held in the Trust, the remainder shall be paid in cash
based upon the Market Value of such shares.
Such payments shall be from the general assets
of the Company (including the Deferred Cash Trust and the Deferred
Stock Trust) in accordance with this Section 8.
Notwithstanding the foregoing, in the event the
Company enters into an agreement described in Section 8.3 with
respect to a Director prior to the Director’s Separation from
Service as a D
