-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rbh4dcVj8Kio1Yx+KbMMzPb+sC3IdN5+xMEhSrxxLt1LOs+Ttfbq7gVcs11T97Fu vGU/3C0wSsg4H8J2qZfpsw== 0000092122-06-000307.txt : 20061122 0000092122-06-000307.hdr.sgml : 20061122 20061122142032 ACCESSION NUMBER: 0000092122-06-000307 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20061116 ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061122 DATE AS OF CHANGE: 20061122 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN CO CENTRAL INDEX KEY: 0000092122 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 580690070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-03526 FILM NUMBER: 061235892 BUSINESS ADDRESS: STREET 1: 30 IVAN ALLEN JR. BLVD., N.W. CITY: ATLANTA STATE: GA ZIP: 30308 BUSINESS PHONE: 4045065000 MAIL ADDRESS: STREET 1: 30 IVAN ALLEN JR. BLVD., N.W. CITY: ATLANTA STATE: GA ZIP: 30308 8-K 1 cic-8k.txt SOUTHERN COMPANY FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) November 16, 2006 ------------------------------ Commission Registrant, State of Incorporation, I.R.S. Employer File Number Address And Telephone Number Identification No. - ----------- ------------------------------------ ------------------ 1-3526 THE SOUTHERN COMPANY 58-0690070 (A Delaware Corporation) 30 Ivan Allen Jr. Boulevard, N.W. Atlanta, Georgia 30308 (404) 506-5000 The address of the registrant has not changed since the last report. Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers On November 16, 2006, the Board of Directors of Southern Company Services, Inc. ("SCS"), a wholly-owned subsidiary of The Southern Company ("Southern Company"), approved the Southern Company Change in Control Benefits Protection Plan (the "Amended Plan"), which amended and restated the Southern Company Change in Control Benefit Plan Determination Policy (the "Original Plan"). The Amended Plan defines the events that constitute a "change in control," protects the benefits to be provided to employees under incentive-based compensation plans upon a change in control and provides for the transfer of funds from Southern Company and certain of its subsidiaries to the Southern Company Deferred Compensation Trust (the "Trust") as a reserve for the payment of deferred compensation and non-qualified retirement benefits following certain change in control events. The Amended Plan modifies the terms of the Original Plan primarily with respect to: (1) the obligation of Southern Company and certain of its subsidiaries to transfer funds to the Trust in connection with certain change in control events, (2) the payment of benefits under the Performance Pay Program (the "PPP") and the Performance Dividend Program (the "PDP") of the Southern Company Omnibus Incentive Compensation Plan (the "Omnibus Plan") following a change in control, and (3) the ability of Southern Company to make future amendments to the Amended Plan. Under the Amended Plan, Southern Company and certain of its subsidiary companies are required to transfer funds to the Trust if any business combination or other transaction involving Southern Company would result in Southern Company shareholders owning 50% or less of the total voting power of the surviving company (65% or less under the Original Plan), any person owning 35% or more of the total voting power of the surviving company (20% or more under the Original Plan) or the incumbent directors of Southern Company not representing a majority of the board of directors of the surviving company. With respect to changes in control involving subsidiaries of Southern Company, the funding obligation will be discretionary unless the subsidiary change in control involves Alabama Power Company ("Alabama Power"), Georgia Power Company ("Georgia Power"), Gulf Power Company or Mississippi Power Company. In addition, under the Amended Plan, in the event the PPP is terminated within two years following a change in control, each participant in the PPP will receive a pro-rata payment based on the target award for the performance period. Under the Original Plan, the payout was the greater of the target award or actual performance during the performance period. With respect to the PDP, following a change in control, participants will receive a performance dividend payment based on the greater of 50% of the dividend actually paid or the actual performance under the PDP for the performance period. Under the Original Plan, the payment was based on actual performance for the performance period. Further, the Amended Plan provides that it may not be amended during the six month period before a "preliminary change in control" through the two year period following the change in control, unless the amendment increases the benefits to participants or is immaterial. The Original Plan could be amended at any time, except that it could not be amended in any material respect so as to impair the rights of any participant in any benefit that had accrued as a result of a change in control. In addition to the approval of the Amended Plan, on November 16, 2006, each of David M. Ratcliffe, Thomas A. Fanning, Michael D. Garrett, G. Edison Holland, Jr., and Charles D. McCrary (together, the "Officers") entered into Amended and Restated Change in Control Agreements (together, the "Amended Agreements") with SCS and Southern Company (with respect to Messrs. Ratcliffe, Fanning and Holland), Southern Company and Alabama Power (with respect to Mr. McCrary) and Southern Company and Georgia Power (with respect to Mr. Garrett). The Amended Agreements amend and restate Change in Control Agreements dated June 1, 2004 involving such parties (the "Original Agreements"). A summary of the principal terms of the Original Agreements is included in Southern Company's Definitive Proxy Statement on Schedule 14A filed April 13, 2006 under the heading "Executive Compensation - Employment, Change in Control and Separation Agreements." 2 The Amended Agreements modify the terms of the Original Agreements primarily with respect to payments under the PDP following a change in control and the circumstances under which an Officer may terminate his employment for "good reason" following a change in control and receive change in control benefits. The revisions relating to payments under the PDP following a change in control are designed to conform to the provisions of the Amended Plan, as described above. In addition, the principal revisions to the definition of "good reason" require a material reduction in welfare, retirement and other benefits made available to an Officer (rather than the elimination of any plan in which such Officer is a participant) and provide a method for determining whether such a material reduction has occurred. In addition, each Amended Agreement also provides that good reason will exist in the case of a subsidiary change in control if the offer of employment by the acquiring employer does not include an agreement to enter into a severance agreement substantially in the form attached to the Amended Agreement. The preceding summary is qualified in its entirety by reference to the full text of the Amended Plan and the Amended Agreements, which are attached hereto as Exhibits 10.1 through 10.6 and incorporated herein by reference. Item 9.01 Financial Statements and Exhibits 10.1 Southern Company Change in Control Benefits Protection Plan. 10.2 Amended and Restated Change in Control Agreement, dated November 16, 2006, among David M. Ratcliffe, Southern Company Services, Inc. and The Southern Company. 3 10.3 Amended and Restated Change in Control Agreement, dated November 16, 2006, among Thomas A. Fanning, Southern Company Services, Inc. and The Southern Company. 10.4 Amended and Restated Change in Control Agreement, dated November 16, 2006, among Michael D. Garrett, The Southern Company and Georgia Power Company. 10.5 Amended and Restated Change in Control Agreement, dated November 16, 2006, among G. Edison Holland, Jr., Southern Company Services, Inc., and The Southern Company. 10.6 Amended and Restated Change in Control Agreement, dated November 16, 2006, among Charles D. McCrary, The Southern Company and Alabama Power Company. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: November 22, 2006 THE SOUTHERN COMPANY By /s/ Patricia L. Roberts Patricia L. Roberts Assistant Secretary 4 EX-10.1 2 ex10-1.txt Exhibit 10.1 SOUTHERN COMPANY CHANGE IN CONTROL BENEFITS PROTECTION PLAN AN AMENDMENT AND RESTATEMENT OF THE SOUTHERN COMPANY CHANGE IN CONTROL BENEFIT PLAN DETERMINATION POLICY Troutman Sanders LLP Bank of America Plaza, Suite 5200 600 Peachtree Street, N.E. Atlanta, Georgia 30308 SOUTHERN COMPANY CHANGE IN CONTROL BENEFITS PROTECTION PLAN AMENDED AND RESTATED ARTICLE I - PURPOSE AND ADOPTION OF PLAN ------------------- ------------------------------ 1.1 Adoption of Plan. Southern Company Services, Inc. hereby adopts this Southern Company Change in Control Benefits Protection Plan effective this 16 day of November, 2006. The Plan is an amendment and restatement of the Southern Company Change in Control Benefits Determination Policy which was originally effective July 10, 2000 and previously amended and restated effective May 9, 2002. 1.2 Purpose. The Plan defines the events that constitute a Southern Change in Control and a Subsidiary Change in Control, protects the benefits to be provided to employees of the Employing Companies under certain incentive-based compensation plans and arrangements upon such a Change in Control and creates a protocol for transferring funds from the Employing Companies to the Southern Company Deferred Compensation Trust as a reserve for the payment of deferred compensation and non-qualified retirement benefits following certain change in control events involving Southern Company and certain of its subsidiaries. ARTICLE II - DEFINITIONS 2.1 "Administrative Committee" shall mean the Board of Directors. 2.2 "Beneficial Ownership" shall mean beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act. 2.3 "Board of Directors" shall mean the board of directors of the Company. 2.4 "Business Combination" shall mean a reorganization, merger or consolidation of Southern Company or a sale or other disposition of all or substantially all of the assets of Southern Company. 2.5 "Change in Control" shall mean a Southern Change in Control or a Subsidiary Change in Control, as applicable. 2.6 "Common Stock" shall mean the common stock of Southern Company. 2.7 "Company" shall mean Southern Company Services, Inc., its successors and assigns. 2.8 "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 agencies. 2 2.9 "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. 2.10 "DCP" shall have the meaning set forth in Section 6.1 hereof. 2.11 "Employee" shall mean an employee of an Employing Company as of the date of a Southern Change in Control. 2.12 "Employing Company" shall mean Southern Company, the Company, or any other corporation or other entity Controlled by Southern Company, directly or indirectly, which the Compensation and Management Succession Committee of the Southern Company Board of Directors has authorized to participate in the Plan and which has thereafter adopted the Plan, and any successor of any of them. 2.13 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 2.14 "Funding Change in Control" shall mean any of the following: (a) The Consummation of an acquisition by any Person of Beneficial Ownership of 35% or more of Southern Company's Voting Securities; provided, however, that for purposes of this subsection (a), the following acquisitions of Southern Company's Voting Securities shall not constitute a Change in Control: (i) any acquisition directly from Southern Company; (ii) any acquisition by Southern Company; (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern Company or any corporation controlled by Southern Company; (iv) any acquisition by a qualified pension plan or publicly held mutual fund; (v) any acquisition by an employee of Southern Company 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 2.14(a); (b) 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; (c) The Consummation of a Business Combination, unless, following such Business Combination, all of the following three conditions are met: 3 (i) all or substantially all of the individuals and entities who held Beneficial Ownership, respectively, of Southern Company'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 Company's Voting Securities or all or substantially all of Southern Company'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 Company'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 Company, 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) 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, providing for such Business Combination. (d) 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 a Funding Subsidiary; provided, however, that for purposes of this Subsection 2.14(d), any acquisition by an employee of Southern Company 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 Company or any corporation Controlled by Southern Company shall not constitute a Funding Change in Control; (e) The Consummation of a reorganization, merger or consolidation of a Funding Subsidiary (a "Funding Subsidiary Business Combination"), in each case, unless, following such Funding Subsidiary Business Combination, Southern Company 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 a Funding Subsidiary to an entity that Southern Company does not Control. 2.15 "Funding Event" shall mean the occurrence of any of the following events as administratively determined by the Southern Committee: 4 (a) Southern Company or a Funding Subsidiary 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 Company, a Funding Subsidiary 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 board of directors of a Funding Subsidiary elects to otherwise fund the Trust in accordance with the provisions of ARTICLE IV, ARTICLE V, and ARTICLE VI hereof. 2.16 "Funding Subsidiary" shall mean Alabama Power Company, Georgia Power Company, Gulf Power Company and Mississippi Power Company, and any successor of any of them, provided such companies are Employing Companies, and any other Employing Company that the Southern Committee in its sole discretion shall designate in writing as a Funding Subsidiary. 2.17 "Funding Subsidiary Business Combination" shall have the meaning set forth in Section 2.14(e) hereof. 2.18 "Group" shall have the meaning set forth in Section 14(d) of the Exchange Act. 2.19 "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 Company'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. 2.20 "Omnibus Plan" shall mean the Southern Company Omnibus Incentive Compensation Plan, including the Incentive Programs: Design and Administrative Specifications as approved by the Compensation and Management Succession Committee of the Southern Board, any Program thereunder, and any successor thereto. 2.21 "Operating Committee" shall mean the committee appointed by the Administrative Committee to conduct the day to day administration of the Plan. 5 2.22 "Participant" shall mean (i) in the case of a Funding Change in Control involving Southern Company under Section 2.14(a), (b) or (c) hereof, an employee of an Employing Company who, as of the date of the Funding Change in Control, has a non-forfeitable right to Retirement Income under the Pension Plan, or (ii) in the case of a Funding Change in Control involving a Funding Subsidiary under Section 2.14(d), (e) or (f) hereof, an employee of such Funding Subsidiary who, on the date of such Funding Change in Control, has a non-forfeitable right to Retirement Income under the Pension Plan. 2.23 "Person" shall mean any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act. 2.24 "Plan" shall mean this Southern Company Change in Control Benefits Protection Plan. The Plan amends and restates the Southern Company Change in Control Benefit Plan Determination Policy. 2.25 "Plan Termination" shall mean the termination of the Omnibus Plan (or any Program thereunder) by Southern Company or an Employing Company following a Southern Change in Control unless an equitable arrangement (embodied in an ongoing substitute or replacement plan or program) has been made with respect to the Omnibus Plan or Program in connection with the Change in Control. For purposes of this Plan, an ongoing substitute or alternative plan or program shall be considered an "equitable arrangement" if a nationally recognized compensation consulting firm chosen by the Operating Committee opines in writing that the post-Change in Control plan or program is an equitable substitute or replacement of the Omnibus Plan or Program that was terminated. 2.26 "Preliminary Change in Control" shall mean the occurrence of any of the following as administratively determined by the Southern Committee: (a) Southern Company or an Employing 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 Company, an Employing Company or any other Person publicly announces an intention to take or to consider taking actions which, if Consummated, would result in a Change in Control under circumstances where the Consummation of the announced action or intended action is legally and financially possible; or (c) Any Person acquires Beneficial Ownership of fifteen percent (15%) or more of the Common Stock. 2.27 "SBP" shall have the meaning set forth in Section 4.1 hereof. 2.28 "SERP" shall have the meaning set forth in Section 5.1 hereof. 2.29 "Southern Board" shall mean the board of directors of Southern Company. 2.30 "Southern Change in Control" shall mean any of the following: 6 (a) The Consummation of an acquisition by any Person of Beneficial Ownership of 20% or more of Southern Company's Voting Securities; provided, however, that for purposes of this subsection (a), the following acquisitions of Southern Company's Voting Securities shall not constitute a Change in Control: (i) any acquisition directly from Southern Company; (ii) any acquisition by Southern Company; (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern Company or any corporation controlled by Southern Company; (iv) any acquisition by a qualified pension plan or publicly held mutual fund; (v) any acquisition by an employee of Southern Company or its subsidiary or affiliate, or Group composed exclusively of such 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 this Section 2.30(a); (b) 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 (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 Company'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 Surviving Company in substantially the same proportions as their ownership, immediately prior to such Business Combination, of Southern Company'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 Company, 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 7 the earlier of the date of execution of the initial agreement, or of the action of the Southern Board, providing for such Business Combination. 2.31 "Southern Committee" shall mean the committee comprised of the Chairman of the Southern Board, the Chief Financial Officer of Southern Company and the General Counsel of Southern Company. 2.32 "Southern Company" shall mean The Southern Company, its successors and assigns. 2.33 "Southern Termination" shall mean the following: (a) The Consummation of a reorganization, merger or consolidation of Southern Company under circumstances where either (i) Southern Company is not the Surviving Company or (ii) Southern Company's Voting Securities are no longer publicly traded; (b) The Consummation of a sale or other disposition of all or substantially all of Southern Company's assets; or (c) The Consummation of an acquisition by any Person of Beneficial Ownership of all of Southern Company's Voting Securities such that Southern Company's Voting Securities are no longer publicly traded. 2.34 "Subsidiary Change in Control" shall mean any of the following: (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 an Employing Company; provided, however, that for purposes of this Subsection 2.34, any acquisition by an employee of Southern Company 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 Company or any corporation Controlled by Southern Company shall not constitute a Change in Control; (b) Consummation of a reorganization, merger or consolidation of an Employing Company (an "Employing Company Business Combination"), in each case, unless, following such Employing Company Business Combination, Southern Company Controls the corporation surviving or resulting from such Employing Company Business Combination; or (c) Consummation of the sale or other disposition of all or substantially all of the assets of an Employing Company to an entity which Southern Company does not Control. 2.35 "Subsidiary Employee" shall mean an employee of an Employing Company that has undergone a Subsidiary Change in Control who does not become an employee of another Employing Company immediately following such Subsidiary Change in Control. The Operating Committee may in its sole discretion deem one or more 8 employees of any corporation or entity Controlled by Southern Company, directly or indirectly, to be employed by an Employing Company for purposes of being covered as a Subsidiary Employee under this Plan. Such action shall be in writing and shall cause such an employee to be a Subsidiary Employee entitled to benefits under this Plan only in the event of a Subsidiary Change in Control of his deemed Employing Company, not his actual employer (which may or may not be an Employing Company). 2.36 "Surviving Company" shall have the meaning set forth in Section 2.14(c)(i) hereof. 2.37 "Trust" shall mean the Southern Company Deferred Compensation Trust. 2.38 "Voting Securities" shall mean the outstanding voting securities of a corporation entitling the holder thereof to vote generally in the election of such corporation's directors. ARTICLE III - OMNIBUS PLAN CHANGE IN CONTROL PROVISIONS 3.1 Application. The provisions of this Article III apply to benefits payable under the Southern Company Omnibus Incentive Compensation Plan (the "Omnibus Plan") notwithstanding any provision in the Omnibus Plan to the contrary. The meaning of capitalized terms not defined herein are determined under the Omnibus Plan. 3.2 Stock-Based Awards. The provisions of this Section 3.2 apply to stock-based awards granted under the Omnibus Plan. (a) Southern Change in Control. In the event of a Southern Change in Control which is not also a Southern Termination: (i) Any Options and Stock Appreciation Rights held as of the date of the Southern Change in Control shall remain subject to such restrictions and vesting schedules in accordance with the terms of the grant. (ii) The restrictions and deferral limitations applicable to any Restricted Stock and Restricted Stock Units shall continue in accordance with the terms of the grant. (iii) The restrictions, deferral limitations and other conditions applicable to any other Awards shall continue in accordance with the terms of the grant. (b) Subsidiary Change in Control. In the event of a Subsidiary Change in Control: (i) Any Options and Stock Appreciation Rights held by a Subsidiary Employee which are outstanding as of the date such Subsidiary Change in Control is determined to have occurred, and which 9 are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Subsidiary Employee holding a Stock Appreciation Right who is actually subject to Section 16(b) of the Exchange Act, such Stock Appreciation Right shall not become fully vested and exercisable unless it shall have been outstanding for at least six months as of the date such Subsidiary Change in Control is determined to have occurred. (ii) The restrictions and deferral limitations applicable to any Restricted Stock and Restricted Stock Units held by a Subsidiary Employee shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable. (c) Southern Termination. In the event of a Southern Termination: (i) Any Options and Stock Appreciation Rights which are outstanding as of the date such Southern Termination is determined to have occurred, and which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of an Employee holding a Stock Appreciation Right who 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 actions would result in liability to the Employee under Section 16(b), provided further, that any such actions not taken as a result of the rules under Section 16(b) shall be effected as of the first date that such activity would no longer result in liability under such section. (ii) The restrictions and deferral limitations applicable to any Restricted Stock and Restricted Stock Units held by Employees shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable. (iii) The restrictions, deferral limitations and other conditions applicable to any other Awards held by Employees shall lapse, and such other Awards shall become free of all restrictions, limitations or conditions and become fully vested and transferable. (iv) Any Options, Stock Appreciation Rights, Restricted Stock or Restricted Stock Units which are outstanding as of the date such Southern Termination is determined to have occurred, shall be converted into or replaced by options, stock appreciation rights, restricted stock or restricted stock units, as the case may be, in the Surviving Company, or the corporation which has acquired all of Southern Company's Common Stock or assets. In the event of such conversion or replacement, the terms of the replacement options or stock appreciation rights shall preserve with respect to each Option and each SAR the spread between the Fair Market Value of the shares subject to the Options or SARs and the Option Price or Base Value, as the case may be, as determined immediately prior to the Southern Termination. Similarly, the terms of replacement restricted stock or restricted stock units shall preserve the Fair Market Value of each share of Restricted 10 Stock or Restricted Stock Unit as determined immediately prior to the Southern Termination. No replacement option, stock appreciation right, share of restricted stock or restricted stock unit received shall be subject to any terms which are less favorable than those which existed with respect to the original Option, SAR or share of Restricted Stock or Restricted Unit immediately prior to the Southern Termination. 3.3 Application. The provisions of this Sections 3.3 apply to benefits payable under the Performance Pay Program under the Omnibus Plan (the "PPP"). (a) Southern Change in Control. In the event of a Southern Change in Control, if there is no Plan Termination with respect to the PPP, payout of Cash-Based Awards under the PPP to Employees for the performance period in which the Southern Change in Control shall have occurred shall be the greater of actual or target performance under the PPP. (b) Plan Termination. In the event of a Plan Termination with respect to the PPP within two (2) years following a Southern Change in Control, each Employee who is an employee on the date of such Plan Termination shall be entitled to receive within thirty (30) days of the Plan Termination, cash in an amount equal to a pro-rated payout of his Cash-Based Award under the PPP for the performance period in which the Plan Termination shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the date of the Plan Termination. (c) Subsidiary Change in Control. In the event of a Subsidiary Change in Control, each Subsidiary Employee on the date of such Change in Control shall be entitled to receive within thirty (30) days of the Subsidiary Change in Control, cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Subsidiary Change in Control shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the date of the Subsidiary Change in Control. (d) Southern Termination. In the event of a Southern Termination, each Employee on the date of such Southern Termination shall be entitled to receive within thirty (30) days of the Southern Termination, cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Southern Termination shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the date of the Southern Termination. The PPP shall terminate immediately following the payments provided for in this Section 3.3(d). (e) Pro rata Calculation. For purposes of calculating any pro rata Cash-Based Awards under this Section 3.3, a month shall not be considered if the determining event occurs on or before the 14th day of the month, and a month shall be considered if the determining event occurs on or after the 15th day of the month. 11 3.4 Application. The provisions of this Section 3.4 apply to benefits payable under the Performance Dividend Program under the Omnibus Plan (the "PDP"). (a)Southern Change in Control. In the event of a Southern Change in Control, if there is no Plan Termination with respect to the PDP, payout of Cash-Based Awards under the PDP to Employees for the performance period in which the Southern Change in Control shall have occurred shall be based on a payout percentage of the greater of 50% or actual performance under the PDP for such performance period. (b)Plan Termination. In the event of a Plan Termination with respect to the PDP within two (2) years following a Southern Change in Control, each Employee who is an employee on the date of such Plan Termination shall be entitled to receive within thirty (30) days of the Plan Termination, cash for each Cash-Based Award under the PDP held as of such date, based on a payout percentage of the greater of 50% or actual performance under the PDP determined as of the date of the Plan Termination, and the sum of the quarterly dividends on the Common Stock declared during the calendar year of and prior to the date of the Plan Termination. For purposes of this Section 3.4(b), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31st of the year in which the Plan Termination occurs, all other remaining PPP performance measurement periods shall terminate and no payment shall be made with respect thereto. (c)Subsidiary Change in Control. In the event of a Subsidiary Change in Control, each Subsidiary Employee on the date of such Change in Control shall be entitled to receive within thirty (30) days of the Subsidiary Change in Control, cash for each Cash-Based Award under the PDP held as of such date, based on a payout percentage of the greater of 50% or actual performance determined as of the date on which the Subsidiary Change in Control shall have occurred, and the sum of the quarterly dividends on the Common Stock declared during the calendar year of and prior to the date of the Subsidiary Change in Control. For purposes of this Section 3.4(c), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31st of the year in which the Subsidiary Change in Control occurs, all other remaining PPP performance measurement periods shall terminate and no payment to such Subsidiary Employee shall be made with respect thereto. (d)Southern Termination. In the event of a Southern Termination, each Employee who is an employee on the date of such Southern Termination shall be entitled to receive within thirty (30) days of the Southern Termination, cash for each Cash-Based Award under the PDP held as of such date, based on a payout percentage of the greater of 50% or actual performance determined as of the date on which the Southern Termination shall have occurred, and the sum of the quarterly dividends on the Common Stock declared during the year of and prior to the date of the Southern Termination. For purposes of this Section 3.4(d), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31st of the year in which the Southern Termination occurs, the PPP and all other remaining PPP performance measurement periods shall terminate and no further payment shall be made with respect thereto. 12 3.5 Other Incentives. The provisions of this Section 3.5 shall apply to any Employee or Subsidiary Employee who, as of the date of the respective Change in Control, is entitled to a Performance Unit or Performance Share award under the Omnibus Plan (other than those described in Section 3.2 hereof), or any cash or stock-based award under any other plan or program sponsored by an Employing Company. If and to the extent an Employee or Subsidiary Employee has received a stock-based award under the Omnibus Plan (other than those described in Section 3.2 hereof) or any other plan or program sponsored by his Employing Company, in the event of a Southern Change in Control, a Subsidiary Change in Control and/or a Southern Termination, such award shall be subject to the provisions of this Plan, and any restrictions, limitations and deferral limitations shall lapse if and to the extent provided under Section 3.2 hereof for similar Awards granted under the Omnibus Plan. If and to the extent an Employee or Subsidiary Employee is entitled to a cash-based award under the Omnibus Plan (other than PPP or PDP) or any other plan or program sponsored by his Employing Company, in the event of a Southern Change in Control, a Subsidiary Change in Control and/or a Southern Termination, such award shall be subject to the provisions of this Plan, and, provided such Employee or Subsidiary Employee is not otherwise entitled to a payout under any change in control provision of such plan or program, such award shall be payable in a similar manner as set forth in Sections 3.3 and 3.4 hereof with respect to PPP and PDP (e.g., if prorated, the award is paid at target, if the award is for a full performance period, the award is paid at the greater of actual or target if administratively practicable, if not, at target) as determined by the Operating Committee on a good faith basis. ARTICLE IV - SUPPLEMENTAL BENEFIT PLAN CHANGE IN CONTROL AND OTHER SPECIAL PROVISIONS 4.1 Application. Upon a Funding Change in Control, the provisions of this Article IV shall apply to the funding, calculation and payment of accrued benefits under The Southern Company Supplemental Benefit Plan (the "SBP") notwithstanding any provision in the SBP to the contrary. The meaning of any capitalized terms not defined herein shall be as defined under the SBP. 4.2 Funding of the Trust. The Trust has been established to hold assets of the Employing Companies under certain circumstances as a reserve for the discharge of the Employing Companies' obligations under the SBP and certain other plans and arrangements. Upon a Funding Event involving a Funding Change in Control under Section 2.14(a), (b) or (c) hereof, all Employing Companies shall be obligated to immediately contribute such amounts to the Trust as may be necessary to fully fund each Employing Company's obligations to pay the aggregate Pension Benefits and Non-Pension Benefits to be accrued under the SBP as of the date of the Funding Change in Control, the aggregate accrued Pension Benefit to be determined under Section 4.4 hereof, in accordance with the procedures set forth in Section 4.3 hereof. Upon a Funding Event involving a Funding Subsidiary under Section 2.14(d), (e) and (f) hereof, such Funding Subsidiary shall be obligated to immediately contribute such amounts to the Trust as may be necessary to fully fund such Funding Subsidiary's obligations to pay the aggregate Pension Benefits and Non-Pension Benefits to be accrued under the SBP as of the date of the Funding Change in Control, the aggregate accrued Pension Benefit to be determined under Section 4.4 hereof, in accordance with the procedures set forth in Section 4.3 hereof. Under the terms of the Trust 13 agreement, all assets held in the Trust remain subject only to the claims of the Employing Companies' general creditors whose claims against the Employing Companies are not satisfied because of the Employing Companies' bankruptcy or insolvency (as those terms are defined in the Trust). No Participant has any preferred claim on, or beneficial ownership interest in, any assets of the Trust before the assets are paid to the Participant and all rights created under the Trust, as under the SBP, are unsecured contractual claims of the Participant against his Employing Company. 4.3 Calculation of Trust Contribution. As soon as practicable following a Funding Event, the affected Employing Companies shall contribute funds to the Trust based upon the funding strategy adopted by the Operating Committee with the assistance of an appointed actuary in such amounts as shall be necessary to fulfill the Employing Companies' obligations pursuant to this Article IV and the terms of the Trust agreement. The dollar amount necessary to satisfy each Employing Company's obligations under this Article IV shall be estimated and paid to the Trust as soon as practicable following a Funding Event and shall be recalculated and trued- up immediately following the respective Funding Change in Control. In the event of a dispute after a Funding Event between a Participant and an Employing Company over such actuary's determination of the dollar amount necessary to appropriately fund the Trust under the terms of this Article IV, the respective Employing Company(ies) and any complaining Participant(s) shall refer such dispute to an independent, third-party actuarial consultant, chosen by mutual agreement of the Employing Company and such Participant. If the Employing Company and the Participant cannot agree on an independent, third-party actuarial consultant, the actuarial consultant shall be chosen by lot from an equal number of actuaries submitted by the affected Employing Companies and the Trustee (not to exceed four (4) each). Any such referral shall only occur once in total and the determination by the third-party actuarial consultant shall be final and binding upon both parties. The Employing Companies shall be responsible for all of the fees and expenses of the independent actuarial consultant. 4.4 Pension Benefit Upon a Funding Change in Control. As of the date of a Funding Change in Control, the accrued Pension Benefit of each Participant shall be calculated based on such Participant's Earnings and Accredited Service on such date, regardless of whether such Participant is retirement eligible on such date. Each Participant shall be entitled to receive the amount of his accrued Pension Benefit based on such Participant's Earnings and Accredited Service as of the date of a Funding Change in Control adjusted to take into account appropriate early reduction factors, if any, based on the Participant's commencement of benefits. Such accrued Pension Benefit shall be paid in lump sum as soon as practicable following such Participant's termination of employment or retirement. Any Participants' Pension Benefits accrued under the SBP subsequent to the date of a Funding Change in Control shall be calculated and distributed pursuant to the terms of the SBP, without regard to this Article IV. 4.5 Non-Pension Benefit Distribution Election upon a Funding Change in Control. In the event of a Funding Change in Control, notwithstanding anything to the contrary in the SBP, the Non-Pension Benefit of a Participant shall be paid out in a lump sum as soon as practicable following such Participant's termination of employment or retirement if such Participant makes such an election pursuant to those procedures established by the Operating Committee in its sole and absolute discretion. If no such election is made, a Participant shall receive payment of his Non-Pension Benefit Account solely in accordance with Article V of the SBP. 14 ARTICLE V - SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ------------------------------------------------------------ CHANGE IN CONTROL AND OTHER SPECIAL PROVISIONS 5.1 Application. Upon a Funding Change in Control, the provisions of this Article V shall apply to the funding, calculation and payment of accrued benefits under The Southern Company Supplemental Executive Retirement Plan (the "SERP") notwithstanding any provision in the SERP to the contrary. The meaning of any capitalized terms not defined herein shall be as defined under the SERP. 5.2 Funding of the Trust. The Trust has been established to hold assets of the Employing Companies under certain circumstances as a reserve for the discharge of the Employing Companies' obligations under the SERP and certain other plans and arrangements. Upon a Funding Event involving a Funding Change in Control under Section 2.14(a), (b) or (c) hereof, all Employing Companies shall be obligated to immediately contribute such amounts to the Trust as may be necessary to fully fund each Employing Company's obligations to pay the aggregate benefits to be accrued under the SERP as of the date of the Funding Change in Control, as determined under Section 5.4 hereof, in accordance with the procedures set forth in Section 5.3 hereof. Upon a Funding Event involving a Funding Subsidiary under Section 2.14(d), (e) and (f) hereof, such Funding Subsidiary shall be obligated to immediately contribute such amounts to the Trust as may be necessary to fully fund such Funding Subsidiary's obligations to pay the aggregate benefits to be accrued under the SERP as of the date of such Funding Change in Control. Under the terms of the Trust agreement, all assets held in the Trust remain subject only to the claims of the Employing Companies' general creditors whose claims against the Employing Companies are not satisfied because of the Employing Companies' bankruptcy or insolvency (as those terms are defined in the Trust). No Participant has any preferred claim on, or beneficial ownership interest in, any assets of the Trust before the assets are paid to the Participant and all rights created under the Trust, as under the SERP, are unsecured contractual claims of the Participant against his Employing Company. 5.3 Calculation of Trust Contribution. As soon as practicable following a Funding Event, the affected Employing Companies shall contribute funds to the Trust based upon the funding strategy adopted by the Operating Committee with the assistance of an appointed actuary in such amounts as shall be necessary to fulfill the Employing Companies' obligations pursuant to this Article V and the terms of the Trust agreement. The dollar amount necessary to satisfy each Employing Company's obligations under this Article V shall be estimated and paid to the Trust as soon as practicable following a Funding Event and shall be recalculated and trued- up immediately following the respective Funding Change in Control. In the event of a dispute after a Funding Event between a Participant and an Employing Company over such actuary's determination of the dollar amount necessary to appropriately fund the Trust under this Article V, the respective Employing Company(ies) and any complaining Participant(s) shall refer such dispute to an independent, third-party actuarial consultant, chosen by mutual agreement of the Employing Company and such Participant. If the Employing Company and the Participant cannot agree on an independent, third-party actuarial consultant, the actuarial consultant shall be chosen by lot from an equal number of actuaries submitted by the affected Employing Companies and the Trustee (not to exceed four (4) each). Any such referral shall only occur once in total and the determination by the third-party actuarial consultant shall be final and binding upon both parties. The Employing Companies 15 shall be responsible for all of the fees and expenses of the independent actuarial consultant. 5.4 SERP Benefit Upon a Funding Change in Control. As of the date of a Funding Change in Control, the accrued SERP Benefit of each Participant shall be calculated based on such Participant's Earnings and Accredited Service on such date, regardless of whether such Participant is retirement eligible on such date. Each such Participant shall be entitled to receive the amount of his SERP Benefit based on such Participant's Earnings and Accredited Service as of the date of a Funding Change in Control adjusted to take into account appropriate early reduction factors, if any, based on the Participant's commencement of benefits. Such accrued SERP Benefit shall be paid in lump sum as soon as practicable following such Participant's termination of employment or retirement. Any Participants' SERP Benefits accrued under the SERP subsequent to the date of a Funding Change in Control shall be calculated and distributed pursuant to the terms of the SERP without regard to this Article V. ARTICLE VI - DEFERRED COMPENSATION PLAN CHANGE IN CONTROL AND OTHER SPECIAL PROVISIONS 6.1 Application. Upon a Funding Change in Control, the provisions of this Article VI shall apply to the funding, calculation and payment of benefits under the Southern Company Deferred Compensation Plan (the "DCP") notwithstanding any provision in the DCP to the contrary. The meaning of any capitalized terms not defined herein shall be as defined under the DCP. For purposes of this Article VI, the term "Participant" shall have the meaning set forth in Article II of the DCP without regard to Section 2.21 hereof. 6.2 Funding of the Trust. The Trust has been established to hold assets of the Employing Companies under certain circumstances as a reserve for the discharge of the Employing Companies' obligations under the DCP and certain other plans and arrangements. Upon a Funding Event involving a Funding Change in Control under Section 2.14(a), (b) or (c) hereof, all Employing Companies shall be obligated to immediately contribute such amounts to the Trust as may be necessary to fully fund each Employing Company's obligations to pay the aggregate benefits to be accrued under the DCP as of the date of the Funding Change in Control in accordance with the procedures set forth in Section 6.3 hereof. Upon a Funding Event involving a Funding Subsidiary under Section 2.14(d), (e) and (f) hereof, such Funding Subsidiary shall be obligated to immediately contribute such amounts to the Trust as may be necessary to fully fund such Funding Subsidiary's obligations to pay the aggregate benefits to be accrued under the DCP as of the date of the Funding Change in Control in accordance with the procedures set forth in Section 6.3 hereof. Under the terms of the Trust agreement, all assets held in the Trust remain subject only to the claims of the Employing Companies' general creditors whose claims against the Employing Companies are not satisfied because of the Employing Companies' bankruptcy or insolvency (as those terms are defined in the Trust). No Participant has any preferred claim on, or beneficial ownership interest in, any assets of the Trust before the assets are paid to the Participant and all rights created under the Trust, as under the DCP, are unsecured contractual claims of the Participant against his Employing Company. 6.3 Calculation of Trust Contribution. As soon as practicable following a Funding Event, the affected Employing Companies shall contribute funds to the Trust based upon the funding strategy adopted by the Operating Committee with the assistance of an appointed actuary in such amounts as shall be necessary to 16 fulfill the Employing Companies' obligations pursuant to this Article VI and the terms of the Trust. The dollar amount necessary to satisfy each Employing Company's obligations under this Article VI shall be estimated and paid to the Trust as soon as practicable following a Funding Event and shall be recalculated and trued- up immediately following the respective Funding Change in Control. In the event of a dispute following a Funding Event between a Participant and an Employing Company over such actuary's determination of the dollar amount necessary to appropriately fund the Trust under this Article VI, the respective Employing Company(ies) and any complaining Participant(s) shall refer such dispute to an independent, third-party actuarial consultant, chosen by mutual agreement of the Employing Company and such Participant. If the Employing Company and the Participant cannot agree on an independent, third-party actuarial consultant, the actuarial consultant shall be chosen by lot from an equal number of actuaries submitted by the Employing Company and the Trustee (not to exceed four (4) each). Any such referral shall only occur once in total and the determination by the third-party actuarial consultant shall be final and binding upon both parties. The Employing Companies shall be responsible for all of the fees and expenses of the independent actuarial consultant. 6.4 Payment of DCP Account. In the event of a Funding Change in Control, notwithstanding anything to the contrary in the DCP, a Participant's Account under the DCP shall be paid out in a lump sum as soon as practicable following such Participant's termination of employment or retirement if such Participant makes such an election pursuant to those procedures established by the Operating Committee in its sole and absolute discretion. If no such election is made, a Participant shall receive payment of his DCP Account solely in accordance with Article VII of the DCP. ARTICLE VII - ADMINISTRATION 7.1 Administrative Committee. The Administrative Committee shall appoint the members of the Operating Committee and shall designate a Chairman thereof. The Operating Committee shall be responsible for the general administration of the Plan. 7.2 Duties of the Operating Committee. (a) The Operating Committee shall be responsible for the daily administration of the Plan and may appoint other persons or entities to perform or assist in the performance of any of its fiduciary duties, subject to its review and approval. The Operating Committee shall have the right to remove any such appointee from his position without cause upon notice. Any person, group of persons, or entity may serve in more than one fiduciary capacity. (b) The Operating Committee shall maintain permanent records and accounts of Participants and of their rights under the Plan and of all receipts, disbursements, transfers, and other transactions concerning the Plan. Such accounts, books, and records relating thereto shall be open at all reasonable times to inspection and audit by the Company and any persons designated thereby. 17 (c)The Operating Committee shall take all steps necessary to ensure that the Plan complies with the law at all times, including the preparation and filing of all documents and forms required by any governmental agency; maintenance of adequate Participant records; recording and transmission of all notices required to be given to Participants and their beneficiaries; receipt and dissemination, if required, of all reports and information received from the Employing Companies; securing of such fidelity bonds as may be required by law; and doing such other acts necessary for the proper administration of the Plan. The Operating Committee shall keep a record of all of its proceedings and acts, and shall keep all such books of accounts, records, and other data as may be necessary for proper administration of the Plan. The Operating Committee shall notify the Employing Companies upon their request of any action taken by it, and when required, shall notify any other interested person or persons. 7.3 Powers. The Operating Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan as more particularly set forth herein. The Operating Committee shall have the discretionary authority to interpret the Plan (including any ambiguities herein) and to determine all questions arising in the administration, interpretation, and application of the Plan. The Operating Committee shall adopt such procedures and regulations necessary or desirable for the discharge of its duties hereunder and may appoint such accountants, counsel, actuaries, specialists, and other agents as it deems necessary or desirable in connection with the administration of this Plan. The Operating Committee shall be the legal appointed agent for the service of process. 7.4 Compensation of the Operating Committee. The Operating Committee shall not receive any compensation from the Plan for its services. 7.5 Payment of Expenses. The Operating Committee shall be reimbursed by the Employing Companies for its reasonable expenses incurred in the discharge of its duties. Such expenses shall include any expenses incident to its duties, including, but not limited to, fees of accountants, counsel, actuaries, and other specialists, and other costs of administering the Plan. 7.6 Indemnification. Each Employing Company shall indemnify the Operating Committee against any and all claims, losses, damages, expenses, and liability arising from its actions or omissions, except when the same is finally adjudicated to be the result of gross negligence or willful misconduct. The Employing Companies may purchase at their own expense sufficient liability insurance for the Operating Committee to cover any and all claims, losses, damages, and expenses arising from any action or omission in connection with the execution of the duties as the Operating Committee. ARTICLE VIII - MISCELLANEOUS 8.1 Amendment and Termination The Plan may be amended or terminated at any time by the Board of Directors, provided, however, that no such amendment or termination of the Plan shall be effective if such amendment or termination is made or is effective within a period that is (a) six (6) months before, or at any time after, a Preliminary Change in Control and (b) prior to (x) the earlier of such time as the Southern Committee shall have determined that the event that gave rise to such Preliminary Change in Control shall not be Consummated or (y) two years following the respective Change in Control, unless such amendment or 18 termination during such period has the effect of increasing benefits to Participants under the Plan, is determined by the Board of Directors to be immaterial, or applies solely to individuals who, in the case of a Subsidiary Change in Control, were not employees of the Employing Company undergoing the Subsidiary Change in Control on the date of the respective Preliminary Change in Control, or, in the case of a Southern Change in Control, are not Employees on the date of the respective Southern Change in Control. Following a Change in Control, nothing in this Section shall prevent the Board of Directors from amending or terminating the Plan as to any subsequent Change in Control provided that no such amendment or termination shall impair any rights or reduce any benefits previously accrued under the Plan as a result of a previous Change in Control. 8.2 Additional Rights. Nothing in the Plan shall interfere with or limit in any way the right of the Employing Companies to terminate any employee's employment at any time, or confer upon any employee any right to continue in the employ of the Employing Companies. IN WITNESS WHEREOF, this Southern Company Change in Control Benefits Protection Plan has been executed by duly authorized officers of Southern Company Services, Inc. pursuant to resolutions of the Board of Directors of Southern Company Services, Inc. as of the date first above written. SOUTHERN COMPANY SERVICES, INC. By: /s/ Robert A. Bell EX-10.2 3 ex10-2.txt Exhibit 10.2 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. David M. Ratcliffe ("Mr. Ratcliffe") (hereinafter collectively referred to as the "Parties") is effective November 16, 2006. This Agreement amends and restates the Amended and Restated Change in Control Agreement entered into by Mr. Ratcliffe, Southern and the Company, effective June 1, 2004. WITNESSETH: WHEREAS, Mr. Ratcliffe is the President and Chief Executive Officer of the Company; WHEREAS, the Company wishes to provide to Mr. Ratcliffe 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: 1 ARTICLE I - DEFINITIONS. For purposes of this Agreement, the following terms shall have the following meanings: 1.1 "Annual Compensation" shall mean Mr. Ratcliffe's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan and Long Term Bonus Plan. 1.2 "Base Salary" shall mean Mr. Ratcliffe'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 or sale or other disposition of all or substantially all of the assets of Southern. 2 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 3 (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 4 (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. Ratcliffe, 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 ("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. Ratcliffe or his dependents may be entitled pursuant to Code Section 4980B. 5 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. 6 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. 7 1.23 "Good Reason" shall mean, without Mr. Ratcliffe's express written consent, after written notice to the Company, 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. Ratcliffe claiming benefits under this Agreement upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if Mr. Ratcliffe 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. Ratcliffe of its decision within thirty (30) days of receipt of Mr. Ratcliffe's written offer of employment. Any dispute regarding the Compensation Committee's decision shall be resolved in accordance with Article III hereof. (a) Inconsistent Duties. (i) Change in Control. A meaningful and detrimental alteration in Mr. Ratcliffe's position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control. (ii) Subsidiary Change in Control. In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Ratcliffe is offered employment with the acquiring employer with a job title, duties and status which are materially and 8 detrimentally lower than Mr. Ratcliffe'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. Ratcliffe's Base Salary; (B) the sum of Mr. Ratcliffe'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. Ratcliffe'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. In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Ratcliffe is offered Base Salary, Target Bonus under the acquiring company's Short Term Bonus Plan and Long Term Bonus Plan and 9 Target Bonus under the acquiring company's Equity Based Bonus Plan that, in the aggregate, is less than ninety percent (95%) of Mr. Ratcliffe'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. Ratcliffe's work location to a location more than fifty (50) miles from the facility where Mr. Ratcliffe 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. Ratcliffe's principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by Mr. Ratcliffe 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. Ratcliffe's right to refuse subsequent transfer by the Company to a location which is more than fifty (50) miles from Mr. Ratcliffe'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. In the case of a Subsidiary Change in Control, Good Reason shall exist if Mr. Ratcliffe's work location under the terms of the offer of employment from the acquiring employer is more than fifty (50) miles from Mr. Ratcliffe's work location at the Company as of the date the offer of employment by the acquiring employer is received. 10 (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. Ratcliffe is entitled under the Company's Retirement and Welfare Benefit plans in which Mr. Ratcliffe 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. Ratcliffe with the number of paid vacation days or, if applicable, paid time off days to which Mr. Ratcliffe 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. Ratcliffe 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. 11 (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. Ratcliffe 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. Ratcliffe 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 12 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. Ratcliffe 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 group health plan covering Mr. Ratcliffe, as such plan may be amended from time to time. 1.26 "Group Life Insurance Plan" shall mean the group life insurance plan covering Mr. Ratcliffe, as such plan may be amended from time to time. 13 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. Ratcliffe 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. Ratcliffe 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 14 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; 15 (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; (c) Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock; or (d) The Southern Board or the Board of Directors has declared that a Preliminary Change of Control has occurred. 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. Ratcliffe'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. Ratcliffe is deemed to have retired pursuant to the provisions of Section 2.3 hereof, Mr. Ratcliffe's Separation Date shall be the effective date of his retirement pursuant to the terms of the Pension Plan. 16 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 set forth in Section 1.8(b)(iii) hereof. 1.45 "Target Bonus" shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or awards granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs. 1.46 "Termination for Cause" or "Cause" shall mean Mr. Ratcliffe's termination of employment with the Company upon the occurrence of any of the following: (a) The willful and continued failure by Mr. Ratcliffe to substantially perform his duties with the Company (other than any such failure 17 resulting from Mr. Ratcliffe's Total Disability or from Mr. Ratcliffe's retirement or any such actual or anticipated failure resulting from termination by Mr. Ratcliffe 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 Mr. Ratcliffe has not substantially performed his duties; or (b) The willful engaging by Mr. Ratcliffe in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following: (i) any willful act involving fraud or dishonesty in the course of Mr. Ratcliffe's employment by the Company; (ii) the willful carrying out of any activity or the making of any statement by Mr. Ratcliffe which would materially prejudice or impair the good name and standing of the Company, Southern or any other Southern Subsidiary or would bring the Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which the Company, Southern or such other Southern Subsidiary is located; (iii) attendance by Mr. Ratcliffe 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 offense; (iv) 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; 18 (v) assault or other act of violence by Mr. Ratcliffe against any person during the course of employment; or (vi) Mr. Ratcliffe's indictment for any felony or any misdemeanor involving moral turpitude. No act or failure to act by Mr. Ratcliffe shall be deemed "willful" unless done, or omitted to be done, by Mr. Ratcliffe 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. Ratcliffe 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 the majority of the Southern Board at a meeting called and held for such purpose (after reasonable notice to Mr. Ratcliffe 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. Ratcliffe was guilty of conduct set forth in Section 1.46(a) or (b) hereof and specifying the particulars thereof in detail. 1.47 "Total Disability" shall mean total disability under the terms of the Pension Plan. 1.48 "Voting Securities" shall mean the outstanding voting securities of a corporation entitling the holder thereof to vote generally in the election of such corporation's directors. 1.49 "Waiver and Release" shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto. 1.50 "Year of Service" shall mean an Employee'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 an Employee has a break in his 19 service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service. ARTICLE II - SEVERANCE BENEFITS 2.1 Eligibility. (a) Except as otherwise provided herein, if Mr. Ratcliffe's employment is involuntarily terminated by the Company at any time during the two year period following a Change in Control of Southern or the Company for reasons other than Cause or if Mr. Ratcliffe voluntarily terminates his employment with the Company for Good Reason at any time during the two year period following a Change in Control of Southern or the Company, he shall be entitled to receive the benefits described in Section 2.2 hereof, subject to the terms and conditions described in this Article II. (b) Limits on Eligibility. Notwithstanding anything to the contrary herein, Mr. Ratcliffe shall not be eligible to receive benefits under this Plan if Mr. Ratcliffe : (i) is not actively at work on his Separation Date, unless Mr. Ratcliffe is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work; (ii) voluntarily terminates his employment with the Company for other than Good Reason; (iii) has his employment terminated by the Company for Cause; 20 (iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern; (v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or the Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if Mr. Ratcliffe would otherwise have been entitled to severance benefits under this Agreement but for this Section 2.1(b)(v), Mr. Ratcliffe shall be eligible for benefits under this Agreement except for those outplacement, severance and welfare benefits described in Sections 2.2(a), (b) and (c) hereof); (vi) is involuntarily separated from service with the Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from the Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 1.23(a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he is entitled at the Company as of the day immediately preceding the day of such offer of employment; (vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such 21 offer does not provide Good Reason under the requirements of Section 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof. (viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Agreement. 2.2 Severance Benefits. Upon the Company's receipt of an effective Waiver and Release, Mr. Ratcliffe shall be entitled to receive the following severance benefits: (a) Employee Outplacement Services. Mr. Ratcliffe shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Mr. Ratcliffe's Separation Date. (b) Severance Amount. Mr. Ratcliffe shall be paid in cash 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. Ratcliffe 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 22 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. Ratcliffe under Code Section 280G exceeds three (3) times Mr. Ratcliffe'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. Ratcliffe's Base Amount, less all other "parachute payments" (as such term is defined under Code Section 280G) received by Mr. Ratcliffe, less one dollar (the "Capped Amount"), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax. For purposes of this Section 2.2(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 a nationally recognized firm specializing in federal income taxes as selected by the Compensation Committee, and such calculations or determinations shall be binding upon Mr. Ratcliffe, Southern and the Company. (c) Welfare Benefit. (i) Except as provided in Section 2.3 hereof, Mr. Ratcliffe shall be eligible to participate in the Company's Group Health Plan for a period of six (6) months for each of Mr. Ratcliffe's Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following Mr. Ratcliffe's Separation Date unless otherwise specifically provided under 23 such plan, upon Mr. Ratcliffe's payment of both the Company's and Mr. Ratcliffe's premium under such plan. Mr. Ratcliffe shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Mr. Ratcliffe's Separation 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. Ratcliffe's extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan. (ii) The extended medical coverage afforded to Mr. Ratcliffe pursuant to this Section 2.2(c) as well as the premiums to be paid by Mr. Ratcliffe 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. Ratcliffe in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Mr. Ratcliffe fails to pay his premium within thirty (30) days of its due date, his extended coverage shall be terminated. (iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Mr. Ratcliffe or his dependent may elect. In the event that Mr. Ratcliffe or his dependent becomes eligible to be covered, by virtue of re-employment or otherwise, by any 24 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. Ratcliffe or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Mr. Ratcliffe to inform the Company of his eligibility to participate in any such health plan. (iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Mr. Ratcliffe elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Mr. Ratcliffe a cash amount equal to the Company's and Mr. Ratcliffe's cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control. (d) Stock Option Vesting. The provisions of this Section 2.2(d) shall apply to any equity based awards under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(d) by reference. (i) Any of Mr. Ratcliffe's Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Stock Appreciation Right, if Mr. Ratcliffe 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 actions would result in liability to Mr. Ratcliffe under Section 16(b) of the Exchange Act, provided further that any such actions not 25 taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act. (ii) The restrictions and deferral limitations applicable to any of Mr. Ratcliffe's Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable. (e) Performance Pay Program. The provisions of this Section 2.2(e) shall apply to the Performance Pay Program under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(e) by reference. Provided Mr. Ratcliffe is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of Mr. Ratcliffe's Separation Date and to the extent Mr. Ratcliffe is entitled to participate therein, Mr. Ratcliffe shall be entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. (f) Performance Dividend Program. The provisions of this Section 2.2(f) shall apply to the Performance Dividend Program, the defined terms of which are incorporated in this Section 2.2(f) by reference. Provided Mr. Ratcliffe is not entitled to a Cash-Based Award under the PDP, if the PDP is in place through Mr. Ratcliffe's Separation Date and to the extent Mr. Ratcliffe is entitled to participate therein, Mr. Ratcliffe shall be entitled to receive cash for each 26 such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to the Separation Date. For purposes of this Section 2.2(f), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31st of the year in which Mr. Ratcliffe's Separation Date occurs, all other remaining PPP performance measurement periods shall terminate with respect to Mr. Ratcliffe and no payment to Mr. Ratcliffe shall be made with respect thereto. (g) Other Short Term Incentives Under the Omnibus Plan. The provisions of this Section 2.2(g) shall apply to Performance Unit or Performance Share awards under the Omnibus Plan. Provided Mr. Ratcliffe is not otherwise entitled to a Performance Unit/Share award under the Omnibus Plan, Mr. Ratcliffe shall be entitled to receive cash in an amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. (h) Other Short-Term Incentive Plans. The provisions of this Section 2.2(h) shall apply to Mr. Ratcliffe to the extent that he, as of the date of the Change in Control, is a participant in any other "short term incentive compensation plan" not otherwise previously referred to in this Section 2.2. Provided Mr. Ratcliffe is not otherwise entitled to a plan 27 payout under any change in control provisions of such plans, if the "short term incentive compensation plan" is in place through Mr. Ratcliffe's Separation Date and to the extent Mr. Ratcliffe is entitled to participate therein, Mr. Ratcliffe shall be entitled to receive cash in an amount equal to his award under the Company's "short term incentive compensation plan" for the annual performance period in which the Separation Date shall have occurred, at Mr. Ratcliffe's target performance level and prorated by the number of months which have passed since the beginning of the annual performance period until the Separation Date. For purposes of this Section 2.2(h), 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 to participants based upon articulated performance criteria, and which have been identified by the Compensation Committee and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments. (i) Pro rata Calculation. For purposes of calculating any pro rata Cash-Based Awards under Section 2.2(e), (f), (g) and (h) hereof, a month shall not be considered if the determining event occurs on or before the 14th day of the month, and a month shall be considered if the determining event occurs on or after the 15th day of the month. (j) No Duplicate Benefits. Notwithstanding anything in this Section 2.2 to the contrary, in the event that Mr. Ratcliffe has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the "BPP") for the Performance Period which includes Mr. Ratcliffe's Separation Date, then the amount of any such Cash-Based 28 Award under this Plan shall be reduced dollar-for-dollar by any such amount received or to be received under the BPP. 2.3 Coordination with Retiree Medical and Life Insurance Coverage. Notwithstanding anything to the contrary above, if Mr. Ratcliffe is otherwise eligible to retire pursuant to the terms of the Pension Plan, he shall be deemed to have retired for purposes of all employee benefit plans sponsored by the Company of which Mr. Ratcliffe is a participant. If Mr. Ratcliffe is deemed to have retired in accordance with the preceding sentence, he shall not be eligible to receive the benefits described in Section 2.2(c) hereof if, upon his Separation Date, Mr. Ratcliffe becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan. 2.4 Payment of Benefits. (a) Except as otherwise provided in Section 2.4(b) hereof, the total amount payable under this Article II shall be paid to Mr. Ratcliffe in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Mr. Ratcliffe's Separation Date, or (b) the tender to the Company by Mr. Ratcliffe of an effective Waiver and Release 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. (b) Notwithstanding anything to the contrary in Section 2.4(a) above, if the Compensation Committee determines that it is necessary to delay any payment under this Article II in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such payment shall be delayed for 29 the period set forth in Section 409A(a)(2)(B)(i) and such delayed payment shall bear a reasonable rate of interest as determined by the Compensation Committee. 2.5 Benefits in the Event of Death. In the event of Mr. Ratcliffe's death prior to the payment of all benefits due under this Article II, Mr. Ratcliffe's estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release. 2.6 Legal Fees. In the event of a dispute between Mr. Ratcliffe and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Mr. Ratcliffe's favor, the Company shall reimburse Mr. Ratcliffe's legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000). 2.7 No Mitigation. Mr. Ratcliffe shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Mr. Ratcliffe hereunder shall not be reduced or suspended if he accepts such subsequent employment. 2.8 Non-qualified Retirement and Deferred Compensation Plans. Subsequent to a Change in Control, any claims by Mr. Ratcliffe 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 procedures and provisions set forth in Article III hereof and if any material issue in such dispute is finally resolved in Mr. Ratcliffe's favor, the Company shall reimburse Mr. Ratcliffe's legal fees in the manner provided in Section 2.6 hereof. ARTICLE III - ARBITRATION 30 3.1 General. 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 Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Mr. Ratcliffe's employment by the Company or the termination thereof. 3.2 Demand for Arbitration. Arbitration shall be initiated by serving a written notice of demand for arbitration to Mr. Ratcliffe, in the case of the Company, or to the Compensation Committee, in the case of Mr. Ratcliffe. 3.3 Law and Venue. The arbitrators shall apply the laws of the State of country-regionplaceGeorgia, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia. 3.4 Appointment of Arbitrators. Arbitrators shall be appointed 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. Ratcliffe, 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. 3.5 Costs. The arbitration filing fee shall be paid by Mr. Ratcliffe. All other costs of arbitration shall be borne equally by Mr. Ratcliffe and the Company, provided, however, that the Company shall reimburse such fees and costs in the event any 31 material issue in such dispute is finally resolved in Mr. Ratcliffe's favor and Mr. Ratcliffe is reimbursed legal fees under Section 2.6 hereof. 3.6 Interim and Injunctive Relief. Nothing in this Article III is intended to preclude, upon application of either party, 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 either party's interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to 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 Article III. ARTICLE IV - TRANSFER OF EMPLOYMENT 4.1 Transfer of Employment. In the event that Mr. Ratcliffe's employment by the Company is terminated during the two year period following a Change in Control and Mr. Ratcliffe accepts employment by Southern or a another Southern Subsidiary, the Company shall assign this Agreement to Southern or such Southern Subsidiary, Southern shall accept such assignment or cause such Southern Subsidiary to accept such assignment, and such assignee shall become the "Company" for all purposes hereunder. ARTICLE V - MISCELLANEOUS 5.1 Funding of Benefits. Unless the Board of Directors in its discretion determines otherwise, the amounts payable to Mr. Ratcliffe under the this 32 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. 5.2 Withholding. There shall be deducted from the payment of any amount 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. Ratcliffe. 5.3 Assignment. Neither Mr. Ratcliffe nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount 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. 5.4 Interpretation. This Agreement is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional tax under Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Agreement for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent. 5.5 Amendment and Termination. The Agreement may be amended or terminated only by a writing executed by the parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 16 day November, 2006. THE SOUTHERN COMPANY By: /s/ Thomas A. Fanning SOUTHERN COMPANY SERVICES, INC. By: /s/ Robert A. Bell MR. RATCLIFFE /s/ David M. Ratcliffe David M. Ratcliffe Exhibit A CHANGE IN CONTROL AGREEMENT Waiver and Release The attached Waiver and Release is to be given to Mr. David M. Ratcliffe upon the occurrence of an event that triggers eligibility for severance benefits under the Change in Control Agreement, as described in Section 2.2 of such Agreement. CHANGE IN CONTROL AGREEMENT Waiver and Release I, David M. Ratcliffe, understand that I am entitled to receive the severance benefits described in Article II 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 Company Services, 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 receiving the severance and welfare benefits under Article II of the Agreement, I hereby voluntarily and irrevocably waive, release, dismiss with prejudice, and withdraw all claims, complaints, suits or demands of any kind whatsoever (whether known or unknown) which I ever had, may have, or now have against The Southern Company, Southern Company Services, Inc., Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Communications Services, Inc. d/b/a Southern LINC, Southern Company Energy Solutions, L.L.C., Southern Nuclear Operating Company, Inc., Southern Telecom, Inc., Southern Company Management Development, Inc., and other current or former subsidiaries or affiliates of The Southern Company and their past, present and future officers, directors, employees, agents, insurers and attorneys (collectively, the "Releasees"), arising from or relating to (directly or indirectly) my employment or the termination of my employment or other events occurred as of the date of execution of this Agreement, including but not limited to: (a) claims for violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, 42 U.S.C. ss. 1981, the National Labor Relations Act, the Labor Management Relations Act, Executive Order 11246, Executive Order 11141, the Rehabilitation Act of 1973, the Sarbanes-Oxley Act of 2002 or the Employee Retirement Income Security Act; (b) claims for violations of any other federal or state statute or regulation or local ordinance; (c) claims for lost or unpaid wages, compensation, or benefits, defamation, intentional or negligent infliction of emotional distress, assault, battery, wrongful or constructive discharge, negligent hiring, retention or supervision, fraud, misrepresentation, conversion, tortious interference, breach of contract, or breach of fiduciary duty; (d) claims to benefits under any bonus, severance, workforce reduction, early retirement, outplacement, or any other similar type plan sponsored by the Company (except for those plans listed below); or (e) any other claims under state law arising in tort or contract. In signing this Agreement, I am not releasing any claims that may arise under the terms of this Agreement or which may arise out of events occurring after the date I execute this Agreement. I am also not releasing claims to benefits that I am already entitled to receive under The Southern Company Pension Plan, The Southern Company Employee Stock Ownership Plan, The Southern Company Employee Savings Plan, The Southern Company Omnibus Incentive Compensation Plan, The Southern Company Change in Control Benefits Protection Plan or under any workers' compensation laws. 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. Nothing in this Agreement shall prohibit me from engaging in protected activities under applicable law (including protected activities described in Section 211 of the Energy Reorganization Act) or from communicating, either voluntarily or otherwise, with any governmental agency concerning any potential violation of the law. I understand and agree for a period of two (2) years after the date I execute this Agreement, I will regard and treat as strictly confidential all valuable, non-public, competitively sensitive data and information relating to the Releasees' business that is not generally known by or readily available to Releasees' competitors and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such information to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees. I further understand and agree that I will regard and treat as strictly confidential all trade secrets of Releasees for as long as such items remain trade secrets under applicable law and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such trade secrets to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees. I further agree to keep confidential and not disclose the terms of this Agreement, including, but not limited to, the benefits under the Agreement, except to my spouse, attorneys or financial advisors (who must be informed of and agree to be bound by the confidentiality provisions contained in this Agreement before I disclose any information to them about this Agreement), or where such disclosure is required by law. I agree to return to the Company prior to my last day of employment all property of the Company, including but not limited to data, lists, information, memoranda, documents, identification cards, credit cards, parking cards, keys, computers, fax machines, beepers, phones, and files (including copies thereof). I understand and agree that I will not seek re-employment as an employee, leased employee or independent contractor with the Company or any Southern Company subsidiary or affiliate during the twenty-four (24) month period beginning immediately following my execution of this Agreement. I have carefully read this agreement and I fully understand all of the provisions of this Waiver. I have been encouraged and advised in writing to seek advice from anyone of my choosing regarding this Waiver (including my attorney, accountant or tax advisor). Prior to signing this Waiver, I have been given the opportunity and sufficient time to seek such advice. I have had the opportunity to review and consider this Waiver for a period of at least twenty-one (21) days before signing it. I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign this Waiver. In order to revoke this Waiver, I must deliver written notification of such revocation to the Compensation Committee. 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. Revocation of this Waiver will not alter or change the termination of my employment by the Company. In signing this Waiver, I am not relying on any representation or statement (written or oral) not specifically set forth in this Waiver, the Agreement or by the company or any of its representatives with regard to the subject matter, basis, or effect of this Waiver or otherwise. I was not coerced, threatened, or otherwise forced to sign this Waiver. I am voluntarily signing and delivering this Waiver of my own free will. I understand that by signing this Waiver I am giving up rights i may have. I understand I do not have to sign this Waiver. IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________________, in the year _____. --------------------------- David M. Ratcliffe Sworn to and subscribed to me this ___day of _________, ____ - -------------------------- Notary Public My Commission Expires: - --------------------------- (Notary Seal) Acknowledged and Accepted by the Company. By: ----------------------------------- Date: ----------------------------------- EXHIBIT B SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT ("Agreement") made and entered into by and between Acquiring Company ("Company") and Mr. ________________ ("Executive") (hereinafter collectively referred to as the "Parties") effective ______________, 200__. WITNESSETH: WHEREAS, the Company wishes to provide to Executive certain severance benefits under certain circumstances; 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 1.1 "Annual Compensation" shall Executive's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan. 1.2 "Base Salary" shall mean Executive's annual base salary rate during the twelve (12) month period immediately preceding his Separation Date plus target bonus. 1.3 "Board of Directors" shall mean the board of directors of the Company. 1.4 "COBRA Coverage" shall mean any continuation coverage to which Executive or his dependents may be entitled pursuant to Code Section 4980B. 1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended. 1.6 "Company" shall mean Acquiring Company, its successors and assigns. 1.7 "Employee Outplacement Program" shall mean the program established by the Company from time to time for the purpose of assisting employees find 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. 1.8 "Employment Date" shall mean the date that Executive is hired by the Company as a full time employee. 1.9 "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. 1.10 "Good Reason" shall mean, without Executive's express written consent, after written notice to the Board of Directors, and after a thirty (30) day opportunity for the Board of Directors to cure, the continuing occurrence of any of the events described in Subsections (a), (b), (c) or (d) of this Section 1.10. (a) Inconsistent Duties. A meaningful and detrimental alteration in Executive's position or in the nature or status of his responsibilities from those in effect on the Employment Date. (b) Reduced Compensation. A reduction of five percent (5%) or more by the Company in any of the following amounts of compensation expressed in subparagraphs (i), (ii) or (iii) 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 all employees of the Company eligible for such compensation: (i) Executive's Base Salary; (ii) the sum of Executive's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan, as in effect on the Employment Date; or (iii) the sum of Executive's Base Salary plus Target Bonus under the Short Term Bonus Plan and Long Term Bonus Plan plus the Target Award under the Equity Based Bonus Plan, each of which as in effect on the Employment Date. (c) Relocation. A change in Executive's work location to a location more than fifty (50) miles from the facility where Executive was located at the time of his Employment Date, unless such new work location is within fifty (50) miles from Executive's principal place of residence on his Employment Date. The acceptance, if any, by Executive of employment by the Company at a work location which is outside the fifty mile radius set forth in this Section 1.10(c) shall not be a waiver of Executive's right to refuse subsequent transfer by an Company to a location which is more than fifty (50) miles from Executive's principal place of residence on his Employment Date, and such subsequent nonconsensual transfer shall be "Good Reason" under this Agreement; (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 Executive is entitled under the Company's Retirement and Welfare Benefit plans in which Executive was participating on his Employment Date. (ii) Vacation and Paid Time Off. The failure by the Company to provide Executive with the number of paid vacation days or, if applicable, paid time off days to which Executive is entitled on the basis of years of service with a Southern Entity and the Company in accordance with the Company's normal vacation policy or the paid time off program (whichever applicable) in effect on the Employment Date (except for across-the-board vacation policy or paid time off program changes or policy or 2 program terminations similarly affecting at least ninety-five percent (95%) of all employees of the Company). 1.11 "Group Health Agreement" shall mean the group health plan covering Executive, as such plan may be amended from time to time. 1.12 "Group Life Insurance Agreement" shall mean the group life insurance plan covering Executive, as such plan may be amended from time to time. 1.13 "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. 1.14 "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 Executive 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 Employment Date, 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 Employment Date. 1.15 "Month of Service"shall mean any calendar month during which Executive worked at least one (1) hour or was on approved leave of absence while in the employ of a Southern Entity or Acquiring Company and its affiliates. 1.16 "Pension Plan" shall mean the Company Pension Plan or any successor thereto, as in effect on the Employment Date. 1.17 "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). 1.18 "Separation Date" shall mean the date on which Executive is separated from the Company's regular payroll. 1.19 "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. 1.20 "Southern Entity" shall mean The Southern Company or any of its subsidiaries and affiliates. 1.21 "Target Bonus" shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan as used by the Company to measure the market competitiveness of its employee compensation programs. 3 1.22 "Termination for Cause" or "Cause" shall mean Executive's termination of employment with the Company upon the occurrence of any of the following: (a) The willful and continued failure by Executive to substantially perform his duties with the Company (other than any such failure resulting from Executive's Total Disability or from Executive's retirement or any such actual or anticipated failure resulting from termination by Executive for Good Reason) after a written demand for substantial performance is delivered to him by the Board of Directors, which demand specifically identifies the manner in which such corporate officer believes Executive has not substantially performed his duties; or (b) The willful engaging by Executive in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following: (i) any willful act involving fraud or dishonesty in the course of Executive's employment by the Company; (ii) the willful carrying out of any activity or the making of any statement by Executive which would materially prejudice or impair the good name and standing of the Company, or would bring the Company into contempt, ridicule or would reasonably shock or offend any community in which the Company is located; (iii) attendance by Executive 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 offense; (iv) 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; (v) assault or other act of violence by Executive against any person during the course of employment; or (vi) Executive's indictment for any felony or any misdemeanor involving moral turpitude. No act or failure to act by Executive shall be deemed "willful" unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, Executive 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 the majority of Board of Directors at a meeting called and held for such purpose (after reasonable notice to Executive and an opportunity for him, together with counsel, to be heard before the Board of Directors), finding that, in the good faith opinion of the Board of Directors, Executive was guilty of conduct set forth in Section 1.22(a) or (b) hereof and specifying the particulars thereof in detail. 1.23 "Total Disability" shall mean total disability under the terms of the Pension Plan. 4 1.24 "Waiver and Release" shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto. 1.25 "Year of Service" shall mean Executive'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 Executive had a break in service during his employment with a Southern Entity, he or she will receive credit under this Agreement for his service prior to such break in service provided the break in service was less than five (5) years and his service with the Southern Entity prior to the break exceeded the length of such break in service. ARTICLE II - SEVERANCE BENEFITS 2.1 Eligibility. (a) Except as otherwise provided herein, if Executive's employment is involuntarily terminated by the Company at any time during the two year period following his Employment Date for reasons other than Cause or if Executive shall voluntarily terminate his employment with the Company for Good Reason at any time during the two year period following his Employment Date, Executive shall be entitled to receive the amounts described in Section 2.2 hereof, subject to the terms and conditions described in this Article II. (b) Limits on Eligibility. Notwithstanding anything to the contrary herein, Executive shall not be eligible to receive amounts under this Agreement if Executive: (i) is not actively at work on his Separation Date, unless Executive is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work; ) (ii) voluntarily terminates his employment with the Company for other than Good Reason; (iii) has his employment terminated by the Company for Cause; (iv) accepts the transfer of his employment to an affiliate of the Company; (v) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement. 2.2 Benefits. Upon the Company's receipt of an effective Waiver and Release, Executive shall be entitled to receive the following: (a) Employee Outplacement Services. Executive shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Executive's Separation Date. (b) Severance Benefit. Executive shall be paid in cash an amount equal to three times Executive's 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 5 Company shall pay to Executive 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 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 Executive under Code Section 280G exceeds three (3) times Executive'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 Executive's Base Amount, less all other "parachute payments" (as such term is defined under Code Section 280G) received by Executive, less one dollar (the "Capped Amount"), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax. For purposes of this Section 2.2(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 a nationally recognized firm specializing in federal income taxes as selected by the Board of Directors, and such calculations or determinations shall be binding upon Executive and the Company. (c) Welfare Benefit. (i) Except as provided in Section 2.3 hereof, Executive shall be eligible to participate in the Company's Group Health Plan for a period of six (6) months for each of Executive's Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following Executive's Separation Date unless otherwise specifically provided under such plan, upon Executive's payment of both the Company's and Executive's premium under such plan. Executive shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Executive's Separation 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 Executive's extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Agreement. (ii) The extended medical coverage afforded to Executive pursuant to this Section 2.2(c) as well as the premiums to be paid by Executive 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 Executive in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Executive fails to pay his premium within thirty (30) days of its due date, Executive's extended coverage shall be terminated. 6 (iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Executive or his dependent may elect. In the event that Executive 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 Employing Company's Group Health Plan available to Executive or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Executive to inform the Company of his eligibility to participate in any such health plan. (iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Executive elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Executive a cash amount equal to the Company's and Executive's cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan. (d)Equity Based Awards. Any Equity Based Awards outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a stock appreciation right, if Executive 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 actions would result in liability to Executive under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act. (e)Incentive Plans. To the extent that Executive, as of the Separation Date, is a participant in any Short Term Bonus Plan or Long Term Bonus Plan, Executive shall be entitled to receive cash in an amount equal to his awards under such Plans for the period in which the Separation Date shall have occurred, at Executive's Target Bonus and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. For this purpose a month shall not be considered if the Separation Date occurs on or before the 14th day of the month, and a month shall be considered if the Separation Date occurs on or after the 15th day of the month. 2.3 Payment of Benefits. The total amount payable under this Article II shall be paid to Executive in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Executive's Separation Date, or (b) the tender to the Company by Executive of an effective Waiver and Release (in substantially 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. 2.4 Benefits in the Event of Death. In the event of Executive's death prior to the payment of all benefits due under this Article II, Executive's estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release. 7 2.5 Legal Fees. In the event of a dispute between Executive and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Executive's favor, the Company shall reimburse Executive's legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000). 2.6 No Mitigation. Executive shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Executive hereunder shall not be reduced or suspended if Executive accepts such subsequent employment. ARTICLE III - ARBITRATION 3.1 General. Any dispute, controversy or claim arising out of or relating to the Company's obligations to pay severance amounts 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 Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Executive's employment by the Company or the termination thereof. 3.2 Demand for Arbitration. Arbitration shall be initiated by serving a written notice of demand for arbitration to Executive, in the case of the Company, or to the Board of Directors, in the case of Executive. 3.3 Law and Venue. The arbitrators shall apply the laws of the State in which the Company's headquarters are located, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in such State. 3.4 Appointment of Arbitrators. Arbitrators shall be appointed 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 Executive, 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. 3.5 Costs. The arbitration filing fee shall be paid by Executive. All other costs of arbitration shall be borne equally by Executive 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 Executive's favor and Executive is reimbursed legal fees under Section 2.5 hereof. 3.6 Interim and Injunctive Relief. Nothing in this Article III is intended to preclude, upon application of either party, 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 either party's interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to 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 Article III. 8 ARTICLE IV - MISCELLANEOUS 4.1 Funding of Benefits. Unless the Board of Directors in its discretion determines otherwise, amounts payable to Executive 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. 4.2 Withholding. There shall be deducted from the payment of any amount 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 Executive entitled to such payment. 4.3 Assignment. Neither Executive nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount 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. 4.4 Amendment and Termination. The Agreement may be amended or terminated only by a writing executed by the parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement this ____ day of ______________, _____. ACQUIRING COMPANY By: ____________________________________ EXECUTIVE ----------------------------- 9 Exhibit A SEVERANCE AGREEMENT Waiver and Release The attached Waiver and Release is to be given to Executive upon the occurrence of an event that triggers eligibility for severance benefits under the Severance Agreement, as described in Paragraph 2.1(a) of such agreement. 10 Waiver and Release I, _________________, understand that I am entitled to receive the severance benefits described in Article II of the Severance 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 Acquiring Company (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 Acquiring Company and other direct or indirect subsidiaries of Acquiring 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 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. 11 I understand that I may take up to twenty-one (21) calendar days to consider whether or not I desire to enter this Waiver. I was not coerced, threatened or otherwise forced to sign this Waiver. I have made my choice to sign this Waiver voluntarily and of my own free will. I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign and deliver this Waiver to the Company. If I revoke this Waiver, I must do so in writing delivered to the Company. I understand that this Waiver is not effective until the expiration of this seven (7) calendar day revocation period. I understand that upon the expiration of such seven (7) calendar day revocation period this entire Waiver will be binding upon me and will be irrevocable. I understand that by signing this Waiver I am giving up rights I may have. IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________, in the year - ----. --------------------------- Executive Sworn to and subscribed to me this ___day of _________, ____ - -------------------------- Notary Public My Commission Expires: - --------------------------- (Notary Seal) Acknowledged and Accepted by the Company. By: ----------------------------------- Date: ----------------------------------- 12 EX-10.3 4 ex10-3.txt Exhibit 10.3 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. Thomas A. Fanning ("Mr. Fanning") (hereinafter collectively referred to as the "Parties") is effective November 16, 2006. This Agreement amends and restates the Amended and Restated Change in Control Agreement entered into by Mr. Fanning, Southern and the Company, effective June 1, 2004. WITNESSETH: WHEREAS, Mr. Fanning is the Executive Vice President and Chief Financial Officer of the Company; WHEREAS, the Company wishes to provide to Mr. Fanning 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: 1 ARTICLE I - DEFINITIONS. For purposes of this Agreement, the following terms shall have the following meanings: 1.1 "Annual Compensation" shall mean Mr. Fanning's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan and Long Term Bonus Plan. 1.2 "Base Salary" shall mean Mr. Fanning'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 or sale or other disposition of all or substantially all of the assets of Southern. 2 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 3 (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 4 (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. Fanning, 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 ("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. Fanning or his dependents may be entitled pursuant to Code Section 4980B. 5 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. 6 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. 7 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. Fanning's express written consent, after written notice to the Company, 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. Fanning claiming benefits under this Agreement upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if Mr. Fanning 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. Fanning of its decision within thirty (30) days of receipt of Mr. Fanning's written offer of employment. Any dispute regarding the Compensation Committee's decision shall be resolved in accordance with Article III hereof. (a) Inconsistent Duties. (i) Change in Control. A meaningful and detrimental alteration in Mr. Fanning's position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control. (ii) Subsidiary Change in Control. In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Fanning is offered employment with the acquiring employer with a job 8 title, duties and status which are materially and detrimentally lower than Mr. Fanning'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. Fanning's Base Salary; (B) the sum of Mr. Fanning'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. Fanning'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. In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Fanning is offered Base Salary, Target Bonus under the acquiring 9 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. Fanning'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. Fanning's work location to a location more than fifty (50) miles from the facility where Mr. Fanning 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. Fanning's principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by Mr. Fanning 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. Fanning's right to refuse subsequent transfer by the Company to a location which is more than fifty (50) miles from Mr. Fanning'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. In the case of a Subsidiary Change in Control, Good Reason shall exist if Mr. Fanning's work location under the terms of the offer of employment from the acquiring employer is more than fifty (50) miles from Mr. 10 Fanning'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. Fanning is entitled under the Company's Retirement and Welfare Benefit plans in which Mr. Fanning 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. Fanning with the number of paid vacation days or, if applicable, paid time off days to which Mr. Fanning 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. Fanning 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. 11 (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. Fanning 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. Fanning 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 12 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. Fanning 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 group health plan covering Mr. Fanning, as such plan may be amended from time to time. 1.26 "Group Life Insurance Plan"shall mean the group life insurance plan covering Mr. Fanning, as such plan may be amended from time to time. 13 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. Fanning 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. Fanning 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 14 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; 15 (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; (c) Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock; or (d) The Southern Board or the Board of Directors has declared that a Preliminary Change of Control has occurred. 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. Fanning'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. Fanning is deemed to have retired pursuant to the provisions of Section 2.3 hereof, Mr. Fanning's Separation Date shall be the effective date of his retirement pursuant to the terms of the Pension Plan. 16 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 set forth in Section 1.8(b)(iii) hereof. 1.45 "Target Bonus" shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or awards granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs. 1.46 "Termination for Cause" or "Cause" shall mean Mr. Fanning's termination of employment with the Company upon the occurrence of any of the following: (a) The willful and continued failure by Mr. Fanning to substantially perform his duties with the Company (other than any such failure resulting from Mr. Fanning's Total Disability or from Mr. Fanning's retirement or any such actual or 17 anticipated failure resulting from termination by Mr. Fanning 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 Mr. Fanning has not substantially performed his duties; or (b) The willful engaging by Mr. Fanning in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following: (i) any willful act involving fraud or dishonesty in the course of Mr. Fanning's employment by the Company; (ii) the willful carrying out of any activity or the making of any statement by Mr. Fanning which would materially prejudice or impair the good name and standing of the Company, Southern or any other Southern Subsidiary or would bring the Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which the Company, Southern or such other Southern Subsidiary is located; (iii) attendance by Mr. Fanning 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 offense; (iv) 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; 18 (v) assault or other act of violence by Mr. Fanning against any person during the course of employment; or (vi) Mr. Fanning's indictment for any felony or any misdemeanor involving moral turpitude. No act or failure to act by Mr. Fanning shall be deemed "willful" unless done, or omitted to be done, by Mr. Fanning 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. Fanning 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 the majority of the Southern Board at a meeting called and held for such purpose (after reasonable notice to Mr. Fanning 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. Fanning was guilty of conduct set forth in Section 1.46(a) or (b) hereof and specifying the particulars thereof in detail. 1.47 "Total Disability" shall mean total disability under the terms of the Pension Plan. 1.48 "Voting Securities" shall mean the outstanding voting securities of a corporation entitling the holder thereof to vote generally in the election of such corporation's directors. 1.49 "Waiver and Release" shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto. 1.50 "Year of Service" shall mean an Employee'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 an Employee has a break in his 19 service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service. ARTICLE II - SEVERANCE BENEFITS 2.1 Eligibility. (a) Except as otherwise provided herein, if Mr. Fanning's employment is involuntarily terminated by the Company at any time during the two year period following a Change in Control of Southern or the Company for reasons other than Cause or if Mr. Fanning voluntarily terminates his employment with the Company for Good Reason at any time during the two year period following a Change in Control of Southern or the Company, he shall be entitled to receive the benefits described in Section 2.2 hereof, subject to the terms and conditions described in this Article II. (b) Limits on Eligibility. Notwithstanding anything to the contrary herein, Mr. Fanning shall not be eligible to receive benefits under this Plan if Mr. Fanning : (i) is not actively at work on his Separation Date, unless Mr. Fanning is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work; (ii) voluntarily terminates his employment with the Company for other than Good Reason; (iii) has his employment terminated by the Company for Cause; 20 (iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern; (v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or the Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if Mr. Fanning would otherwise have been entitled to severance benefits under this Agreement but for this Section 2.1(b)(v), Mr. Fanning shall be eligible for benefits under this Agreement except for those outplacement, severance and welfare benefits described in Sections 2.2(a), (b) and (c) hereof); (vi) is involuntarily separated from service with the Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from the Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 1.23(a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he is entitled at the Company as of the day immediately preceding the day of such offer of employment; (vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such offer does not provide Good Reason under the requirements of Section 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof. 21 (viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Agreement. 2.2 Severance Benefits. Upon the Company's receipt of an effective Waiver and Release, Mr. Fanning shall be entitled to receive the following severance benefits: (a) Employee Outplacement Services. Mr. Fanning shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Mr. Fanning's Separation Date. (b) Severance Amount. Mr. Fanning shall be paid in cash 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. Fanning 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 22 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. Fanning under Code Section 280G exceeds three (3) times Mr. Fanning'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. Fanning's Base Amount, less all other "parachute payments" (as such term is defined under Code Section 280G) received by Mr. Fanning, less one dollar (the "Capped Amount"), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax. For purposes of this Section 2.2(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 a nationally recognized firm specializing in federal income taxes as selected by the Compensation Committee, and such calculations or determinations shall be binding upon Mr. Fanning, Southern and the Company. (c) Welfare Benefit. (i) Except as provided in Section 2.3 hereof, Mr. Fanning shall be eligible to participate in the Company's Group Health Plan for a period of six (6) months for each of Mr. Fanning's Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following 23 Mr. Fanning's Separation Date unless otherwise specifically provided under such plan, upon Mr. Fanning's payment of both the Company's and Mr. Fanning's premium under such plan. Mr. Fanning shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Mr. Fanning's Separation 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. Fanning's extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan. (ii) The extended medical coverage afforded to Mr. Fanning pursuant to this Section 2.2(c) as well as the premiums to be paid by Mr. Fanning 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. Fanning in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Mr. Fanning fails to pay his premium within thirty (30) days of its due date, his extended coverage shall be terminated. (iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Mr. Fanning or his dependent may elect. In the event that Mr. Fanning or his dependent becomes eligible to be covered, by virtue of re-employment or otherwise, by any employer-sponsored group health 24 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. Fanning or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Mr. Fanning to inform the Company of his eligibility to participate in any such health plan. (iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Mr. Fanning elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Mr. Fanning a cash amount equal to the Company's and Mr. Fanning's cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control. (d) Stock Option Vesting. The provisions of this Section 2.2(d) shall apply to any equity based awards under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(d) by reference. (i) Any of Mr. Fanning's Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Stock Appreciation Right, if Mr. Fanning 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 actions would result in liability to Mr. Fanning under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as 25 of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act. (ii) The restrictions and deferral limitations applicable to any of Mr. Fanning's Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable. (e) Performance Pay Program. The provisions of this Section 2.2(e) shall apply to the Performance Pay Program under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(e) by reference. Provided Mr. Fanning is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of Mr. Fanning's Separation Date and to the extent Mr. Fanning is entitled to participate therein, Mr. Fanning shall be entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. (f) Performance Dividend Program. The provisions of this Section 2.2(f) shall apply to the Performance Dividend Program, the defined terms of which are incorporated in this Section 2.2(f) by reference. Provided Mr. Fanning is not entitled to a Cash-Based Award under the PDP, if the PDP is in place through Mr. Fanning's Separation Date and to the extent Mr. Fanning is entitled to participate therein, Mr. Fanning shall be entitled to receive cash for each 26 such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to the Separation Date. For purposes of this Section 2.2(f), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31st of the year in which Mr. Fanning's Separation Date occurs, all other remaining PPP performance measurement periods shall terminate with respect to Mr. Fanning and no payment to Mr. Fanning shall be made with respect thereto. (g) Other Short Term Incentives Under the Omnibus Plan. The provisions of this Section 2.2(g) shall apply to Performance Unit or Performance Share awards under the Omnibus Plan. Provided Mr. Fanning is not otherwise entitled to a Performance Unit/Share award under the Omnibus Plan, Mr. Fanning shall be entitled to receive cash in an amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. (h) Other Short-Term Incentive Plans. The provisions of this Section 2.2(h) shall apply to Mr.Fanning to the extent that he, as of the date of the Change in Control, is a participant in any other "short term incentive compensation plan" not otherwise previously referred to in this Section 2.2. Provided Mr. Fanning is not otherwise entitled to a plan payout under any change in control 27 provisions of such plans, if the "short term incentive compensation plan" is in place through Mr. Fanning's Separation Date and to the extent Mr. Fanning is entitled to participate therein, Mr. Fanning shall be entitled to receive cash in an amount equal to his award under the Company's "short term incentive compensation plan" for the annual performance period in which the Separation Date shall have occurred, at Mr. Fanning's target performance level and prorated by the number of months which have passed since the beginning of the annual performance period until the Separation Date. For purposes of this Section 2.2(h), 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 to participants based upon articulated performance criteria, and which have been identified by the Compensation Committee and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments. (i) Pro rata Calculation. For purposes of calculating any pro rata Cash-Based Awards under Section 2.2(e), (f), (g) and (h) hereof, a month shall not be considered if the determining event occurs on or before the 14th day of the month, and a month shall be considered if the determining event occurs on or after the 15th day of the month. (j) No Duplicate Benefits. Notwithstanding anything in this Section 2.2 to the contrary, in the event that Mr. Fanning has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the "BPP") for the Performance Period which includes Mr. Fanning's Separation Date, then the amount 28 of any such Cash-Based Award under this Plan shall be reduced dollar-for-dollar by any such amount received or to be received under the BPP. 2.3 Coordination with Retiree Medical and Life Insurance Coverage. Notwithstanding anything to the contrary above, if Mr. Fanning is otherwise eligible to retire pursuant to the terms of the Pension Plan, he shall be deemed to have retired for purposes of all employee benefit plans sponsored by the Company of which Mr. Fanning is a participant. If Mr. Fanning is deemed to have retired in accordance with the preceding sentence, he shall not be eligible to receive the benefits described in Section 2.2(c) hereof if, upon his Separation Date, Mr. Fanning becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan. 2.4 Payment of Benefits. (a) Except as otherwise provided in Section 2.4(b) hereof, the total amount payable under this Article II shall be paid to Mr. Fanning in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Mr. Fanning's Separation Date, or (b) the tender to the Company by Mr. Fanning of an effective Waiver and Release 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. (b) Notwithstanding anything to the contrary in Section 2.4(a) above, if the Compensation Committee determines that it is necessary to delay any payment under this Article II in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such payment shall be delayed for 29 the period set forth in Section 409A(a)(2)(B)(i) and such delayed payment shall bear a reasonable rate of interest as determined by the Compensation Committee. 2.5 Benefits in the Event of Death. In the event of Mr. Fanning's death prior to the payment of all benefits due under this Article II, Mr. Fanning's estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release. 2.6 Legal Fees. In the event of a dispute between Mr. Fanning and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Mr. Fanning's favor, the Company shall reimburse Mr. Fanning's legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000). 2.7 No Mitigation. Mr. Fanning shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Mr. Fanning hereunder shall not be reduced or suspended if he accepts such subsequent employment. 2.8 Non-qualified Retirement and Deferred Compensation Plans. Subsequent to a Change in Control, any claims by Mr. Fanning 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 procedures and provisions set forth in Article III hereof and if any material issue in such dispute is finally resolved in Mr. Fanning's favor, the Company shall reimburse Mr. Fanning's legal fees in the manner provided in Section 2.6 hereof. ARTICLE III - ARBITRATION 30 3.1 General. 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 Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Mr. Fanning's employment by the Company or the termination thereof. 3.2 Demand for Arbitration. Arbitration shall be initiated by serving a written notice of demand for arbitration to Mr. Fanning, in the case of the Company, or to the Compensation Committee, in the case of Mr. Fanning. 3.3 Law and Venue. The arbitrators shall apply the laws of the State of Georgia, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia. 3.4 Appointment of Arbitrators. Arbitrators shall be appointed 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. Fanning, 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. 3.5 Costs. The arbitration filing fee shall be paid by Mr. Fanning. All other costs of arbitration shall be borne equally by Mr. Fanning and the Company, provided, however, that the Company 31 shall reimburse such fees and costs in the event any material issue in such dispute is finally resolved in Mr. Fanning's favor and Mr. Fanning is reimbursed legal fees under Section 2.6 hereof. 3.6 Interim and Injunctive Relief. Nothing in this Article III is intended to preclude, upon application of either party, 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 either party's interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to 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 Article III. ARTICLE IV - TRANSFER OF EMPLOYMENT 4.1 Transfer of Employment. In the event that Mr. Fanning's employment by the Company is terminated during the two year period following a Change in Control and Mr. Fanning accepts employment by Southern or a another Southern Subsidiary, the Company shall assign this Agreement to Southern or such Southern Subsidiary, Southern shall accept such assignment or cause such Southern Subsidiary to accept such assignment, and such assignee shall become the "Company" for all purposes hereunder. ARTICLE V - MISCELLANEOUS 5.1 Funding of Benefits. Unless the Board of Directors in its discretion determines otherwise, the amounts payable to Mr. Fanning under the this Agreement shall not be funded in any manner and shall be paid by the Company out 32 of its general assets, which assets are subject to the claims of the Company's creditors. 5.2 Withholding. There shall be deducted from the payment of any amount 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. Fanning. 5.3 Assignment. Neither Mr. Fanning nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount 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. 5.4 Interpretation. This Agreement is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional tax under Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Agreement for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent. 5.5 Amendment and Termination. The Agreement may be amended or terminated only by a writing executed by the parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 16 day of November 30, 2006. THE SOUTHERN COMPANY By: /s/ David M. Ratcliffe SOUTHERN COMPANY SERVICES, INC. By: /s/ Robert A. Bell MR. FANNING /s/ Thomas A. Fanning Thomas A. Fanning Exhibit A CHANGE IN CONTROL AGREEMENT Waiver and Release The attached Waiver and Release is to be given to Mr. Thomas A. Fanning upon the occurrence of an event that triggers eligibility for severance benefits under the Change in Control Agreement, as described in Section 2.2 of such Agreement. CHANGE IN CONTROL AGREEMENT Waiver and Release I, Thomas A. Fanning, understand that I am entitled to receive the severance benefits described in Article II 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 Company Services, 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 receiving the severance and welfare benefits under Article II of the Agreement, I hereby voluntarily and irrevocably waive, release, dismiss with prejudice, and withdraw all claims, complaints, suits or demands of any kind whatsoever (whether known or unknown) which I ever had, may have, or now have against The Southern Company, Southern Company Services, Inc., Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Communications Services, Inc. d/b/a Southern LINC, Southern Company Energy Solutions, L.L.C., Southern Nuclear Operating Company, Inc., Southern Telecom, Inc., Southern Company Management Development, Inc., and other current or former subsidiaries or affiliates of The Southern Company and their past, present and future officers, directors, employees, agents, insurers and attorneys (collectively, the "Releasees"), arising from or relating to (directly or indirectly) my employment or the termination of my employment or other events occurred as of the date of execution of this Agreement, including but not limited to: (a) claims for violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, 42 U.S.C. ss. 1981, the National Labor Relations Act, the Labor Management Relations Act, Executive Order 11246, Executive Order 11141, the Rehabilitation Act of 1973, the Sarbanes-Oxley Act of 2002 or the Employee Retirement Income Security Act; (b) claims for violations of any other federal or state statute or regulation or local ordinance; (c) claims for lost or unpaid wages, compensation, or benefits, defamation, intentional or negligent infliction of emotional distress, assault, battery, wrongful or constructive discharge, negligent hiring, retention or supervision, fraud, misrepresentation, conversion, tortious interference, breach of contract, or breach of fiduciary duty; (d) claims to benefits under any bonus, severance, workforce reduction, early retirement, outplacement, or any other similar type plan sponsored by the Company (except for those plans listed below); or (e) any other claims under state law arising in tort or contract. In signing this Agreement, I am not releasing any claims that may arise under the terms of this Agreement or which may arise out of events occurring after the date I execute this Agreement. I am also not releasing claims to benefits that I am already entitled to receive under The Southern Company Pension Plan, The Southern Company Employee Stock Ownership Plan, The Southern Company Employee Savings Plan, The Southern Company Omnibus Incentive Compensation Plan, The Southern Company Change in Control Benefits Protection Plan or under any workers' compensation laws. 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. Nothing in this Agreement shall prohibit me from engaging in protected activities under applicable law (including protected activities described in Section 211 of the Energy Reorganization Act) or from communicating, either voluntarily or otherwise, with any governmental agency concerning any potential violation of the law. I understand and agree for a period of two (2) years after the date I execute this Agreement, I will regard and treat as strictly confidential all valuable, non-public, competitively sensitive data and information relating to the Releasees' business that is not generally known by or readily available to Releasees' competitors and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such information to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees. I further understand and agree that I will regard and treat as strictly confidential all trade secrets of Releasees for as long as such items remain trade secrets under applicable law and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such trade secrets to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees. I further agree to keep confidential and not disclose the terms of this Agreement, including, but not limited to, the benefits under the Agreement, except to my spouse, attorneys or financial advisors (who must be informed of and agree to be bound by the confidentiality provisions contained in this Agreement before I disclose any information to them about this Agreement), or where such disclosure is required by law. I agree to return to the Company prior to my last day of employment all property of the Company, including but not limited to data, lists, information, memoranda, documents, identification cards, credit cards, parking cards, keys, computers, fax machines, beepers, phones, and files (including copies thereof). I understand and agree that I will not seek re-employment as an employee, leased employee or independent contractor with the Company or any Southern Company subsidiary or affiliate during the twenty-four (24) month period beginning immediately following my execution of this Agreement. I have carefully read this agreement and I fully understand all of the provisions of this Waiver. I have been encouraged and advised in writing to seek advice from anyone of my choosing regarding this Waiver (including my attorney, accountant or tax advisor). Prior to signing this Waiver, I have been given the opportunity and sufficient time to seek such advice. I have had the opportunity to review and consider this Waiver for a period of at least twenty-one (21) days before signing it. I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign this Waiver. In order to revoke this Waiver, I must deliver written notification of such revocation to the Compensation Committee. 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. Revocation of this Waiver will not alter or change the termination of my employment by the Company. In signing this Waiver, I am not relying on any representation or statement (written or oral) not specifically set forth in this Waiver, the Agreement or by the company or any of its representatives with regard to the subject matter, basis, or effect of this Waiver or otherwise. I was not coerced, threatened, or otherwise forced to sign this Waiver. I am voluntarily signing and delivering this Waiver of my own free will. I understand that by signing this Waiver I am giving up rights I may have. I understand I do not have to sign this Waiver. IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________________, in the year _____. --------------------------- Thomas A. Fanning Sworn to and subscribed to me this ___day of _________, ____ - -------------------------- Notary Public My Commission Expires: - --------------------------- (Notary Seal) Acknowledged and Accepted by the Company. By: ----------------------------------- Date: ----------------------------------- EXHIBIT B SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT ("Agreement") made and entered into by and between Acquiring Company ("Company") and Mr. ________________ ("Executive") (hereinafter collectively referred to as the "Parties") effective ______________, 200__. WITNESSETH: WHEREAS, the Company wishes to provide to Executive certain severance benefits under certain circumstances; 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 1.1 "Annual Compensation" shall Executive's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan. 1.2 "Base Salary" shall mean Executive's annual base salary rate during the twelve (12) month period immediately preceding his Separation Date plus target bonus. 1.3 "Board of Directors" shall mean the board of directors of the Company. 1.4 "COBRA Coverage" shall mean any continuation coverage to which Executive or his dependents may be entitled pursuant to Code Section 4980B. 1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended. 1.6 "Company" shall mean Acquiring Company, its successors and assigns. 1.7 "Employee Outplacement Program" shall mean the program established by the Company from time to time for the purpose of assisting employees find 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. 1.8 "Employment Date" shall mean the date that Executive is hired by the Company as a full time employee. 1.9 "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. 1.10 "Good Reason" shall mean, without Executive's express written consent, after written notice to the Board of Directors, and after a thirty (30) day opportunity for the Board of Directors to cure, the continuing occurrence of any of the events described in Subsections (a), (b), (c) or (d) of this Section 1.10. (a) Inconsistent Duties. A meaningful and detrimental alteration in Executive's position or in the nature or status of his responsibilities from those in effect on the Employment Date. (b) Reduced Compensation. A reduction of five percent (5%) or more by the Company in any of the following amounts of compensation expressed in subparagraphs (i), (ii) or (iii) 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 all employees of the Company eligible for such compensation: (i) Executive's Base Salary; (ii) the sum of Executive's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan, as in effect on the Employment Date; or (iii) the sum of Executive's Base Salary plus Target Bonus under the Short Term Bonus Plan and Long Term Bonus Plan plus the Target Award under the Equity Based Bonus Plan, each of which as in effect on the Employment Date. (c) Relocation. A change in Executive's work location to a location more than fifty (50) miles from the facility where Executive was located at the time of his Employment Date, unless such new work location is within fifty (50) miles from Executive's principal place of residence on his Employment Date. The acceptance, if any, by Executive of employment by the Company at a work location which is outside the fifty mile radius set forth in this Section 1.10(c) shall not be a waiver of Executive's right to refuse subsequent transfer by an Company to a location which is more than fifty (50) miles from Executive's principal place of residence on his Employment Date, and such subsequent nonconsensual transfer shall be "Good Reason" under this Agreement; (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 Executive is entitled under the Company's Retirement and Welfare Benefit plans in which Executive was participating on his Employment Date. (ii) Vacation and Paid Time Off. The failure by the Company to provide Executive with the number of paid vacation days or, if applicable, paid time off days to which Executive is entitled on the basis of years of service with a Southern Entity and the Company in accordance with the Company's normal vacation policy or the paid time off program (whichever applicable) in effect on the Employment Date (except for across-the-board vacation policy or paid time off program changes or policy or 2 program terminations similarly affecting at least ninety-five percent (95%) of all employees of the Company). 1.11 "Group Health Agreement" shall mean the group health plan covering Executive, as such plan may be amended from time to time. 1.12 "Group Life Insurance Agreement" shall mean the group life insurance plan covering Executive, as such plan may be amended from time to time. 1.13 "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. 1.14 "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 Executive 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 Employment Date, 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 Employment Date. 1.15 "Month of Service"shall mean any calendar month during which Executive worked at least one (1) hour or was on approved leave of absence while in the employ of a Southern Entity or Acquiring Company and its affiliates. 1.16 "Pension Plan" shall mean the Company Pension Plan or any successor thereto, as in effect on the Employment Date. 1.17 "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). 1.18 "Separation Date" shall mean the date on which Executive is separated from the Company's regular payroll. 1.19 "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. 1.20 "Southern Entity" shall mean The Southern Company or any of its subsidiaries and affiliates. 1.21 "Target Bonus" shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan as used by the Company to measure the market competitiveness of its employee compensation programs. 3 1.22 "Termination for Cause" or "Cause" shall mean Executive's termination of employment with the Company upon the occurrence of any of the following: (a) The willful and continued failure by Executive to substantially perform his duties with the Company (other than any such failure resulting from Executive's Total Disability or from Executive's retirement or any such actual or anticipated failure resulting from termination by Executive for Good Reason) after a written demand for substantial performance is delivered to him by the Board of Directors, which demand specifically identifies the manner in which such corporate officer believes Executive has not substantially performed his duties; or (b) The willful engaging by Executive in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following: (i) any willful act involving fraud or dishonesty in the course of Executive's employment by the Company; (ii) the willful carrying out of any activity or the making of any statement by Executive which would materially prejudice or impair the good name and standing of the Company, or would bring the Company into contempt, ridicule or would reasonably shock or offend any community in which the Company is located; (iii) attendance by Executive 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 offense; (iv) 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; (v) assault or other act of violence by Executive against any person during the course of employment; or (vi) Executive's indictment for any felony or any misdemeanor involving moral turpitude. No act or failure to act by Executive shall be deemed "willful" unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, Executive 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 the majority of Board of Directors at a meeting called and held for such purpose (after reasonable notice to Executive and an opportunity for him, together with counsel, to be heard before the Board of Directors), finding that, in the good faith opinion of the Board of Directors, Executive was guilty of conduct set forth in Section 1.22(a) or (b) hereof and specifying the particulars thereof in detail. 1.23 "Total Disability" shall mean total disability under the terms of the Pension Plan. 4 1.24 "Waiver and Release" shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto. 1.25 "Year of Service" shall mean Executive'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 Executive had a break in service during his employment with a Southern Entity, he or she will receive credit under this Agreement for his service prior to such break in service provided the break in service was less than five (5) years and his service with the Southern Entity prior to the break exceeded the length of such break in service. ARTICLE II - SEVERANCE BENEFITS 2.1 Eligibility. (a) Except as otherwise provided herein, if Executive's employment is involuntarily terminated by the Company at any time during the two year period following his Employment Date for reasons other than Cause or if Executive shall voluntarily terminate his employment with the Company for Good Reason at any time during the two year period following his Employment Date, Executive shall be entitled to receive the amounts described in Section 2.2 hereof, subject to the terms and conditions described in this Article II. (b) Limits on Eligibility. Notwithstanding anything to the contrary herein, Executive shall not be eligible to receive amounts under this Agreement if Executive: (i) is not actively at work on his Separation Date, unless Executive is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work; ) (ii) voluntarily terminates his employment with the Company for other than Good Reason; (iii) has his employment terminated by the Company for Cause; (iv) accepts the transfer of his employment to an affiliate of the Company; (v) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement. 2.2 Benefits. Upon the Company's receipt of an effective Waiver and Release, Executive shall be entitled to receive the following: (a) Employee Outplacement Services. Executive shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Executive's Separation Date. (b) Severance Benefit. Executive shall be paid in cash an amount equal to three times Executive's 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 5 Company shall pay to Executive 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 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 Executive under Code Section 280G exceeds three (3) times Executive'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 Executive's Base Amount, less all other "parachute payments" (as such term is defined under Code Section 280G) received by Executive, less one dollar (the "Capped Amount"), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax. For purposes of this Section 2.2(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 a nationally recognized firm specializing in federal income taxes as selected by the Board of Directors, and such calculations or determinations shall be binding upon Executive and the Company. (c) Welfare Benefit. (i) Except as provided in Section 2.3 hereof, Executive shall be eligible to participate in the Company's Group Health Plan for a period of six (6) months for each of Executive's Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following Executive's Separation Date unless otherwise specifically provided under such plan, upon Executive's payment of both the Company's and Executive's premium under such plan. Executive shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Executive's Separation 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 Executive's extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Agreement. (ii) The extended medical coverage afforded to Executive pursuant to this Section 2.2(c) as well as the premiums to be paid by Executive 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 Executive in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Executive fails to pay his premium within thirty (30) days of its due date, Executive's extended coverage shall be terminated. 6 (iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Executive or his dependent may elect. In the event that Executive 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 Employing Company's Group Health Plan available to Executive or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Executive to inform the Company of his eligibility to participate in any such health plan. (iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Executive elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Executive a cash amount equal to the Company's and Executive's cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan. (d)Equity Based Awards. Any Equity Based Awards outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a stock appreciation right, if Executive 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 actions would result in liability to Executive under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act. (e)Incentive Plans. To the extent that Executive, as of the Separation Date, is a participant in any Short Term Bonus Plan or Long Term Bonus Plan, Executive shall be entitled to receive cash in an amount equal to his awards under such Plans for the period in which the Separation Date shall have occurred, at Executive's Target Bonus and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. For this purpose a month shall not be considered if the Separation Date occurs on or before the 14th day of the month, and a month shall be considered if the Separation Date occurs on or after the 15th day of the month. 2.3 Payment of Benefits. The total amount payable under this Article II shall be paid to Executive in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Executive's Separation Date, or (b) the tender to the Company by Executive of an effective Waiver and Release (in substantially 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. 2.4 Benefits in the Event of Death. In the event of Executive's death prior to the payment of all benefits due under this Article II, Executive's estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release. 7 2.5 Legal Fees. In the event of a dispute between Executive and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Executive's favor, the Company shall reimburse Executive's legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000). 2.6 No Mitigation. Executive shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Executive hereunder shall not be reduced or suspended if Executive accepts such subsequent employment. ARTICLE III - ARBITRATION 3.1 General. Any dispute, controversy or claim arising out of or relating to the Company's obligations to pay severance amounts 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 Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Executive's employment by the Company or the termination thereof. 3.2 Demand for Arbitration. Arbitration shall be initiated by serving a written notice of demand for arbitration to Executive, in the case of the Company, or to the Board of Directors, in the case of Executive. 3.3 Law and Venue. The arbitrators shall apply the laws of the State in which the Company's headquarters are located, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in such State. 3.4 Appointment of Arbitrators. Arbitrators shall be appointed 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 Executive, 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. 3.5 Costs. The arbitration filing fee shall be paid by Executive. All other costs of arbitration shall be borne equally by Executive 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 Executive's favor and Executive is reimbursed legal fees under Section 2.5 hereof. 3.6 Interim and Injunctive Relief. Nothing in this Article III is intended to preclude, upon application of either party, 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 either party's interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to 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 Article III. 8 ARTICLE IV - MISCELLANEOUS 4.1 Funding of Benefits. Unless the Board of Directors in its discretion determines otherwise, amounts payable to Executive 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. 4.2 Withholding. There shall be deducted from the payment of any amount 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 Executive entitled to such payment. 4.3 Assignment. Neither Executive nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount 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. 4.4 Amendment and Termination. The Agreement may be amended or terminated only by a writing executed by the parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement this ____ day of ______________, _____. ACQUIRING COMPANY By: ____________________________________ EXECUTIVE ----------------------------- 9 Exhibit A SEVERANCE AGREEMENT Waiver and Release The attached Waiver and Release is to be given to Executive upon the occurrence of an event that triggers eligibility for severance benefits under the Severance Agreement, as described in Paragraph 2.1(a) of such agreement. 10 Waiver and Release I, _________________, understand that I am entitled to receive the severance benefits described in Article II of the Severance 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 Acquiring Company (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 Acquiring Company and other direct or indirect subsidiaries of Acquiring 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 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. 11 I understand that I may take up to twenty-one (21) calendar days to consider whether or not I desire to enter this Waiver. I was not coerced, threatened or otherwise forced to sign this Waiver. I have made my choice to sign this Waiver voluntarily and of my own free will. I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign and deliver this Waiver to the Company. If I revoke this Waiver, I must do so in writing delivered to the Company. I understand that this Waiver is not effective until the expiration of this seven (7) calendar day revocation period. I understand that upon the expiration of such seven (7) calendar day revocation period this entire Waiver will be binding upon me and will be irrevocable. I understand that by signing this Waiver I am giving up rights I may have. IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________, in the year - ----. --------------------------- Executive Sworn to and subscribed to me this ___day of _________, ____ EX-10.4 5 ex10-4.txt Exhibit 10.4 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"), Georgia Power Company (the "Company") and Mr. Michael D. Garrett ("Mr. Garrett ") (hereinafter collectively referred to as the "Parties") is effective November 16, 2006. This Agreement amends and restates the Amended and Restated Change in Control Agreement entered into by Mr. Garrett, Southern and the Company, effective June 1, 2004. WITNESSETH: WHEREAS, Mr. Garrett is the President and Chief Executive Officer of the Company; WHEREAS, the Company wishes to provide to Mr. Garrett 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: 1 ARTICLE I - DEFINITIONS. For purposes of this Agreement, the following terms shall have the following meanings: 1.1 "Annual Compensation" shall mean Mr. Garrett's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan and Long Term Bonus Plan. 1.2 "Base Salary" shall mean Mr. Garrett'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 or sale or other disposition of all or substantially all of the assets of Southern. 2 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 3 (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 4 (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. Garrett, 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 ("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. Garrett or his dependents may be entitled pursuant to Code Section 4980B. 5 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 Georgia Power Company, 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. 6 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 Georgia Power Company, 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. 7 1.23 "Good Reason" shall mean, without Mr. Garrett's express written consent, after written notice to the Company, 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. Garrett claiming benefits under this Agreement upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if Mr. Garrett 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. Garrett of its decision within thirty (30) days of receipt of Mr. Garrett's written offer of employment. Any dispute regarding the Compensation Committee's decision shall be resolved in accordance with Article III hereof. (a) Inconsistent Duties. (i) Change in Control. A meaningful and detrimental alteration in Mr. Garrett's position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control. (ii) Subsidiary Change in Control. In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Garrett is offered employment with the acquiring employer with a job title, duties and status which are materially and 8 detrimentally lower than Mr. Garrett'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. Garrett's Base Salary; (B) the sum of Mr. Garrett'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. Garrett'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. In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Garrett is offered Base Salary, Target Bonus under the acquiring company's Short Term Bonus Plan and Long Term Bonus Plan and 9 Target Bonus under the acquiring company's Equity Based Bonus Plan that, in the aggregate, is less than ninety percent (95%) of Mr. Garrett'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. Garrett's work location to a location more than fifty (50) miles from the facility where Mr. Garrett 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. Garrett's principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by Mr. Garrett 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.Garrett's right to refuse subsequent transfer by the Company to a location which is more than fifty (50) miles from Mr. Garrett'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. In the case of a Subsidiary Change in Control, Good Reason shall exist if Mr. Garrett's work location under the terms of the offer of employment from the acquiring employer is more than fifty (50) miles from Mr. Garrett's work location at the Company as of the date the 10 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. Garrett is entitled under the Company's Retirement and Welfare Benefit plans in which Mr. Garrett 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. Garrett with the number of paid vacation days or, if applicable, paid time off days to which Mr. Garrett 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. Garrett 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. 11 (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. Garrett 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. Garrett 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 12 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. Garrett 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 group health plan covering Mr. Garrett, as such plan may be amended from time to time. 1.26 "Group Life Insurance Plan" shall mean the group life insurance plan covering Mr. Garrett, as such plan may be amended from time to time. 13 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. Garrett 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. Garrett 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 14 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; 15 (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; (c) Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock; or (d) The Southern Board or the Board of Directors has declared that a Preliminary Change of Control has occurred. 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. Garrett'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. Garrett is deemed to have retired pursuant to the provisions of Section 2.3 hereof, Mr. Garrett's Separation Date shall be the effective date of his retirement pursuant to the terms of the Pension Plan. 16 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 set forth in Section 1.8(b)(iii) hereof. 1.45 "Target Bonus" shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or awards granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs. 1.46 "Termination for Cause" or "Cause" shall mean Mr. Garrett's termination of employment with the Company upon the occurrence of any of the following: (a)The willful and continued failure by Mr. Garrett to substantially perform his duties with the Company (other than any such failure resulting from Mr. Garrett's Total Disability or from Mr. Garrett's retirement or any such 17 actual or anticipated failure resulting from termination by Mr. Garrett 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 Mr. Garrett has not substantially performed his duties; or (b)The willful engaging by Mr. Garrett in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following: (i) any willful act involving fraud or dishonesty in the course of Mr. Garrett's employment by the Company; (ii) the willful carrying out of any activity or the making of any statement by Mr. Garrett which would materially prejudice or impair the good name and standing of the Company, Southern or any other Southern Subsidiary or would bring the Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which the Company, Southern or such other Southern Subsidiary is located; (iii)attendance by Mr. Garrett 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 offense; (iv) 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; 18 (v) assault or other act of violence by Mr. Garrett against any person during the course of employment; or (vi) Mr. Garrett's indictment for any felony or any misdemeanor involving moral turpitude. No act or failure to act by Mr. Garrett shall be deemed "willful" unless done, or omitted to be done, by Mr. Garrett 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. Garrett 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 the majority of the Southern Board at a meeting called and held for such purpose (after reasonable notice to Mr. Garrett 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. Garrett was guilty of conduct set forth in Section 1.46(a) or (b) hereof and specifying the particulars thereof in detail. 1.47 "Total Disability" shall mean total disability under the terms of the Pension Plan. 1.48 "Voting Securities" shall mean the outstanding voting securities of a corporation entitling the holder thereof to vote generally in the election of such corporation's directors. 1.49 "Waiver and Release" shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto. 1.50 "Year of Service" shall mean an Employee'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 an Employee has a break in his 19 service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service. ARTICLE II - SEVERANCE BENEFITS 2.1 Eligibility. (a) Except as otherwise provided herein, if Mr. Garrett's employment is involuntarily terminated by the Company at any time during the two year period following a Change in Control of Southern or the Company for reasons other than Cause or if Mr. Garrett voluntarily terminates his employment with the Company for Good Reason at any time during the two year period following a Change in Control of Southern or the Company, he shall be entitled to receive the benefits described in Section 2.2 hereof, subject to the terms and conditions described in this Article II. (b) Limits on Eligibility. Notwithstanding anything to the contrary herein, Mr. Garrett shall not be eligible to receive benefits under this Plan if Mr. Garrett : (i) is not actively at work on his Separation Date, unless Mr. Garrett is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work; (ii) voluntarily terminates his employment with the Company for other than Good Reason; (iii) has his employment terminated by the Company for Cause; 20 (iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern; (v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or the Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if Mr. Garrett would otherwise have been entitled to severance benefits under this Agreement but for this Section 2.1(b)(v), Mr. Garrett shall be eligible for benefits under this Agreement except for those outplacement, severance and welfare benefits described in Sections 2.2(a), (b) and (c) hereof); (vi) is involuntarily separated from service with the Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from the Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 1.23(a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he is entitled at the Company as of the day immediately preceding the day of such offer of employment; (vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such offer does not provide Good Reason under the requirements of 21 Section 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof. (viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Agreement. 2.2 Severance Benefits. Upon the Company's receipt of an effective Waiver and Release, Mr. Garrett shall be entitled to receive the following severance benefits: (a) Employee Outplacement Services. Mr. Garrett shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Mr. Garrett's Separation Date. (b) Severance Amount. Mr. Garrett shall be paid in cash 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. Garrett 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 22 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. Garrett under Code Section 280G exceeds three (3) times Mr. Garrett'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. Garrett's Base Amount, less all other "parachute payments" (as such term is defined under Code Section 280G) received by Mr. Garrett, less one dollar (the "Capped Amount"), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax. For purposes of this Section 2.2(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 a nationally recognized firm specializing in federal income taxes as selected by the Compensation Committee, and such calculations or determinations shall be binding upon Mr. Garrett, Southern and the Company. (c) Welfare Benefit. (i) Except as provided in Section 2.3 hereof, Mr. Garrett shall be eligible to participate in the Company's Group Health Plan for a period of six (6) months for each of Mr. Garrett's Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following Mr. Garrett's Separation Date unless otherwise specifically provided under such plan, upon Mr. Garrett's payment of both the Company's and Mr. 23 Garrett's premium under such plan. Mr. Garrett shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Mr. Garrett's Separation 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. Garrett's extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan. (ii) The extended medical coverage afforded to Mr. Garrett pursuant to this Section 2.2(c) as well as the premiums to be paid by Mr. Garrett 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. Garrett in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Mr. Garrett fails to pay his premium within thirty (30) days of its due date, his extended coverage shall be terminated. (iii)Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Mr. Garrett or his dependent may elect. In the event that Mr. Garrett 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 24 under the Company's Group Health Plan available to Mr. Garrett or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Mr. Garrett to inform the Company of his eligibility to participate in any such health plan. (iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Mr. Garrett elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Mr. Garrett a cash amount equal to the Company's and Mr. Garrett's cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control. (d) Stock Option Vesting. The provisions of this Section 2.2(d) shall apply to any equity based awards under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(d) by reference. (i) Any of Mr. Garrett's Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Stock Appreciation Right, if Mr. Garrett 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 actions would result in liability to Mr. Garrett under Section 16(b) of the Exchange Act, provided further that 25 any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act. (ii) The restrictions and deferral limitations applicable to any of Mr. Garrett's Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable. (e) Performance Pay Program. The provisions of this Section 2.2(e) shall apply to the Performance Pay Program under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(e) by reference. Provided Mr. Garrett is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of Mr. Garrett's Separation Date and to the extent Mr. Garrett is entitled to participate therein, Mr. Garrett shall be entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. (f) Performance Dividend Program. The provisions of this Section 2.2(f) shall apply to the Performance Dividend Program, the defined terms of which are incorporated in this Section 2.2(f) by reference. Provided Mr. Garrett is not entitled to a Cash-Based Award under the PDP, if the PDP is in place 26 through Mr. Garrett's Separation Date and to the extent Mr. Garrett is entitled to participate therein, Mr. Garrett shall be entitled to receive cash for each such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to the Separation Date. For purposes of this Section 2.2(f), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31st of the year in which Mr. Garrett's Separation Date occurs, all other remaining PPP performance measurement periods shall terminate with respect to Mr. Garrett and no payment to Mr. Garrett shall be made with respect thereto. (g) Other Short Term Incentives Under the Omnibus Plan. The provisions of this Section 2.2(g) shall apply to Performance Unit or Performance Share awards under the Omnibus Plan. Provided Mr. Garrett is not otherwise entitled to a Performance Unit/Share award under the Omnibus Plan, Mr. Garrett shall be entitled to receive cash in an amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. (h) Other Short-Term Incentive Plans. The provisions of this Section 2.2(h) shall apply to Mr. Garrett to the extent that he, as of the date of the Change in Control, is a participant in any other "short term incentive compensation plan" not otherwise previously referred to in this Section 2.2. Provided Mr. Garrett is not otherwise entitled to a plan payout under any change in control provisions of such plans, if the "short term incentive compensation plan" is in place through Mr. Garrett's Separation Date and to the extent Mr. Garrett is entitled to participate therein, Mr. 27 Garrett shall be entitled to receive cash in an amount equal to his award under the Company's "short term incentive compensation plan" for the annual performance period in which the Separation Date shall have occurred, at Mr. Garrett's target performance level and prorated by the number of months which have passed since the beginning of the annual performance period until the Separation Date. For purposes of this Section 2.2(h), 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 to participants based upon articulated performance criteria, and which have been identified by the Compensation Committee and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments. (i) Pro rata Calculation. For purposes of calculating any pro rata Cash-Based Awards under Section 2.2(e), (f), (g) and (h) hereof, a month shall not be considered if the determining event occurs on or before the 14th day of the month, and a month shall be considered if the determining event occurs on or after the 15th day of the month. (j) No Duplicate Benefits. Notwithstanding anything in this Section 2.2 to the contrary, in the event that Mr. Garrett has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the "BPP") for the Performance Period which includes Mr. Garrett's Separation Date, then the amount of any such Cash-Based Award under this Plan shall be reduced dollar-for-dollar by any such amount received or to be received under the BPP. 28 2.3 Coordination with Retiree Medical and Life Insurance Coverage. Notwithstanding anything to the contrary above, if Mr. Garrett is otherwise eligible to retire pursuant to the terms of the Pension Plan, he shall be deemed to have retired for purposes of all employee benefit plans sponsored by the Company of which Mr. Garrett is a participant. If Mr. Garrett is deemed to have retired in accordance with the preceding sentence, he shall not be eligible to receive the benefits described in Section 2.2(c) hereof if, upon his Separation Date, Mr. Garrett becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan. 2.4 Payment of Benefits. (a) Except as otherwise provided in Section 2.4(b) hereof, the total amount payable under this Article II shall be paid to Mr. Garrett in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Mr. Garrett's Separation Date, or (b) the tender to the Company by Mr. Garrett of an effective Waiver and Release 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. (b) Notwithstanding anything to the contrary in Section 2.4(a) above, if the Compensation Committee determines that it is necessary to delay any payment under this Article II in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such payment shall be delayed for the period set forth in Section 409A(a)(2)(B)(i) and such delayed 29 payment shall bear a reasonable rate of interest as determined by the Compensation Committee. 2.5 Benefits in the Event of Death. In the event of Mr. Garrett's death prior to the payment of all benefits due under this Article II, Mr. Garrett's estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release. 2.6 Legal Fees. In the event of a dispute between Mr. Garrett and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Mr. Garrett's favor, the Company shall reimburse Mr. Garrett's legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000). 2.7 No Mitigation. Mr. Garrett shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Mr. Garrett hereunder shall not be reduced or suspended if he accepts such subsequent employment. 2.8 Non-qualified Retirement and Deferred Compensation Plans. Subsequent to a Change in Control, any claims by Mr. Garrett 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 procedures and provisions set forth in Article III hereof and if any material issue in such dispute is finally resolved in Mr. Garrett's favor, the Company shall reimburse Mr. Garrett's legal fees in the manner provided in Section 2.6 hereof. ARTICLE III - ARBITRATION 30 3.1 General. 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 Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Mr. Garrett's employment by the Company or the termination thereof. 3.2 Demand for Arbitration. Arbitration shall be initiated by serving a written notice of demand for arbitration to Mr. Garrett, in the case of the Company, or to the Compensation Committee, in the case of Mr. Garrett. 3.3 Law and Venue. The arbitrators shall apply the laws of the State of country-regionplaceGeorgia, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia. 3.4 Appointment of Arbitrators. Arbitrators shall be appointed 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. Garrett, 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. 3.5 Costs. The arbitration filing fee shall be paid by Mr. Garrett. All other costs of arbitration shall be borne equally by Mr. Garrett and the Company, provided, however, that the Company shall reimburse such fees and costs in the 31 event any material issue in such dispute is finally resolved in Mr. Garrett's favor and Mr. Garrett is reimbursed legal fees under Section 2.6 hereof. 3.6 Interim and Injunctive Relief. Nothing in this Article III is intended to preclude, upon application of either party, 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 either party's interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to 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 Article III. ARTICLE IV - TRANSFER OF EMPLOYMENT 4.1 Transfer of Employment. In the event that Mr. Garrett's employment by the Company is terminated during the two year period following a Change in Control and Mr. Garrett accepts employment by Southern or a another Southern Subsidiary, the Company shall assign this Agreement to Southern or such Southern Subsidiary, Southern shall accept such assignment or cause such Southern Subsidiary to accept such assignment, and such assignee shall become the "Company" for all purposes hereunder. ARTICLE V - MISCELLANEOUS 5.1 Funding of Benefits. Unless the Board of Directors in its discretion determines otherwise, the amounts payable to Mr. Garrett under the this Agreement shall not be funded in any manner and shall be paid by the Company out 32 of its general assets, which assets are subject to the claims of the Company's creditors. 5.2 Withholding. There shall be deducted from the payment of any amount 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. Garrett. 5.3 Assignment. Neither Mr. Garrett nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount 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. 5.4 Interpretation. This Agreement is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional tax under Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Agreement for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent. 5.5 Amendment and Termination. The Agreement may be amended or terminated only by a writing executed by the parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 16 day of November, 2006. THE SOUTHERN COMPANY By: /s/ David M. Ratcliffe GEORGIA POWER COMPANY By: /s/ Robert A. Bell MR. GARRETT /s/ Michael D. Garrett Michael D. Garrett Exhibit A CHANGE IN CONTROL AGREEMENT Waiver and Release The attached Waiver and Release is to be given to Mr. Michael D. Garrett upon the occurrence of an event that triggers eligibility for severance benefits under the Change in Control Agreement, as described in Section 2.2 of such Agreement. CHANGE IN CONTROL AGREEMENT Waiver and Release I, Michael D. Garrett, understand that I am entitled to receive the severance benefits described in Article II 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 Georgia Power Company (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 receiving the severance and welfare benefits under Article II of the Agreement, I hereby voluntarily and irrevocably waive, release, dismiss with prejudice, and withdraw all claims, complaints, suits or demands of any kind whatsoever (whether known or unknown) which I ever had, may have, or now have against The Southern Company, Southern Company Services, Inc., Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Communications Services, Inc. d/b/a Southern LINC, Southern Company Energy Solutions, L.L.C., Southern Nuclear Operating Company, Inc., Southern Telecom, Inc., Southern Company Management Development, Inc., and other current or former subsidiaries or affiliates of The Southern Company and their past, present and future officers, directors, employees, agents, insurers and attorneys (collectively, the "Releasees"), arising from or relating to (directly or indirectly) my employment or the termination of my employment or other events occurred as of the date of execution of this Agreement, including but not limited to: (a) claims for violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, 42 U.S.C. ss. 1981, the National Labor Relations Act, the Labor Management Relations Act, Executive Order 11246, Executive Order 11141, the Rehabilitation Act of 1973, the Sarbanes-Oxley Act of 2002 or the Employee Retirement Income Security Act; (b) claims for violations of any other federal or state statute or regulation or local ordinance; (c) claims for lost or unpaid wages, compensation, or benefits, defamation, intentional or negligent infliction of emotional distress, assault, battery, wrongful or constructive discharge, negligent hiring, retention or supervision, fraud, misrepresentation, conversion, tortious interference, breach of contract, or breach of fiduciary duty; (d) claims to benefits under any bonus, severance, workforce reduction, early retirement, outplacement, or any other similar type plan sponsored by the Company (except for those plans listed below); or (e) any other claims under state law arising in tort or contract. In signing this Agreement, I am not releasing any claims that may arise under the terms of this Agreement or which may arise out of events occurring after the date I execute this Agreement. I am also not releasing claims to benefits that I am already entitled to receive under The Southern Company Pension Plan, The Southern Company Employee Stock Ownership Plan, The Southern Company Employee Savings Plan, The Southern Company Omnibus Incentive Compensation Plan, The Southern Company Change in Control Benefits Protection Plan or under any workers' compensation laws. 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. Nothing in this Agreement shall prohibit me from engaging in protected activities under applicable law (including protected activities described in Section 211 of the Energy Reorganization Act) or from communicating, either voluntarily or otherwise, with any governmental agency concerning any potential violation of the law. I understand and agree for a period of two (2) years after the date I execute this Agreement, I will regard and treat as strictly confidential all valuable, non-public, competitively sensitive data and information relating to the Releasees' business that is not generally known by or readily available to Releasees' competitors and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such information to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees. I further understand and agree that I will regard and treat as strictly confidential all trade secrets of Releasees for as long as such items remain trade secrets under applicable law and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such trade secrets to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees. I further agree to keep confidential and not disclose the terms of this Agreement, including, but not limited to, the benefits under the Agreement, except to my spouse, attorneys or financial advisors (who must be informed of and agree to be bound by the confidentiality provisions contained in this Agreement before I disclose any information to them about this Agreement), or where such disclosure is required by law. I agree to return to the Company prior to my last day of employment all property of the Company, including but not limited to data, lists, information, memoranda, documents, identification cards, credit cards, parking cards, keys, computers, fax machines, beepers, phones, and files (including copies thereof). I understand and agree that I will not seek re-employment as an employee, leased employee or independent contractor with the Company or any Southern Company subsidiary or affiliate during the twenty-four (24) month period beginning immediately following my execution of this Agreement. I have carefully read this agreement and I fully understand all of the provisions of this Waiver. I have been encouraged and advised in writing to seek advice from anyone of my choosing regarding this Waiver (including my attorney, accountant or tax advisor). Prior to signing this Waiver, I have been given the opportunity and sufficient time to seek such advice. I have had the opportunity to review and consider this Waiver for a period of at least twenty-one (21) days before signing it. I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign this Waiver. In order to revoke this Waiver, I must deliver written notification of such revocation to the Compensation Committee. 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. Revocation of this Waiver will not alter or change the termination of my employment by the Company. In signing this Waiver, I am not relying on any representation or statement (written or oral) not specifically set forth in this Waiver, the Agreement or by the company or any of its representatives with regard to the subject matter, basis, or effect of this Waiver or otherwise. I was not coerced, threatened, or otherwise forced to sign this Waiver. I am voluntarily signing and delivering this Waiver of my own free will. I understand that by signing this Waiver I am giving up rights I may have. I understand I do not have to sign this Waiver. IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________________, in the year _____. --------------------------- Michael D. Garrett Sworn to and subscribed to me this ___day of _________, ____ - -------------------------- Notary Public My Commission Expires: - --------------------------- (Notary Seal) Acknowledged and Accepted by the Company. By: ----------------------------------- Date: ----------------------------------- EXHIBIT B SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT ("Agreement") made and entered into by and between Acquiring Company ("Company") and Mr. ________________ ("Executive") (hereinafter collectively referred to as the "Parties") effective ______________, 200__. WITNESSETH: WHEREAS, the Company wishes to provide to Executive certain severance benefits under certain circumstances; 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 1.1 "Annual Compensation" shall Executive's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan. 1.2 "Base Salary" shall mean Executive's annual base salary rate during the twelve (12) month period immediately preceding his Separation Date plus target bonus. 1.3 "Board of Directors" shall mean the board of directors of the Company. 1.4 "COBRA Coverage" shall mean any continuation coverage to which Executive or his dependents may be entitled pursuant to Code Section 4980B. 1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended. 1.6 "Company" shall mean Acquiring Company, its successors and assigns. 1.7 "Employee Outplacement Program" shall mean the program established by the Company from time to time for the purpose of assisting employees find 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. 1.8 "Employment Date" shall mean the date that Executive is hired by the Company as a full time employee. 1.9 "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. 1.10 "Good Reason" shall mean, without Executive's express written consent, after written notice to the Board of Directors, and after a thirty (30) day opportunity for the Board of Directors to cure, the continuing occurrence of any of the events described in Subsections (a), (b), (c) or (d) of this Section 1.10. (a) Inconsistent Duties. A meaningful and detrimental alteration in Executive's position or in the nature or status of his responsibilities from those in effect on the Employment Date. (b) Reduced Compensation. A reduction of five percent (5%) or more by the Company in any of the following amounts of compensation expressed in subparagraphs (i), (ii) or (iii) 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 all employees of the Company eligible for such compensation: (i) Executive's Base Salary; (ii) the sum of Executive's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan, as in effect on the Employment Date; or (iii) the sum of Executive's Base Salary plus Target Bonus under the Short Term Bonus Plan and Long Term Bonus Plan plus the Target Award under the Equity Based Bonus Plan, each of which as in effect on the Employment Date. (c) Relocation. A change in Executive's work location to a location more than fifty (50) miles from the facility where Executive was located at the time of his Employment Date, unless such new work location is within fifty (50) miles from Executive's principal place of residence on his Employment Date. The acceptance, if any, by Executive of employment by the Company at a work location which is outside the fifty mile radius set forth in this Section 1.10(c) shall not be a waiver of Executive's right to refuse subsequent transfer by an Company to a location which is more than fifty (50) miles from Executive's principal place of residence on his Employment Date, and such subsequent nonconsensual transfer shall be "Good Reason" under this Agreement; (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 Executive is entitled under the Company's Retirement and Welfare Benefit plans in which Executive was participating on his Employment Date. (ii) Vacation and Paid Time Off. The failure by the Company to provide Executive with the number of paid vacation days or, if applicable, paid time off days to which Executive is entitled on the basis of years of service with a Southern Entity and the Company in accordance with the Company's normal vacation policy or the paid time off program (whichever applicable) in effect on the Employment Date (except for across-the-board vacation policy or paid time off program changes or policy or 2 program terminations similarly affecting at least ninety-five percent (95%) of all employees of the Company). 1.11 "Group Health Agreement" shall mean the group health plan covering Executive, as such plan may be amended from time to time. 1.12 "Group Life Insurance Agreement" shall mean the group life insurance plan covering Executive, as such plan may be amended from time to time. 1.13 "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. 1.14 "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 Executive 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 Employment Date, 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 Employment Date. 1.15 "Month of Service"shall mean any calendar month during which Executive worked at least one (1) hour or was on approved leave of absence while in the employ of a Southern Entity or Acquiring Company and its affiliates. 1.16 "Pension Plan" shall mean the Company Pension Plan or any successor thereto, as in effect on the Employment Date. 1.17 "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). 1.18 "Separation Date" shall mean the date on which Executive is separated from the Company's regular payroll. 1.19 "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. 1.20 "Southern Entity" shall mean The Southern Company or any of its subsidiaries and affiliates. 1.21 "Target Bonus" shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan as used by the Company to measure the market competitiveness of its employee compensation programs. 3 1.22 "Termination for Cause" or "Cause" shall mean Executive's termination of employment with the Company upon the occurrence of any of the following: (a) The willful and continued failure by Executive to substantially perform his duties with the Company (other than any such failure resulting from Executive's Total Disability or from Executive's retirement or any such actual or anticipated failure resulting from termination by Executive for Good Reason) after a written demand for substantial performance is delivered to him by the Board of Directors, which demand specifically identifies the manner in which such corporate officer believes Executive has not substantially performed his duties; or (b) The willful engaging by Executive in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following: (i) any willful act involving fraud or dishonesty in the course of Executive's employment by the Company; (ii) the willful carrying out of any activity or the making of any statement by Executive which would materially prejudice or impair the good name and standing of the Company, or would bring the Company into contempt, ridicule or would reasonably shock or offend any community in which the Company is located; (iii) attendance by Executive 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 offense; (iv) 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; (v) assault or other act of violence by Executive against any person during the course of employment; or (vi) Executive's indictment for any felony or any misdemeanor involving moral turpitude. No act or failure to act by Executive shall be deemed "willful" unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, Executive 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 the majority of Board of Directors at a meeting called and held for such purpose (after reasonable notice to Executive and an opportunity for him, together with counsel, to be heard before the Board of Directors), finding that, in the good faith opinion of the Board of Directors, Executive was guilty of conduct set forth in Section 1.22(a) or (b) hereof and specifying the particulars thereof in detail. 1.23 "Total Disability" shall mean total disability under the terms of the Pension Plan. 4 1.24 "Waiver and Release" shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto. 1.25 "Year of Service" shall mean Executive'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 Executive had a break in service during his employment with a Southern Entity, he or she will receive credit under this Agreement for his service prior to such break in service provided the break in service was less than five (5) years and his service with the Southern Entity prior to the break exceeded the length of such break in service. ARTICLE II - SEVERANCE BENEFITS 2.1 Eligibility. (a) Except as otherwise provided herein, if Executive's employment is involuntarily terminated by the Company at any time during the two year period following his Employment Date for reasons other than Cause or if Executive shall voluntarily terminate his employment with the Company for Good Reason at any time during the two year period following his Employment Date, Executive shall be entitled to receive the amounts described in Section 2.2 hereof, subject to the terms and conditions described in this Article II. (b) Limits on Eligibility. Notwithstanding anything to the contrary herein, Executive shall not be eligible to receive amounts under this Agreement if Executive: (i) is not actively at work on his Separation Date, unless Executive is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work; ) (ii) voluntarily terminates his employment with the Company for other than Good Reason; (iii) has his employment terminated by the Company for Cause; (iv) accepts the transfer of his employment to an affiliate of the Company; (v) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement. 2.2 Benefits. Upon the Company's receipt of an effective Waiver and Release, Executive shall be entitled to receive the following: (a) Employee Outplacement Services. Executive shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Executive's Separation Date. (b) Severance Benefit. Executive shall be paid in cash an amount equal to three times Executive's 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 5 Company shall pay to Executive 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 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 Executive under Code Section 280G exceeds three (3) times Executive'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 Executive's Base Amount, less all other "parachute payments" (as such term is defined under Code Section 280G) received by Executive, less one dollar (the "Capped Amount"), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax. For purposes of this Section 2.2(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 a nationally recognized firm specializing in federal income taxes as selected by the Board of Directors, and such calculations or determinations shall be binding upon Executive and the Company. (c) Welfare Benefit. (i) Except as provided in Section 2.3 hereof, Executive shall be eligible to participate in the Company's Group Health Plan for a period of six (6) months for each of Executive's Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following Executive's Separation Date unless otherwise specifically provided under such plan, upon Executive's payment of both the Company's and Executive's premium under such plan. Executive shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Executive's Separation 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 Executive's extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Agreement. (ii) The extended medical coverage afforded to Executive pursuant to this Section 2.2(c) as well as the premiums to be paid by Executive 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 Executive in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Executive fails to pay his premium within thirty (30) days of its due date, Executive's extended coverage shall be terminated. 6 (iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Executive or his dependent may elect. In the event that Executive 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 Employing Company's Group Health Plan available to Executive or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Executive to inform the Company of his eligibility to participate in any such health plan. (iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Executive elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Executive a cash amount equal to the Company's and Executive's cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan. (d)Equity Based Awards. Any Equity Based Awards outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a stock appreciation right, if Executive 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 actions would result in liability to Executive under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act. (e)Incentive Plans. To the extent that Executive, as of the Separation Date, is a participant in any Short Term Bonus Plan or Long Term Bonus Plan, Executive shall be entitled to receive cash in an amount equal to his awards under such Plans for the period in which the Separation Date shall have occurred, at Executive's Target Bonus and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. For this purpose a month shall not be considered if the Separation Date occurs on or before the 14th day of the month, and a month shall be considered if the Separation Date occurs on or after the 15th day of the month. 2.3 Payment of Benefits. The total amount payable under this Article II shall be paid to Executive in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Executive's Separation Date, or (b) the tender to the Company by Executive of an effective Waiver and Release (in substantially 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. 2.4 Benefits in the Event of Death. In the event of Executive's death prior to the payment of all benefits due under this Article II, Executive's estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release. 7 2.5 Legal Fees. In the event of a dispute between Executive and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Executive's favor, the Company shall reimburse Executive's legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000). 2.6 No Mitigation. Executive shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Executive hereunder shall not be reduced or suspended if Executive accepts such subsequent employment. ARTICLE III - ARBITRATION 3.1 General. Any dispute, controversy or claim arising out of or relating to the Company's obligations to pay severance amounts 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 Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Executive's employment by the Company or the termination thereof. 3.2 Demand for Arbitration. Arbitration shall be initiated by serving a written notice of demand for arbitration to Executive, in the case of the Company, or to the Board of Directors, in the case of Executive. 3.3 Law and Venue. The arbitrators shall apply the laws of the State in which the Company's headquarters are located, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in such State. 3.4 Appointment of Arbitrators. Arbitrators shall be appointed 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 Executive, 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. 3.5 Costs. The arbitration filing fee shall be paid by Executive. All other costs of arbitration shall be borne equally by Executive 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 Executive's favor and Executive is reimbursed legal fees under Section 2.5 hereof. 3.6 Interim and Injunctive Relief. Nothing in this Article III is intended to preclude, upon application of either party, 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 either party's interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to 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 Article III. 8 ARTICLE IV - MISCELLANEOUS 4.1 Funding of Benefits. Unless the Board of Directors in its discretion determines otherwise, amounts payable to Executive 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. 4.2 Withholding. There shall be deducted from the payment of any amount 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 Executive entitled to such payment. 4.3 Assignment. Neither Executive nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount 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. 4.4 Amendment and Termination. The Agreement may be amended or terminated only by a writing executed by the parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement this ____ day of ______________, _____. ACQUIRING COMPANY By: ____________________________________ EXECUTIVE ----------------------------- 9 Exhibit A SEVERANCE AGREEMENT Waiver and Release The attached Waiver and Release is to be given to Executive upon the occurrence of an event that triggers eligibility for severance benefits under the Severance Agreement, as described in Paragraph 2.1(a) of such agreement. 10 Waiver and Release I, _________________, understand that I am entitled to receive the severance benefits described in Article II of the Severance 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 Acquiring Company (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 Acquiring Company and other direct or indirect subsidiaries of Acquiring 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 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. 11 I understand that I may take up to twenty-one (21) calendar days to consider whether or not I desire to enter this Waiver. I was not coerced, threatened or otherwise forced to sign this Waiver. I have made my choice to sign this Waiver voluntarily and of my own free will. I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign and deliver this Waiver to the Company. If I revoke this Waiver, I must do so in writing delivered to the Company. I understand that this Waiver is not effective until the expiration of this seven (7) calendar day revocation period. I understand that upon the expiration of such seven (7) calendar day revocation period this entire Waiver will be binding upon me and will be irrevocable. I understand that by signing this Waiver I am giving up rights I may have. IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________, in the year - ----. --------------------------- Executive Sworn to and subscribed to me this ___day of _________, ____ - -------------------------- Notary Public My Commission Expires: - --------------------------- (Notary Seal) Acknowledged and Accepted by the Company. By: ----------------------------------- Date: ----------------------------------- 12 EX-10.5 6 ex10-5.txt Exhibit 10.5 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 November 16, 2006. This Agreement amends and restates the Amended and Restated Change in Control Agreement entered into by Mr. Holland, Southern and the Company, effective June 1, 2004. 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: 1 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 and Long 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 or sale or other disposition of all or substantially all of the assets of Southern. 2 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 3 (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 4 (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 ("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. 5 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. 6 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. 7 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, 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. (a) Inconsistent Duties. (i) 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. (ii) Subsidiary Change in Control. 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 8 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. In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. Holland is 9 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. 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. 10 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 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. 11 (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 12 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 group health plan covering Mr. Holland, as such plan may be amended from time to time. 1.26 "Group Life Insurance Plan" shall mean the group life insurance plan covering Mr. Holland, as such plan may be amended from time to time. 13 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 14 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; 15 (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; (c)Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock; or (d)The Southern Board or the Board of Directors has declared that a Preliminary Change of Control has occurred. 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. 16 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 set forth in Section 1.8(b)(iii) hereof. 1.45 "Target Bonus" shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or awards granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs. 1.46 "Termination for Cause" or "Cause" shall mean Mr. Holland's termination of employment with the Company upon the occurrence of any of the following: (a)The willful and continued failure by Mr. Holland to substantially perform his duties with the Company (other than any such failure resulting from Mr. Holland's Total Disability or from Mr. Holland's retirement or any such 17 actual or anticipated failure resulting from termination by Mr. Holland 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 Mr. Holland has not substantially performed his duties; or (b)The willful engaging by Mr. Holland in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following: (i) any willful act involving fraud or dishonesty in the course of Mr. Holland's employment by the Company; (ii) the willful carrying out of any activity or the making of any statement by Mr. Holland which would materially prejudice or impair the good name and standing of the Company, Southern or any other Southern Subsidiary or would bring the Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which the Company, Southern or such other Southern Subsidiary is located; (iii) attendance by Mr. Holland 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 offense; (iv) 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; 18 (v) assault or other act of violence by Mr. Holland against any person during the course of employment; or (vi) Mr. Holland's indictment for any felony or any misdemeanor involving moral turpitude. No act or failure to act by Mr. Holland shall be deemed "willful" unless done, or omitted to be done, by Mr. Holland 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. Holland 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 the majority of the Southern Board at a meeting called and held for such purpose (after reasonable notice to Mr. Holland 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. Holland was guilty of conduct set forth in Section 1.46(a) or (b) hereof and specifying the particulars thereof in detail. 1.47 "Total Disability" shall mean total disability under the terms of the Pension Plan. 1.48 "Voting Securities" shall mean the outstanding voting securities of a corporation entitling the holder thereof to vote generally in the election of such corporation's directors. 1.49 "Waiver and Release" shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto. 1.50 "Year of Service" shall mean an Employee'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 an Employee has a break in his 19 service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service. ARTICLE II - SEVERANCE BENEFITS 2.1 Eligibility. (a) Except as otherwise provided herein, if Mr. Holland's employment is involuntarily terminated by the Company at any time during the two year period following a Change in Control of Southern or the Company for reasons other than Cause or if Mr. Holland voluntarily terminates his employment with the Company for Good Reason at any time during the two year period following a Change in Control of Southern or the Company, he shall be entitled to receive the benefits described in Section 2.2 hereof, subject to the terms and conditions described in this Article II. (b) Limits on Eligibility. Notwithstanding anything to the contrary herein, Mr. Holland shall not be eligible to receive benefits under this Plan if Mr. Holland : (i) is not actively at work on his Separation Date, unless Mr. Holland is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work; (ii) voluntarily terminates his employment with the Company for other than Good Reason; (iii) has his employment terminated by the Company for Cause; 20 (iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern; (v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or the Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if Mr. Holland would otherwise have been entitled to severance benefits under this Agreement but for this Section 2.1(b)(v), Mr. Holland shall be eligible for benefits under this Agreement except for those outplacement, severance and welfare benefits described in Sections 2.2(a), (b) and (c) hereof); (vi) is involuntarily separated from service with the Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from the Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 1.23(a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he is entitled at the Company as of the day immediately preceding the day of such offer of employment; (vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such 21 offer does not provide Good Reason under the requirements of Section 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof. (viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Agreement. 2.2 Severance Benefits. Upon the Company's receipt of an effective Waiver and Release, Mr. Holland shall be entitled to receive the following severance benefits: (a)Employee Outplacement Services. Mr. Holland shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Mr. Holland's Separation Date. (b)Severance Amount. Mr. Holland shall be paid in cash 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. Holland 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 22 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. Holland under Code Section 280G exceeds three (3) times Mr. Holland'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. Holland's Base Amount, less all other "parachute payments" (as such term is defined under Code Section 280G) received by Mr. Holland, less one dollar (the "Capped Amount"), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax. For purposes of this Section 2.2(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 a nationally recognized firm specializing in federal income taxes as selected by the Compensation Committee, and such calculations or determinations shall be binding upon Mr. Holland, Southern and the Company. (c) Welfare Benefit. (i) Except as provided in Section 2.3 hereof, Mr. Holland shall be eligible to participate in the Company's Group Health Plan for a period of six (6) months for each of Mr. Holland's Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following 23 Mr. Holland's Separation Date unless otherwise specifically provided under such plan, upon Mr. Holland's payment of both the Company's and Mr. Holland's premium under such plan. Mr. Holland shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Mr. Holland's Separation 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. Holland's extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan. (ii) The extended medical coverage afforded to Mr. Holland pursuant to this Section 2.2(c) as well as the premiums to be paid by Mr. Holland 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. Holland in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Mr. Holland fails to pay his premium within thirty (30) days of its due date, his extended coverage shall be terminated. (iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Mr. Holland or his dependent may elect. In the event that Mr. Holland 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 24 any government-sponsored health plan during the above period, coverage under the Company's Group Health Plan available to Mr. Holland or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Mr. Holland to inform the Company of his eligibility to participate in any such health plan. (iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Mr. Holland elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Mr. Holland a cash amount equal to the Company's and Mr. Holland's cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control. (d)Stock Option Vesting. The provisions of this Section 2.2(d) shall apply to any equity based awards under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(d) by reference. (i)Any of Mr. Holland's Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Stock Appreciation Right, if Mr. Holland 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 actions would result in liability to Mr. Holland under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of 25 the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act. (ii) The restrictions and deferral limitations applicable to any of Mr. Holland's Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable. (e) Performance Pay Program. The provisions of this Section 2.2(e) shall apply to the Performance Pay Program under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(e) by reference. Provided Mr. Holland is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of Mr. Holland's Separation Date and to the extent Mr. Holland is entitled to participate therein, Mr. Holland shall be entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. ( f) Performance Dividend Program. The provisions of this Section 2.2(f) shall apply to the Performance Dividend Program, the defined terms of which are incorporated in this Section 2.2(f) by reference. Provided Mr. Holland is not entitled to a Cash-Based Award under the PDP, if the PDP is in place through Mr. Holland's Separation Date and to the extent Mr. Holland is entitled to participate therein, Mr. Holland shall be entitled to receive 26 cash for each such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to the Separation Date. For purposes of this Section 2.2(f), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31st of the year in which Mr. Holland's Separation Date occurs, all other remaining PPP performance measurement periods shall terminate with respect to Mr. Holland and no payment to Mr. Holland shall be made with respect thereto. (g) Other Short Term Incentives Under the Omnibus Plan. The provisions of this Section 2.2(g) shall apply to Performance Unit or Performance Share awards under the Omnibus Plan. Provided Mr. Holland is not otherwise entitled to a Performance Unit/Share award under the Omnibus Plan, Mr. Holland shall be entitled to receive cash in an amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. (h) Other Short-Term Incentive Plans. The provisions of this Section 2.2(h) shall apply to Mr. Holland to the extent that he, as of the date of the Change in Control, is a participant in any other "short term incentive compensation plan" not otherwise previously referred to in this Section 27 2.2. Provided Mr. Holland is not otherwise entitled to a plan payout under any change in control provisions of such plans, if the "short term incentive compensation plan" is in place through Mr. Holland's Separation Date and to the extent Mr. Holland is entitled to participate therein, Mr. Holland shall be entitled to receive cash in an amount equal to his award under the Company's "short term incentive compensation plan" for the annual performance period in which the Separation Date shall have occurred, at Mr. Holland's target performance level and prorated by the number of months which have passed since the beginning of the annual performance period until the Separation Date. For purposes of this Section 2.2(h), 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 to participants based upon articulated performance criteria, and which have been identified by the Compensation Committee and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments. (i) Pro rata Calculation. For purposes of calculating any pro rata Cash-Based Awards under Section 2.2(e), (f), (g) and (h) hereof, a month shall not be considered if the determining event occurs on or before the 14th day of the month, and a month shall be considered if the determining event occurs on or after the 15th day of the month. (j) No Duplicate Benefits. Notwithstanding anything in this Section 2.2 to the contrary, in the event that Mr. Holland has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the "BPP") for the Performance Period which includes Mr. Holland's Separation Date, then the amount 28 of any such Cash-Based Award under this Plan shall be reduced dollar-for-dollar by any such amount received or to be received under the BPP. 2.3 Coordination with Retiree Medical and Life Insurance Coverage. Notwithstanding anything to the contrary above, if Mr. Holland is otherwise eligible to retire pursuant to the terms of the Pension Plan, he shall be deemed to have retired for purposes of all employee benefit plans sponsored by the Company of which Mr. Holland is a participant. If Mr. Holland is deemed to have retired in accordance with the preceding sentence, he shall not be eligible to receive the benefits described in Section 2.2(c) hereof if, upon his Separation Date, Mr. Holland becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan. 2.4 Payment of Benefits. (a) Except as otherwise provided in Section 2.4(b) hereof, the total amount payable under this Article II shall be paid to Mr. Holland in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Mr. Holland's Separation Date, or (b) the tender to the Company by Mr. Holland of an effective Waiver and Release 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. (b) Notwithstanding anything to the contrary in Section 2.4(a) above, if the Compensation Committee determines that it is necessary to delay any payment under this Article II in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such payment shall be delayed for 29 the period set forth in Section 409A(a)(2)(B)(i) and such delayed payment shall bear a reasonable rate of interest as determined by the Compensation Committee. 2.5 Benefits in the Event of Death. In the event of Mr. Holland's death prior to the payment of all benefits due under this Article II, Mr. Holland's estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release. 2.6 Legal Fees. In the event of a dispute between Mr. Holland and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Mr. Holland's favor, the Company shall reimburse Mr. Holland's legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000). 2.7 No Mitigation. Mr. Holland shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Mr. Holland hereunder shall not be reduced or suspended if he accepts such subsequent employment. 2.8 Non-qualified Retirement and Deferred Compensation Plans. Subsequent to a Change in Control, any claims by Mr. Holland 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 procedures and provisions set forth in Article III hereof and if any material issue in such dispute is finally resolved in Mr. Holland's favor, the Company shall reimburse Mr. Holland's legal fees in the manner provided in Section 2.6 hereof. ARTICLE III - ARBITRATION 30 3.1 General. 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 Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Mr. Holland's employment by the Company or the termination thereof. 3.2 Demand for Arbitration. Arbitration shall be initiated by serving a written notice of demand for arbitration to Mr. Holland, in the case of the Company, or to the Compensation Committee, in the case of Mr. Holland. 3.3 Law and Venue. The arbitrators shall apply the laws of the State of country-regionplaceGeorgia, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia. 3.4 Appointment of Arbitrators. Arbitrators shall be appointed 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. Holland, 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. 3.5 Costs. The arbitration filing fee shall be paid by Mr. Holland. All other costs of arbitration shall be borne equally by Mr. Holland and the Company, provided, however, that the Company shall reimburse such fees and costs in the 31 event any material issue in such dispute is finally resolved in Mr. Holland's favor and Mr. Holland is reimbursed legal fees under Section 2.6 hereof. 3.6 Interim and Injunctive Relief. Nothing in this Article III is intended to preclude, upon application of either party, 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 either party's interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to 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 Article III. ARTICLE IV - TRANSFER OF EMPLOYMENT 4.1 Transfer of Employment. In the event that Mr. Holland's employment by the Company is terminated during the two year period following a Change in Control and Mr. Holland accepts employment by Southern or a another Southern Subsidiary, the Company shall assign this Agreement to Southern or such Southern Subsidiary, Southern shall accept such assignment or cause such Southern Subsidiary to accept such assignment, and such assignee shall become the "Company" for all purposes hereunder. ARTICLE V - MISCELLANEOUS 5.1 Funding of Benefits. Unless the Board of Directors in its discretion determines otherwise, the amounts payable to Mr. Holland under the this Agreement shall not be funded in any manner and shall be paid by the Company out 32 of its general assets, which assets are subject to the claims of the Company's creditors. 5.2 Withholding. There shall be deducted from the payment of any amount 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. Holland. 5.3 Assignment. Neither Mr. Holland nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount 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. 5.4 Interpretation. This Agreement is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional tax under Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Agreement for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent. 5.5 Amendment and Termination. The Agreement may be amended or terminated only by a writing executed by the parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 16 day of November, 2006. THE SOUTHERN COMPANY By: /s/ David M. Ratcliffe SOUTHERN COMPANY SERVICES, INC. By: /s/ Robert A. Bell MR. HOLLAND /s/ G. Edison Holland G. Edison Holland Exhibit A CHANGE IN CONTROL AGREEMENT Waiver and Release The attached Waiver and Release is to be given to Mr. G. Edison Holland upon the occurrence of an event that triggers eligibility for severance benefits under the Change in Control Agreement, as described in Section 2.2 of such Agreement. CHANGE IN CONTROL AGREEMENT Waiver and Release I, G. Edison Holland, understand that I am entitled to receive the severance benefits described in Article II 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 Company Services, 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 receiving the severance and welfare benefits under Article II of the Agreement, I hereby voluntarily and irrevocably waive, release, dismiss with prejudice, and withdraw all claims, complaints, suits or demands of any kind whatsoever (whether known or unknown) which I ever had, may have, or now have against The Southern Company, Southern Company Services, Inc., Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Communications Services, Inc. d/b/a Southern LINC, Southern Company Energy Solutions, L.L.C., Southern Nuclear Operating Company, Inc., Southern Telecom, Inc., Southern Company Management Development, Inc., and other current or former subsidiaries or affiliates of The Southern Company and their past, present and future officers, directors, employees, agents, insurers and attorneys (collectively, the "Releasees"), arising from or relating to (directly or indirectly) my employment or the termination of my employment or other events occurred as of the date of execution of this Agreement, including but not limited to: (a) claims for violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, 42 U.S.C. ss. 1981, the National Labor Relations Act, the Labor Management Relations Act, Executive Order 11246, Executive Order 11141, the Rehabilitation Act of 1973, the Sarbanes-Oxley Act of 2002 or the Employee Retirement Income Security Act; (b) claims for violations of any other federal or state statute or regulation or local ordinance; (c) claims for lost or unpaid wages, compensation, or benefits, defamation, intentional or negligent infliction of emotional distress, assault, battery, wrongful or constructive discharge, negligent hiring, retention or supervision, fraud, misrepresentation, conversion, tortious interference, breach of contract, or breach of fiduciary duty; (d) claims to benefits under any bonus, severance, workforce reduction, early retirement, outplacement, or any other similar type plan sponsored by the Company (except for those plans listed below); or (e) any other claims under state law arising in tort or contract. In signing this Agreement, I am not releasing any claims that may arise under the terms of this Agreement or which may arise out of events occurring after the date I execute this Agreement. I am also not releasing claims to benefits that I am already entitled to receive under The Southern Company Pension Plan, The Southern Company Employee Stock Ownership Plan, The Southern Company Employee Savings Plan, The Southern Company Omnibus Incentive Compensation Plan, The Southern Company Change in Control Benefits Protection Plan or under any workers' compensation laws. 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. Nothing in this Agreement shall prohibit me from engaging in protected activities under applicable law (including protected activities described in Section 211 of the Energy Reorganization Act) or from communicating, either voluntarily or otherwise, with any governmental agency concerning any potential violation of the law. I understand and agree for a period of two (2) years after the date I execute this Agreement, I will regard and treat as strictly confidential all valuable, non-public, competitively sensitive data and information relating to the Releasees' business that is not generally known by or readily available to Releasees' competitors and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such information to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees. I further understand and agree that I will regard and treat as strictly confidential all trade secrets of Releasees for as long as such items remain trade secrets under applicable law and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such trade secrets to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees. I further agree to keep confidential and not disclose the terms of this Agreement, including, but not limited to, the benefits under the Agreement, except to my spouse, attorneys or financial advisors (who must be informed of and agree to be bound by the confidentiality provisions contained in this Agreement before I disclose any information to them about this Agreement), or where such disclosure is required by law. I agree to return to the Company prior to my last day of employment all property of the Company, including but not limited to data, lists, information, memoranda, documents, identification cards, credit cards, parking cards, keys, computers, fax machines, beepers, phones, and files (including copies thereof). I understand and agree that I will not seek re-employment as an employee, leased employee or independent contractor with the Company or any Southern Company subsidiary or affiliate during the twenty-four (24) month period beginning immediately following my execution of this Agreement. I have carefully read this agreement and I fully understand all of the provisions of this Waiver. I have been encouraged and advised in writing to seek advice from anyone of my choosing regarding this Waiver (including my attorney, accountant or tax advisor). Prior to signing this Waiver, I have been given the opportunity and sufficient time to seek such advice. I have had the opportunity to review and consider this Waiver for a period of at least twenty-one (21) days before signing it. I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign this Waiver. In order to revoke this Waiver, I must deliver written notification of such revocation to the Compensation Committee. 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. Revocation of this Waiver will not alter or change the termination of my employment by the Company. In signing this Waiver, I am not relying on any representation or statement (written or oral) not specifically set forth in this Waiver, the Agreement or by the company or any of its representatives with regard to the subject matter, basis, or effect of this Waiver or otherwise. I was not coerced, threatened, or otherwise forced to sign this Waiver. I am voluntarily signing and delivering this Waiver of my own free will. I understand that by signing this Waiver I am giving up rights I may have. I understand I do not have to sign this Waiver. IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________________, in the year _____. --------------------------- G. Edison Holland Sworn to and subscribed to me this ___day of _________, ____ - -------------------------- Notary Public My Commission Expires: - --------------------------- (Notary Seal) Acknowledged and Accepted by the Company. By: ----------------------------------- Date: ----------------------------------- EXHIBIT B SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT ("Agreement") made and entered into by and between Acquiring Company ("Company") and Mr. ________________ ("Executive") (hereinafter collectively referred to as the "Parties") effective ______________, 200__. WITNESSETH: WHEREAS, the Company wishes to provide to Executive certain severance benefits under certain circumstances; 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 1.1 "Annual Compensation" shall Executive's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan. 1.2 "Base Salary" shall mean Executive's annual base salary rate during the twelve (12) month period immediately preceding his Separation Date plus target bonus. 1.3 "Board of Directors" shall mean the board of directors of the Company. 1.4 "COBRA Coverage" shall mean any continuation coverage to which Executive or his dependents may be entitled pursuant to Code Section 4980B. 1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended. 1.6 "Company" shall mean Acquiring Company, its successors and assigns. 1.7 "Employee Outplacement Program" shall mean the program established by the Company from time to time for the purpose of assisting employees find 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. 1.8 "Employment Date" shall mean the date that Executive is hired by the Company as a full time employee. 1.9 "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. 1.10 "Good Reason" shall mean, without Executive's express written consent, after written notice to the Board of Directors, and after a thirty (30) day opportunity for the Board of Directors to cure, the continuing occurrence of any of the events described in Subsections (a), (b), (c) or (d) of this Section 1.10. (a) Inconsistent Duties. A meaningful and detrimental alteration in Executive's position or in the nature or status of his responsibilities from those in effect on the Employment Date. (b) Reduced Compensation. A reduction of five percent (5%) or more by the Company in any of the following amounts of compensation expressed in subparagraphs (i), (ii) or (iii) 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 all employees of the Company eligible for such compensation: (i) Executive's Base Salary; (ii) the sum of Executive's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan, as in effect on the Employment Date; or (iii) the sum of Executive's Base Salary plus Target Bonus under the Short Term Bonus Plan and Long Term Bonus Plan plus the Target Award under the Equity Based Bonus Plan, each of which as in effect on the Employment Date. (c) Relocation. A change in Executive's work location to a location more than fifty (50) miles from the facility where Executive was located at the time of his Employment Date, unless such new work location is within fifty (50) miles from Executive's principal place of residence on his Employment Date. The acceptance, if any, by Executive of employment by the Company at a work location which is outside the fifty mile radius set forth in this Section 1.10(c) shall not be a waiver of Executive's right to refuse subsequent transfer by an Company to a location which is more than fifty (50) miles from Executive's principal place of residence on his Employment Date, and such subsequent nonconsensual transfer shall be "Good Reason" under this Agreement; (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 Executive is entitled under the Company's Retirement and Welfare Benefit plans in which Executive was participating on his Employment Date. (ii) Vacation and Paid Time Off. The failure by the Company to provide Executive with the number of paid vacation days or, if applicable, paid time off days to which Executive is entitled on the basis of years of service with a Southern Entity and the Company in accordance with the Company's normal vacation policy or the paid time off program (whichever applicable) in effect on the Employment Date (except for across-the-board vacation policy or paid time off program changes or policy or 2 program terminations similarly affecting at least ninety-five percent (95%) of all employees of the Company). 1.11 "Group Health Agreement" shall mean the group health plan covering Executive, as such plan may be amended from time to time. 1.12 "Group Life Insurance Agreement" shall mean the group life insurance plan covering Executive, as such plan may be amended from time to time. 1.13 "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. 1.14 "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 Executive 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 Employment Date, 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 Employment Date. 1.15 "Month of Service"shall mean any calendar month during which Executive worked at least one (1) hour or was on approved leave of absence while in the employ of a Southern Entity or Acquiring Company and its affiliates. 1.16 "Pension Plan" shall mean the Company Pension Plan or any successor thereto, as in effect on the Employment Date. 1.17 "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). 1.18 "Separation Date" shall mean the date on which Executive is separated from the Company's regular payroll. 1.19 "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. 1.20 "Southern Entity" shall mean The Southern Company or any of its subsidiaries and affiliates. 1.21 "Target Bonus" shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan as used by the Company to measure the market competitiveness of its employee compensation programs. 3 1.22 "Termination for Cause" or "Cause" shall mean Executive's termination of employment with the Company upon the occurrence of any of the following: (a) The willful and continued failure by Executive to substantially perform his duties with the Company (other than any such failure resulting from Executive's Total Disability or from Executive's retirement or any such actual or anticipated failure resulting from termination by Executive for Good Reason) after a written demand for substantial performance is delivered to him by the Board of Directors, which demand specifically identifies the manner in which such corporate officer believes Executive has not substantially performed his duties; or (b) The willful engaging by Executive in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following: (i) any willful act involving fraud or dishonesty in the course of Executive's employment by the Company; (ii) the willful carrying out of any activity or the making of any statement by Executive which would materially prejudice or impair the good name and standing of the Company, or would bring the Company into contempt, ridicule or would reasonably shock or offend any community in which the Company is located; (iii) attendance by Executive 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 offense; (iv) 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; (v) assault or other act of violence by Executive against any person during the course of employment; or (vi) Executive's indictment for any felony or any misdemeanor involving moral turpitude. No act or failure to act by Executive shall be deemed "willful" unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, Executive 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 the majority of Board of Directors at a meeting called and held for such purpose (after reasonable notice to Executive and an opportunity for him, together with counsel, to be heard before the Board of Directors), finding that, in the good faith opinion of the Board of Directors, Executive was guilty of conduct set forth in Section 1.22(a) or (b) hereof and specifying the particulars thereof in detail. 1.23 "Total Disability" shall mean total disability under the terms of the Pension Plan. 4 1.24 "Waiver and Release" shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto. 1.25 "Year of Service" shall mean Executive'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 Executive had a break in service during his employment with a Southern Entity, he or she will receive credit under this Agreement for his service prior to such break in service provided the break in service was less than five (5) years and his service with the Southern Entity prior to the break exceeded the length of such break in service. ARTICLE II - SEVERANCE BENEFITS 2.1 Eligibility. (a) Except as otherwise provided herein, if Executive's employment is involuntarily terminated by the Company at any time during the two year period following his Employment Date for reasons other than Cause or if Executive shall voluntarily terminate his employment with the Company for Good Reason at any time during the two year period following his Employment Date, Executive shall be entitled to receive the amounts described in Section 2.2 hereof, subject to the terms and conditions described in this Article II. (b) Limits on Eligibility. Notwithstanding anything to the contrary herein, Executive shall not be eligible to receive amounts under this Agreement if Executive: (i) is not actively at work on his Separation Date, unless Executive is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work; ) (ii) voluntarily terminates his employment with the Company for other than Good Reason; (iii) has his employment terminated by the Company for Cause; (iv) accepts the transfer of his employment to an affiliate of the Company; (v) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement. 2.2 Benefits. Upon the Company's receipt of an effective Waiver and Release, Executive shall be entitled to receive the following: (a) Employee Outplacement Services. Executive shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Executive's Separation Date. (b) Severance Benefit. Executive shall be paid in cash an amount equal to three times Executive's 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 5 Company shall pay to Executive 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 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 Executive under Code Section 280G exceeds three (3) times Executive'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 Executive's Base Amount, less all other "parachute payments" (as such term is defined under Code Section 280G) received by Executive, less one dollar (the "Capped Amount"), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax. For purposes of this Section 2.2(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 a nationally recognized firm specializing in federal income taxes as selected by the Board of Directors, and such calculations or determinations shall be binding upon Executive and the Company. (c) Welfare Benefit. (i) Except as provided in Section 2.3 hereof, Executive shall be eligible to participate in the Company's Group Health Plan for a period of six (6) months for each of Executive's Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following Executive's Separation Date unless otherwise specifically provided under such plan, upon Executive's payment of both the Company's and Executive's premium under such plan. Executive shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Executive's Separation 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 Executive's extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Agreement. (ii) The extended medical coverage afforded to Executive pursuant to this Section 2.2(c) as well as the premiums to be paid by Executive 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 Executive in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Executive fails to pay his premium within thirty (30) days of its due date, Executive's extended coverage shall be terminated. 6 (iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Executive or his dependent may elect. In the event that Executive 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 Employing Company's Group Health Plan available to Executive or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Executive to inform the Company of his eligibility to participate in any such health plan. (iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Executive elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Executive a cash amount equal to the Company's and Executive's cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan. (d)Equity Based Awards. Any Equity Based Awards outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a stock appreciation right, if Executive 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 actions would result in liability to Executive under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act. (e)Incentive Plans. To the extent that Executive, as of the Separation Date, is a participant in any Short Term Bonus Plan or Long Term Bonus Plan, Executive shall be entitled to receive cash in an amount equal to his awards under such Plans for the period in which the Separation Date shall have occurred, at Executive's Target Bonus and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. For this purpose a month shall not be considered if the Separation Date occurs on or before the 14th day of the month, and a month shall be considered if the Separation Date occurs on or after the 15th day of the month. 2.3 Payment of Benefits. The total amount payable under this Article II shall be paid to Executive in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Executive's Separation Date, or (b) the tender to the Company by Executive of an effective Waiver and Release (in substantially 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. 2.4 Benefits in the Event of Death. In the event of Executive's death prior to the payment of all benefits due under this Article II, Executive's estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release. 7 2.5 Legal Fees. In the event of a dispute between Executive and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Executive's favor, the Company shall reimburse Executive's legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000). 2.6 No Mitigation. Executive shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Executive hereunder shall not be reduced or suspended if Executive accepts such subsequent employment. ARTICLE III - ARBITRATION 3.1 General. Any dispute, controversy or claim arising out of or relating to the Company's obligations to pay severance amounts 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 Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Executive's employment by the Company or the termination thereof. 3.2 Demand for Arbitration. Arbitration shall be initiated by serving a written notice of demand for arbitration to Executive, in the case of the Company, or to the Board of Directors, in the case of Executive. 3.3 Law and Venue. The arbitrators shall apply the laws of the State in which the Company's headquarters are located, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in such State. 3.4 Appointment of Arbitrators. Arbitrators shall be appointed 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 Executive, 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. 3.5 Costs. The arbitration filing fee shall be paid by Executive. All other costs of arbitration shall be borne equally by Executive 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 Executive's favor and Executive is reimbursed legal fees under Section 2.5 hereof. 3.6 Interim and Injunctive Relief. Nothing in this Article III is intended to preclude, upon application of either party, 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 either party's interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to 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 Article III. 8 ARTICLE IV - MISCELLANEOUS 4.1 Funding of Benefits. Unless the Board of Directors in its discretion determines otherwise, amounts payable to Executive 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. 4.2 Withholding. There shall be deducted from the payment of any amount 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 Executive entitled to such payment. 4.3 Assignment. Neither Executive nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount 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. 4.4 Amendment and Termination. The Agreement may be amended or terminated only by a writing executed by the parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement this ____ day of ______________, _____. ACQUIRING COMPANY By: ____________________________________ EXECUTIVE ----------------------------- 9 Exhibit A SEVERANCE AGREEMENT Waiver and Release The attached Waiver and Release is to be given to Executive upon the occurrence of an event that triggers eligibility for severance benefits under the Severance Agreement, as described in Paragraph 2.1(a) of such agreement. 10 Waiver and Release I, _________________, understand that I am entitled to receive the severance benefits described in Article II of the Severance 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 Acquiring Company (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 Acquiring Company and other direct or indirect subsidiaries of Acquiring 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 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. 11 I understand that I may take up to twenty-one (21) calendar days to consider whether or not I desire to enter this Waiver. I was not coerced, threatened or otherwise forced to sign this Waiver. I have made my choice to sign this Waiver voluntarily and of my own free will. I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign and deliver this Waiver to the Company. If I revoke this Waiver, I must do so in writing delivered to the Company. I understand that this Waiver is not effective until the expiration of this seven (7) calendar day revocation period. I understand that upon the expiration of such seven (7) calendar day revocation period this entire Waiver will be binding upon me and will be irrevocable. I understand that by signing this Waiver I am giving up rights I may have. IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________, in the year - ----. --------------------------- Executive Sworn to and subscribed to me this EX-10.6 7 ex10-6.txt Exhibit 10.6 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"), Alabama Power Company (the "Company") and Mr. Charles Douglas McCrary ("Mr. McCrary") (hereinafter collectively referred to as the "Parties") is effective November 16, 2006. This Agreement amends and restates the Amended and Restated Change in Control Agreement entered into by Mr. McCrary, Southern and the Company, effective June 1, 2004. WITNESSETH: WHEREAS, Mr. McCrary is the President and Chief Executive Officer of the Company; WHEREAS, the Company wishes to provide to Mr. McCrary 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: 1 ARTICLE I - DEFINITIONS. For purposes of this Agreement, the following terms shall have the following meanings: 1.1 "Annual Compensation" shall mean Mr. McCrary's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan and Long Term Bonus Plan. 1.2 "Base Salary" shall mean Mr. McCrary'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 or sale or other disposition of all or substantially all of the assets of Southern. 2 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 3 (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 4 (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. McCrary, 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 ("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. McCrary or his dependents may be entitled pursuant to Code Section 4980B. 5 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 Alabama Power Company, 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. 6 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 Alabama Power Company, 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. 7 1.23 "Good Reason" shall mean, without Mr. McCrary's express written consent, after written notice to the Company, 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. McCrary claiming benefits under this Agreement upon a Subsidiary Change in Control, the foregoing notice and opportunity to cure will be satisfied if Mr. McCrary 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. McCrary of its decision within thirty (30) days of receipt of Mr. McCrary's written offer of employment. Any dispute regarding the Compensation Committee's decision shall be resolved in accordance with Article III hereof. (a) Inconsistent Duties. (i) Change in Control. A meaningful and detrimental alteration in Mr. McCrary's position or in the nature or status of his responsibilities from those in effect immediately prior to the Change in Control. (ii) Subsidiary Change in Control. In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. McCrary is offered employment with the acquiring employer with a job title, duties and status which are materially and detrimentally lower than Mr. McCrary's job title, duties and 8 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. McCrary's Base Salary; (B) the sum of Mr. McCrary'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. McCrary'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. In the event of a Subsidiary Change in Control, Good Reason shall exist if Mr. McCrary is offered Base Salary, Target Bonus under the acquiring company's Short Term Bonus Plan and Long Term Bonus Plan and 9 Target Bonus under the acquiring company's Equity Based Bonus Plan that, in the aggregate, is less than ninety percent (95%) of Mr. McCrary'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. McCrary's work location to a location more than fifty (50) miles from the facility where Mr. McCrary 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. McCrary's principal place of residence on the day immediately preceding the day the Change in Control is Consummated. The acceptance, if any, by Mr. McCrary 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. McCrary's right to refuse subsequent transfer by the Company to a location which is more than fifty (50) miles from Mr. McCrary'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. In the case of a Subsidiary Change in Control, Good Reason shall exist if Mr. McCrary's work location under the terms of the offer of employment from the acquiring employer is more than fifty (50) miles from Mr. McCrary's work location at the Company as of the 10 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. McCrary is entitled under the Company's Retirement and Welfare Benefit plans in which Mr. McCrary 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. McCrary with the number of paid vacation days or, if applicable, paid time off days to which Mr. McCrary 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. McCrary 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. McCrary 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. McCrary 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 12 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. McCrary 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 group health plan covering Mr. McCrary, as such plan may be amended from time to time. 1.26 "Group Life Insurance Plan" shall mean the group life insurance plan covering Mr. McCrary, as such plan may be amended from time to time. 13 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. McCrary 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. McCrary 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 14 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; 15 (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; (c) Any Person achieves the Beneficial Ownership of fifteen percent (15%) or more of the Common Stock; or (d) The Southern Board or the Board of Directors has declared that a Preliminary Change of Control has occurred. 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. McCrary'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. McCrary is deemed to have retired pursuant to the provisions of Section 2.3 hereof, Mr. McCrary's Separation Date shall be the effective date of his retirement pursuant to the terms of the Pension Plan. 16 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 set forth in Section 1.8(b)(iii) hereof. 1.45 "Target Bonus" shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or awards granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan, as used by the Company or respective acquiring employer to measure the market competitiveness of its employee compensation programs. 1.46 "Termination for Cause" or "Cause" shall mean Mr. McCrary's termination of employment with the Company upon the occurrence of any of the following: (a) The willful and continued failure by Mr. McCrary to substantially perform his duties with the Company (other than any such failure resulting from Mr. McCrary's Total Disability 17 or from Mr. McCrary's retirement or any such actual or anticipated failure resulting from termination by Mr. McCrary 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 Mr. McCrary has not substantially performed his duties; or (b) The willful engaging by Mr. McCrary in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following: (i) any willful act involving fraud or dishonesty in the course of Mr. McCrary's employment by the Company; (ii) the willful carrying out of any activity or the making of any statement by Mr. McCrary which would materially prejudice or impair the good name and standing of the Company, Southern or any other Southern Subsidiary or would bring the Company, Southern or any other Southern Subsidiary into contempt, ridicule or would reasonably shock or offend any community in which the Company, Southern or such other Southern Subsidiary is located; (iii) attendance by Mr. McCrary 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 offense; (iv) 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; 18 (v) assault or other act of violence by Mr. McCrary against any person during the course of employment; or (vi) Mr. McCrary's indictment for any felony or any misdemeanor involving moral turpitude. No act or failure to act by Mr. McCrary shall be deemed "willful" unless done, or omitted to be done, by Mr. McCrary 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. McCrary 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 the majority of the Southern Board at a meeting called and held for such purpose (after reasonable notice to Mr. McCrary 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. McCrary was guilty of conduct set forth in Section 1.46(a) or (b) hereof and specifying the particulars thereof in detail. 1.47 "Total Disability" shall mean total disability under the terms of the Pension Plan. 1.48 "Voting Securities" shall mean the outstanding voting securities of a corporation entitling the holder thereof to vote generally in the election of such corporation's directors. 1.49 "Waiver and Release" shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto. 1.50 "Year of Service" shall mean an Employee'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 an Employee has a break in his 19 service with his Employing Company, he will receive credit under this Plan for the service prior to the break in service only if the break in service was less than five years and his service prior to the break exceeds the length of the break in service. ARTICLE II - SEVERANCE BENEFITS 2.1 Eligibility. (a) Except as otherwise provided herein, if Mr. McCrary's employment is involuntarily terminated by the Company at any time during the two year period following a Change in Control of Southern or the Company for reasons other than Cause or if Mr. McCrary voluntarily terminates his employment with the Company for Good Reason at any time during the two year period following a Change in Control of Southern or the Company, he shall be entitled to receive the benefits described in Section 2.2 hereof, subject to the terms and conditions described in this Article II. (b) Limits on Eligibility. Notwithstanding anything to the contrary herein, Mr. McCrary shall not be eligible to receive benefits under this Plan if Mr. McCrary : (i) is not actively at work on his Separation Date, unless Mr. McCrary is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work; (ii) voluntarily terminates his employment with the Company for other than Good Reason; (iii) has his employment terminated by the Company for Cause; 20 (iv) accepts the transfer of his employment to Southern, any Southern Subsidiary or any employer that acquires all or substantially all of the assets of Southern; (v) accepts the transfer of his employment to any employer (or its affiliate) that acquires all or substantially all of the assets of a Southern Subsidiary or the Company and becomes an employee of any such employer (or its affiliate) following such acquisition (provided, however, that if Mr. McCrary would otherwise have been entitled to severance benefits under this Agreement but for this Section 2.1(b)(v), Mr. McCrary shall be eligible for benefits under this Agreement except for those outplacement, severance and welfare benefits described in Sections 2.2(a), (b) and (c) hereof); (vi) is involuntarily separated from service with the Company after refusing an offer of employment by Southern or a Southern Subsidiary, under circumstances where the terms of such offer would not have amounted to Good Reason for voluntary termination of employment from the Company by comparing each item of compensation and benefits of such offer of employment as set forth in Section 1.23(a)(i), (b)(i), (c)(i), (d)(i) and (d)(ii) above, with such items of compensation and benefits to which he is entitled at the Company as of the day immediately preceding the day of such offer of employment; (vii) refuses an offer of employment by an acquiring employer in a Subsidiary Change in Control under circumstances where such offer does not provide Good Reason under the requirements of 21 Section 1.23(a)(ii), (b)(ii), (c)(ii), (d)(iii) or (e) hereof. (viii) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement; provided however, that the receipt of benefits under any retention plan or agreement shall not be deemed to be the receipt of benefits under any severance, separation or outplacement program for purposes of this Agreement. 2.2 Severance Benefits. Upon the Company's receipt of an effective Waiver and Release, Mr. McCrary shall be entitled to receive the following severance benefits: (a) Employee Outplacement Services. Mr. McCrary shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Mr. McCrary's Separation Date. (b) Severance Amount. Mr. McCrary shall be paid in cash 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. McCrary 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 22 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. McCrary under Code Section 280G exceeds three (3) times Mr. McCrary'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. McCrary's Base Amount, less all other "parachute payments" (as such term is defined under Code Section 280G) received by Mr. McCrary, less one dollar (the "Capped Amount"), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax. For purposes of this Section 2.2(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 a nationally recognized firm specializing in federal income taxes as selected by the Compensation Committee, and such calculations or determinations shall be binding upon Mr. McCrary, Southern and the Company. (c) Welfare Benefit. (i) Except as provided in Section 2.3 hereof, Mr. McCrary shall be eligible to participate in the Company's Group Health Plan for a period of six (6) months for each of Mr. McCrary's Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following Mr. McCrary's 23 Separation Date unless otherwise specifically provided under such plan, upon Mr. McCrary's payment of both the Company's and Mr. McCrary's premium under such plan. Mr. McCrary shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Mr. McCrary's Separation 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. McCrary's extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Plan. (ii) The extended medical coverage afforded to Mr. McCrary pursuant to this Section 2.2(c) as well as the premiums to be paid by Mr. McCrary 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. McCrary in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Mr. McCrary fails to pay his premium within thirty (30) days of its due date, his extended coverage shall be terminated. (iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Mr. McCrary or his dependent may elect. In the event that Mr. McCrary 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 24 government-sponsored health plan during the above period, coverage under the Company's Group Health Plan available to Mr. McCrary or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Mr. McCrary to inform the Company of his eligibility to participate in any such health plan. (iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Mr. McCrary elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Mr. McCrary a cash amount equal to the Company's and Mr. McCrary's cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan, as such Plans were in effect as of the date of the Change in Control. (d) Stock Option Vesting. The provisions of this Section 2.2(d) shall apply to any equity based awards under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(d) by reference. (i) Any of Mr. McCrary's Options and Stock Appreciation Rights outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a Stock Appreciation Right, if Mr. McCrary 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 actions would result in liability to Mr. McCrary under Section 16(b) of the Exchange 25 Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act. (ii) The restrictions and deferral limitations applicable to any of Mr. McCrary's Restricted Stock and Restricted Stock Units as of the Separation Date shall lapse, and such Restricted Stock and Restricted Stock Units shall become free of all restrictions and limitations and become fully vested and transferable. (e) Performance Pay Program. The provisions of this Section 2.2(e) shall apply to the Performance Pay Program under the Omnibus Plan, the defined terms of which are incorporated in this Section 2.2(e) by reference. Provided Mr. McCrary is not entitled to a Cash-Based Award under the PPP, if the PPP is in place as of Mr. McCrary's Separation Date and to the extent Mr. McCrary is entitled to participate therein, Mr. McCrary shall be entitled to receive cash in an amount equal to a prorated payout of his Cash-Based Award under the PPP for the performance period in which the Separation Date shall have occurred, at target performance under the PPP and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. (f) Performance Dividend Program. The provisions of this Section 2.2(f) shall apply to the Performance Dividend Program, the defined terms of which are incorporated in this Section 2.2(f) by reference. Provided Mr. McCrary is not entitled to a Cash-Based Award under the PDP, if the PDP is in place through Mr. McCrary's Separation Date and to the extent Mr. McCrary is entitled to participate therein, Mr. McCrary shall be entitled to receive cash for each such Cash-Based Award under the PDP held as of such date based on a payout percentage of the greater of 50% or actual performance under the PDP for the performance period in which the Separation Date shall have occurred, and the sum of the quarterly dividends declared on the Common Stock in the performance year of and prior to the Separation Date. For purposes of this Section 2.2(f), payout of each Cash-Based Award under the PDP shall be based upon the performance measurement period that would otherwise have ended on December 31st of the year in which Mr. McCrary's Separation Date occurs, all other remaining PPP performance measurement periods shall terminate with respect to Mr. McCrary and no payment to Mr. McCrary shall be made with respect thereto. (g) Other Short Term Incentives Under the Omnibus Plan. The provisions of this Section 2.2(g) shall apply to Performance Unit or Performance Share awards under the Omnibus Plan. Provided Mr. McCrary is not otherwise entitled to a Performance Unit/Share award under the Omnibus Plan, Mr. McCrary shall be entitled to receive cash in an amount equal to a prorated payout of the value of his Performance Units and/or Performance Shares for the performance period in which the Separation Date shall have occurred, at target performance and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. (h) Other Short-Term Incentive Plans. The provisions of this Section 2.2(h) shall apply to Mr. McCrary to the extent that he, as of the date of the Change in Control, is a participant in any other "short term incentive compensation plan" not otherwise previously referred to in this Section 2.2. Provided Mr. McCrary is not otherwise entitled to a plan payout under 27 any change in control provisions of such plans, if the "short term incentive compensation plan" is in place through Mr. McCrary's Separation Date and to the extent Mr. McCrary is entitled to participate therein, Mr. McCrary shall be entitled to receive cash in an amount equal to his award under the Company's "short term incentive compensation plan" for the annual performance period in which the Separation Date shall have occurred, at Mr. McCrary's target performance level and prorated by the number of months which have passed since the beginning of the annual performance period until the Separation Date. For purposes of this Section 2.2(h), 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 to participants based upon articulated performance criteria, and which have been identified by the Compensation Committee and listed on Exhibit B hereto, which may be amended from time to time to reflect plan additions, terminations and amendments. (i) Pro rata Calculation. For purposes of calculating any pro rata Cash-Based Awards under Section 2.2(e), (f), (g) and (h) hereof, a month shall not be considered if the determining event occurs on or before the 14th day of the month, and a month shall be considered if the determining event occurs on or after the 15th day of the month. (j) No Duplicate Benefits. Notwithstanding anything in this Section 2.2 to the contrary, in the event that Mr. McCrary has received or is entitled to receive a Cash-Based Award under the PPP or the PDP as determined under the provisions of the Southern Company Change in Control Benefits Protection Plan (the "BPP") for the Performance Period which includes Mr. McCrary's Separation Date, then the amount of any such Cash-Based Award under this Plan shall be reduced 28 dollar-for-dollar by any such amount received or to be received under the BPP. 2.3 Coordination with Retiree Medical and Life Insurance Coverage. Notwithstanding anything to the contrary above, if Mr. McCrary is otherwise eligible to retire pursuant to the terms of the Pension Plan, he shall be deemed to have retired for purposes of all employee benefit plans sponsored by the Company of which Mr. McCrary is a participant. If Mr. McCrary is deemed to have retired in accordance with the preceding sentence, he shall not be eligible to receive the benefits described in Section 2.2(c) hereof if, upon his Separation Date, Mr. McCrary becomes eligible to receive the retiree medical and life insurance coverage provided to certain retirees pursuant to the terms of the Pension Plan, the Group Health Plan and the Group Life Insurance Plan. 2.4 Payment of Benefits. (a) Except as otherwise provided in Section 2.4(b) hereof, the total amount payable under this Article II shall be paid to Mr. McCrary in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Mr. McCrary's Separation Date, or (b) the tender to the Company by Mr. McCrary of an effective Waiver and Release 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. (b) Notwithstanding anything to the contrary in Section 2.4(a) above, if the Compensation Committee determines that it is necessary to delay any payment under this Article II in order to avoid any tax liability pursuant to Code Section 409A(a)(1), such payment shall be delayed for 29 the period set forth in Section 409A(a)(2)(B)(i) and such delayed payment shall bear a reasonable rate of interest as determined by the Compensation Committee. 2.5 Benefits in the Event of Death. In the event of Mr. McCrary's death prior to the payment of all benefits due under this Article II, Mr. McCrary's estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release. 2.6 Legal Fees. In the event of a dispute between Mr. McCrary and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Mr. McCrary's favor, the Company shall reimburse Mr. McCrary's legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000). 2.7 No Mitigation. Mr.McCrary shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Mr. McCrary hereunder shall not be reduced or suspended if he accepts such subsequent employment. 2.8 Non-qualified Retirement and Deferred Compensation Plans. Subsequent to a Change in Control, any claims by Mr. McCrary 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 procedures and provisions set forth in Article III hereof and if any material issue in such dispute is finally resolved in Mr. McCrary's favor, the Company shall reimburse Mr. McCrary's legal fees in the manner provided in Section 2.6 hereof. ARTICLE III - ARBITRATION 30 3.1 General. 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 Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Mr. McCrary's employment by the Company or the termination thereof. 3.2 Demand for Arbitration. Arbitration shall be initiated by serving a written notice of demand for arbitration to Mr. McCrary, in the case of the Company, or to the Compensation Committee, in the case of Mr. McCrary. 3.3 Law and Venue. The arbitrators shall apply the laws of the State of Georgia, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in Atlanta, Georgia. 3.4 Appointment of Arbitrators. Arbitrators shall be appointed 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. McCrary, 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. 3.5 Costs. The arbitration filing fee shall be paid by Mr. McCrary. All other costs of arbitration shall be borne equally by Mr. McCrary and the Company, provided, however, that the Company shall reimburse such fees 31 and costs in the event any material issue in such dispute is finally resolved in Mr. McCrary's favor and Mr. McCrary is reimbursed legal fees under Section 2.6 hereof. 3.6 Interim and Injunctive Relief. Nothing in this Article III is intended to preclude, upon application of either party, 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 either party's interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to 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 Article III. ARTICLE IV - TRANSFER OF EMPLOYMENT 4.1 Transfer of Employment. In the event that Mr. McCrary's employment by the Company is terminated during the two year period following a Change in Control and Mr. McCrary accepts employment by Southern or a another Southern Subsidiary, the Company shall assign this Agreement to Southern or such Southern Subsidiary, Southern shall accept such assignment or cause such Southern Subsidiary to accept such assignment, and such assignee shall become the "Company" for all purposes hereunder. ARTICLE V - MISCELLANEOUS 5.1 Funding of Benefits. Unless the Board of Directors in its discretion determines otherwise, the amounts payable to Mr. McCrary under the this Agreement shall not be funded in any manner and shall be paid by the Company out 32 of its general assets, which assets are subject to the claims of the Company's creditors. 5.2 Withholding. There shall be deducted from the payment of any amount 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. McCrary. 5.3 Assignment. Neither Mr. McCrary nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount 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. 5.4 Interpretation. This Agreement is intended to comply with the provisions of Code Section 409A and the Treasury Regulations promulgated thereunder in order to avoid any additional tax under Section 409A(a)(1). In the event it is necessary to interpret the provisions of this Agreement for purposes of its operation, such interpretation shall, to the extent possible, be consistent with such intent. 5.5 Amendment and Termination. The Agreement may be amended or terminated only by a writing executed by the parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement this 16 day of November, 2006. THE SOUTHERN COMPANY By: /s/ David M. Ratcliffe ALABAMA POWER COMPANY By: /s/ Robert A. Bell MR. MCCRARY /s/ Charles D. McCrary Charles Douglas McCrary Exhibit A CHANGE IN CONTROL AGREEMENT Waiver and Release The attached Waiver and Release is to be given to Mr. Charles Douglas McCrary upon the occurrence of an event that triggers eligibility for severance benefits under the Change in Control Agreement, as described in Section 2.2 of such Agreement. CHANGE IN CONTROL AGREEMENT Waiver and Release I, Charles Douglas McCrary, understand that I am entitled to receive the severance benefits described in Article II 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 Alabama Power Company (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 receiving the severance and welfare benefits under Article II of the Agreement, I hereby voluntarily and irrevocably waive, release, dismiss with prejudice, and withdraw all claims, complaints, suits or demands of any kind whatsoever (whether known or unknown) which I ever had, may have, or now have against The Southern Company, Southern Company Services, Inc., Alabama Power Company, Georgia Power Company, Gulf Power Company, Mississippi Power Company, Savannah Electric and Power Company, Southern Communications Services, Inc. d/b/a Southern LINC, Southern Company Energy Solutions, L.L.C., Southern Nuclear Operating Company, Inc., Southern Telecom, Inc., Southern Company Management Development, Inc., and other current or former subsidiaries or affiliates of The Southern Company and their past, present and future officers, directors, employees, agents, insurers and attorneys (collectively, the "Releasees"), arising from or relating to (directly or indirectly) my employment or the termination of my employment or other events occurred as of the date of execution of this Agreement, including but not limited to: (a) claims for violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Fair Labor Standards Act, the Civil Rights Act of 1991, the Americans With Disabilities Act, the Equal Pay Act, the Family and Medical Leave Act, 42 U.S.C. ss. 1981, the National Labor Relations Act, the Labor Management Relations Act, Executive Order 11246, Executive Order 11141, the Rehabilitation Act of 1973, the Sarbanes-Oxley Act of 2002 or the Employee Retirement Income Security Act; (b) claims for violations of any other federal or state statute or regulation or local ordinance; (c) claims for lost or unpaid wages, compensation, or benefits, defamation, intentional or negligent infliction of emotional distress, assault, battery, wrongful or constructive discharge, negligent hiring, retention or supervision, fraud, misrepresentation, conversion, tortious interference, breach of contract, or breach of fiduciary duty; (d) claims to benefits under any bonus, severance, workforce reduction, early retirement, outplacement, or any other similar type plan sponsored by the Company (except for those plans listed below); or (e) any other claims under state law arising in tort or contract. In signing this Agreement, I am not releasing any claims that may arise under the terms of this Agreement or which may arise out of events occurring after the date I execute this Agreement. I am also not releasing claims to benefits that I am already entitled to receive under The Southern Company Pension Plan, The Southern Company Employee Stock Ownership Plan, The Southern Company Employee Savings Plan, The Southern Company Omnibus Incentive Compensation Plan, The Southern Company Change in Control Benefits Protection Plan or under any workers' compensation laws. 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. Nothing in this Agreement shall prohibit me from engaging in protected activities under applicable law (including protected activities described in Section 211 of the Energy Reorganization Act) or from communicating, either voluntarily or otherwise, with any governmental agency concerning any potential violation of the law. I understand and agree for a period of two (2) years after the date I execute this Agreement, I will regard and treat as strictly confidential all valuable, non-public, competitively sensitive data and information relating to the Releasees' business that is not generally known by or readily available to Releasees' competitors and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such information to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees. I further understand and agree that I will regard and treat as strictly confidential all trade secrets of Releasees for as long as such items remain trade secrets under applicable law and I will not for any reason, either directly or indirectly, use, sell, lend, lease, distribute, license, transfer, assign, show, disclose, disseminate, reproduce, copy, or otherwise communicate any such trade secrets to any third party for my own benefit or for any purpose, other than in accordance with the express, written instructions of the Company or Releasees. I further agree to keep confidential and not disclose the terms of this Agreement, including, but not limited to, the benefits under the Agreement, except to my spouse, attorneys or financial advisors (who must be informed of and agree to be bound by the confidentiality provisions contained in this Agreement before I disclose any information to them about this Agreement), or where such disclosure is required by law. I agree to return to the Company prior to my last day of employment all property of the Company, including but not limited to data, lists, information, memoranda, documents, identification cards, credit cards, parking cards, keys, computers, fax machines, beepers, phones, and files (including copies thereof). I understand and agree that I will not seek re-employment as an employee, leased employee or independent contractor with the Company or any Southern Company subsidiary or affiliate during the twenty-four (24) month period beginning immediately following my execution of this Agreement. I have carefully read this agreement and I fully understand all of the provisions of this Waiver. I have been encouraged and advised in writing to seek advice from anyone of my choosing regarding this Waiver (including my attorney, accountant or tax advisor). Prior to signing this Waiver, I have been given the opportunity and sufficient time to seek such advice. I have had the opportunity to review and consider this Waiver for a period of at least twenty-one (21) days before signing it. I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign this Waiver. In order to revoke this Waiver, I must deliver written notification of such revocation to the Compensation Committee. 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. Revocation of this Waiver will not alter or change the termination of my employment by the Company. In signing this Waiver, I am not relying on any representation or statement (written or oral) not specifically set forth in this Waiver, the Agreement or by the company or any of its representatives with regard to the subject matter, basis, or effect of this Waiver or otherwise. I was not coerced, threatened, or otherwise forced to sign this Waiver. I am voluntarily signing and delivering this Waiver of my own free will. I understand that by signing this Waiver I am giving up rights I may have. I understand I do not have to sign this Waiver. IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________________, in the year _____. --------------------------- Charles Douglas McCrary Sworn to and subscribed to me this ___day of _________, ____ - -------------------------- Notary Public My Commission Expires: - --------------------------- (Notary Seal) Acknowledged and Accepted by the Company. By: ----------------------------------- Date: ----------------------------------- EXHIBIT B SEVERANCE AGREEMENT THIS SEVERANCE AGREEMENT ("Agreement") made and entered into by and between Acquiring Company ("Company") and Mr. ________________ ("Executive") (hereinafter collectively referred to as the "Parties") effective ______________, 200__. WITNESSETH: WHEREAS, the Company wishes to provide to Executive certain severance benefits under certain circumstances; 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 1.1 "Annual Compensation" shall Executive's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan. 1.2 "Base Salary" shall mean Executive's annual base salary rate during the twelve (12) month period immediately preceding his Separation Date plus target bonus. 1.3 "Board of Directors" shall mean the board of directors of the Company. 1.4 "COBRA Coverage" shall mean any continuation coverage to which Executive or his dependents may be entitled pursuant to Code Section 4980B. 1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended. 1.6 "Company" shall mean Acquiring Company, its successors and assigns. 1.7 "Employee Outplacement Program" shall mean the program established by the Company from time to time for the purpose of assisting employees find 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. 1.8 "Employment Date" shall mean the date that Executive is hired by the Company as a full time employee. 1.9 "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. 1.10 "Good Reason" shall mean, without Executive's express written consent, after written notice to the Board of Directors, and after a thirty (30) day opportunity for the Board of Directors to cure, the continuing occurrence of any of the events described in Subsections (a), (b), (c) or (d) of this Section 1.10. (a) Inconsistent Duties. A meaningful and detrimental alteration in Executive's position or in the nature or status of his responsibilities from those in effect on the Employment Date. (b) Reduced Compensation. A reduction of five percent (5%) or more by the Company in any of the following amounts of compensation expressed in subparagraphs (i), (ii) or (iii) 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 all employees of the Company eligible for such compensation: (i) Executive's Base Salary; (ii) the sum of Executive's Base Salary plus Target Bonus under the Company's Short Term Bonus Plan, as in effect on the Employment Date; or (iii) the sum of Executive's Base Salary plus Target Bonus under the Short Term Bonus Plan and Long Term Bonus Plan plus the Target Award under the Equity Based Bonus Plan, each of which as in effect on the Employment Date. (c) Relocation. A change in Executive's work location to a location more than fifty (50) miles from the facility where Executive was located at the time of his Employment Date, unless such new work location is within fifty (50) miles from Executive's principal place of residence on his Employment Date. The acceptance, if any, by Executive of employment by the Company at a work location which is outside the fifty mile radius set forth in this Section 1.10(c) shall not be a waiver of Executive's right to refuse subsequent transfer by an Company to a location which is more than fifty (50) miles from Executive's principal place of residence on his Employment Date, and such subsequent nonconsensual transfer shall be "Good Reason" under this Agreement; (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 Executive is entitled under the Company's Retirement and Welfare Benefit plans in which Executive was participating on his Employment Date. (ii) Vacation and Paid Time Off. The failure by the Company to provide Executive with the number of paid vacation days or, if applicable, paid time off days to which Executive is entitled on the basis of years of service with a Southern Entity and the Company in accordance with the Company's normal vacation policy or the paid time off program (whichever applicable) in effect on the Employment Date (except for across-the-board vacation policy or paid time off program changes or policy or 2 program terminations similarly affecting at least ninety-five percent (95%) of all employees of the Company). 1.11 "Group Health Agreement" shall mean the group health plan covering Executive, as such plan may be amended from time to time. 1.12 "Group Life Insurance Agreement" shall mean the group life insurance plan covering Executive, as such plan may be amended from time to time. 1.13 "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. 1.14 "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 Executive 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 Employment Date, 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 Employment Date. 1.15 "Month of Service"shall mean any calendar month during which Executive worked at least one (1) hour or was on approved leave of absence while in the employ of a Southern Entity or Acquiring Company and its affiliates. 1.16 "Pension Plan" shall mean the Company Pension Plan or any successor thereto, as in effect on the Employment Date. 1.17 "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). 1.18 "Separation Date" shall mean the date on which Executive is separated from the Company's regular payroll. 1.19 "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. 1.20 "Southern Entity" shall mean The Southern Company or any of its subsidiaries and affiliates. 1.21 "Target Bonus" shall mean the amount of incentive compensation expressed as either a percent of salary or pay, an expected dollar amount, the number of awards granted or such other quantifiable measure to determine the amount to be paid or granted under the terms of the respective Short Term Bonus Plan, Long Term Bonus Plan or Equity Based Bonus Plan as used by the Company to measure the market competitiveness of its employee compensation programs. 3 1.22 "Termination for Cause" or "Cause" shall mean Executive's termination of employment with the Company upon the occurrence of any of the following: (a) The willful and continued failure by Executive to substantially perform his duties with the Company (other than any such failure resulting from Executive's Total Disability or from Executive's retirement or any such actual or anticipated failure resulting from termination by Executive for Good Reason) after a written demand for substantial performance is delivered to him by the Board of Directors, which demand specifically identifies the manner in which such corporate officer believes Executive has not substantially performed his duties; or (b) The willful engaging by Executive in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise, including but not limited to any of the following: (i) any willful act involving fraud or dishonesty in the course of Executive's employment by the Company; (ii) the willful carrying out of any activity or the making of any statement by Executive which would materially prejudice or impair the good name and standing of the Company, or would bring the Company into contempt, ridicule or would reasonably shock or offend any community in which the Company is located; (iii) attendance by Executive 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 offense; (iv) 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; (v) assault or other act of violence by Executive against any person during the course of employment; or (vi) Executive's indictment for any felony or any misdemeanor involving moral turpitude. No act or failure to act by Executive shall be deemed "willful" unless done, or omitted to be done, by Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, Executive 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 the majority of Board of Directors at a meeting called and held for such purpose (after reasonable notice to Executive and an opportunity for him, together with counsel, to be heard before the Board of Directors), finding that, in the good faith opinion of the Board of Directors, Executive was guilty of conduct set forth in Section 1.22(a) or (b) hereof and specifying the particulars thereof in detail. 1.23 "Total Disability" shall mean total disability under the terms of the Pension Plan. 4 1.24 "Waiver and Release" shall mean the Waiver and Release substantially in the form of Exhibit A attached hereto. 1.25 "Year of Service" shall mean Executive'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 Executive had a break in service during his employment with a Southern Entity, he or she will receive credit under this Agreement for his service prior to such break in service provided the break in service was less than five (5) years and his service with the Southern Entity prior to the break exceeded the length of such break in service. ARTICLE II - SEVERANCE BENEFITS 2.1 Eligibility. (a) Except as otherwise provided herein, if Executive's employment is involuntarily terminated by the Company at any time during the two year period following his Employment Date for reasons other than Cause or if Executive shall voluntarily terminate his employment with the Company for Good Reason at any time during the two year period following his Employment Date, Executive shall be entitled to receive the amounts described in Section 2.2 hereof, subject to the terms and conditions described in this Article II. (b) Limits on Eligibility. Notwithstanding anything to the contrary herein, Executive shall not be eligible to receive amounts under this Agreement if Executive: (i) is not actively at work on his Separation Date, unless Executive is capable of returning to work within twelve (12) weeks of the beginning of any leave of absence from work; ) (ii) voluntarily terminates his employment with the Company for other than Good Reason; (iii) has his employment terminated by the Company for Cause; (iv) accepts the transfer of his employment to an affiliate of the Company; (v) elects to receive the benefits of any other voluntary or involuntary severance, separation or outplacement program, plan or agreement maintained by the Company in lieu of benefits under this Agreement. 2.2 Benefits. Upon the Company's receipt of an effective Waiver and Release, Executive shall be entitled to receive the following: (a) Employee Outplacement Services. Executive shall be eligible to participate in the Employee Outplacement Program, which program shall not be less than six (6) months duration measured from Executive's Separation Date. (b) Severance Benefit. Executive shall be paid in cash an amount equal to three times Executive's 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 5 Company shall pay to Executive 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 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 Executive under Code Section 280G exceeds three (3) times Executive'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 Executive's Base Amount, less all other "parachute payments" (as such term is defined under Code Section 280G) received by Executive, less one dollar (the "Capped Amount"), if the Capped Amount, reduced by HI Tax and Income Tax, exceeds what otherwise would have been the Severance Amount, reduced by HI Tax, Income Tax and Excise Tax. For purposes of this Section 2.2(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 a nationally recognized firm specializing in federal income taxes as selected by the Board of Directors, and such calculations or determinations shall be binding upon Executive and the Company. (c) Welfare Benefit. (i) Except as provided in Section 2.3 hereof, Executive shall be eligible to participate in the Company's Group Health Plan for a period of six (6) months for each of Executive's Years of Service, not to exceed a period of five (5) years, beginning on the first day of the first month following Executive's Separation Date unless otherwise specifically provided under such plan, upon Executive's payment of both the Company's and Executive's premium under such plan. Executive shall also be entitled to elect coverage under the Group Health Plan for his dependents who are participating in the Group Health Plan on Executive's Separation 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 Executive's extended medical coverage under this Section 2.2(c) to the extent such dependents remain eligible for dependent coverage under the terms of the Group Health Agreement. (ii) The extended medical coverage afforded to Executive pursuant to this Section 2.2(c) as well as the premiums to be paid by Executive 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 Executive in connection with this extended coverage shall be due on the first day of each month; provided, however, that if Executive fails to pay his premium within thirty (30) days of its due date, Executive's extended coverage shall be terminated. 6 (iii) Any Group Health Plan coverage provided under this Section 2.2(c) shall be a part of and not in addition to any COBRA Coverage which Executive or his dependent may elect. In the event that Executive 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 Employing Company's Group Health Plan available to Executive or his dependent by virtue of the provisions of this Article II shall terminate, except as may otherwise be required by law, and shall not be renewed. It shall be the duty of Executive to inform the Company of his eligibility to participate in any such health plan. (iv) Except as otherwise provided in Section 2.3 hereof, regardless of whether Executive elects the extended coverage described in Section 2.2(c) hereof, the Company shall pay to Executive a cash amount equal to the Company's and Executive's cost of premiums for three (3) years of coverage under the Group Health Plan and Group Life Insurance Plan. (d)Equity Based Awards. Any Equity Based Awards outstanding as of the Separation Date which are not then exercisable and vested, shall become fully exercisable and vested; provided, that in the case of a stock appreciation right, if Executive 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 actions would result in liability to Executive under Section 16(b) of the Exchange Act, provided further that any such actions not taken as a result of the rules under Section 16(b) of the Exchange Act shall be effected as of the first date that such activity would no longer result in liability under Section 16(b) of the Exchange Act. (e)Incentive Plans. To the extent that Executive, as of the Separation Date, is a participant in any Short Term Bonus Plan or Long Term Bonus Plan, Executive shall be entitled to receive cash in an amount equal to his awards under such Plans for the period in which the Separation Date shall have occurred, at Executive's Target Bonus and prorated by the number of months which have passed since the beginning of the performance period until the Separation Date. For this purpose a month shall not be considered if the Separation Date occurs on or before the 14th day of the month, and a month shall be considered if the Separation Date occurs on or after the 15th day of the month. 2.3 Payment of Benefits. The total amount payable under this Article II shall be paid to Executive in one (1) lump sum payment within two (2) payroll periods of the later of the following to occur: (a) Executive's Separation Date, or (b) the tender to the Company by Executive of an effective Waiver and Release (in substantially 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. 2.4 Benefits in the Event of Death. In the event of Executive's death prior to the payment of all benefits due under this Article II, Executive's estate shall be entitled to receive as due any amounts not yet paid under this Article II upon the tender by the executor or administrator of the estate of an effective Waiver and Release. 7 2.5 Legal Fees. In the event of a dispute between Executive and the Company with regard to any amounts due hereunder, if any material issue in such dispute is finally resolved in Executive's favor, the Company shall reimburse Executive's legal fees incurred with respect to all issues in such dispute in an amount not to exceed fifty thousand dollars ($50,000). 2.6 No Mitigation. Executive shall have no duty or obligation to seek other employment following his Separation Date and, except as otherwise provided in Subsection 2.1(b) hereof, the amounts due Executive hereunder shall not be reduced or suspended if Executive accepts such subsequent employment. ARTICLE III - ARBITRATION 3.1 General. Any dispute, controversy or claim arising out of or relating to the Company's obligations to pay severance amounts 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 Article III are not intended to apply to any other disputes, claims or controversies arising out of or relating to Executive's employment by the Company or the termination thereof. 3.2 Demand for Arbitration. Arbitration shall be initiated by serving a written notice of demand for arbitration to Executive, in the case of the Company, or to the Board of Directors, in the case of Executive. 3.3 Law and Venue. The arbitrators shall apply the laws of the State in which the Company's headquarters are located, except to the extent pre-empted by federal law, excluding any law which would require the use of the law of another state. The arbitration shall be held in such State. 3.4 Appointment of Arbitrators. Arbitrators shall be appointed 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 Executive, 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. 3.5 Costs. The arbitration filing fee shall be paid by Executive. All other costs of arbitration shall be borne equally by Executive 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 Executive's favor and Executive is reimbursed legal fees under Section 2.5 hereof. 3.6 Interim and Injunctive Relief. Nothing in this Article III is intended to preclude, upon application of either party, 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 either party's interests or as otherwise may be appropriate pending the conclusion of arbitration proceedings pursuant to this Article III and nothing herein is intended to 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 Article III. 8 ARTICLE IV - MISCELLANEOUS 4.1 Funding of Benefits. Unless the Board of Directors in its discretion determines otherwise, amounts payable to Executive 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. 4.2 Withholding. There shall be deducted from the payment of any amount 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 Executive entitled to such payment. 4.3 Assignment. Neither Executive nor his beneficiaries shall have any rights to sell, assign, transfer, encumber, or otherwise convey the right to receive the payment of any amount 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. 4.4 Amendment and Termination. The Agreement may be amended or terminated only by a writing executed by the parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement this ____ day of ______________, _____. ACQUIRING COMPANY By: ____________________________________ EXECUTIVE ----------------------------- 9 Exhibit A SEVERANCE AGREEMENT Waiver and Release The attached Waiver and Release is to be given to Executive upon the occurrence of an event that triggers eligibility for severance benefits under the Severance Agreement, as described in Paragraph 2.1(a) of such agreement. 10 Waiver and Release I, _________________, understand that I am entitled to receive the severance benefits described in Article II of the Severance 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 Acquiring Company (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 Acquiring Company and other direct or indirect subsidiaries of Acquiring 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 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. 11 I understand that I may take up to twenty-one (21) calendar days to consider whether or not I desire to enter this Waiver. I was not coerced, threatened or otherwise forced to sign this Waiver. I have made my choice to sign this Waiver voluntarily and of my own free will. I understand that I may revoke this Waiver at any time during the seven (7) calendar day period after I sign and deliver this Waiver to the Company. If I revoke this Waiver, I must do so in writing delivered to the Company. I understand that this Waiver is not effective until the expiration of this seven (7) calendar day revocation period. I understand that upon the expiration of such seven (7) calendar day revocation period this entire Waiver will be binding upon me and will be irrevocable. I understand that by signing this Waiver I am giving up rights I may have. IN WITNESS WHEREOF, the undersigned hereby executes this Waiver this ____ day of ________, in the year - ----. --------------------------- Executive Sworn to and subscribed to me this -----END PRIVACY-ENHANCED MESSAGE-----