Document:

Unassociated Document

    Exhibit
10.2

     

    PG&E
CORPORATION

    2006
LONG-TERM INCENTIVE PLAN

     

    RESTRICTED
STOCK UNIT GRANT

     

    PG&E CORPORATION, a
California corporation, hereby grants Restricted Stock Units to the Recipient
named below.  The Restricted Stock Units have been granted under the
PG&E Corporation 2006 Long-Term Incentive Plan, as amended on February 15,
2006, December 20, 2006, and October 17, 2007 (the “LTIP”).  The terms
and conditions of the Restricted Stock Units are set forth in this cover sheet
and in the attached Restricted Stock Unit Agreement (the
“Agreement”).

     

     

    Date of
Grant:                           May
9, 2008

     

    Name of
Recipient:                 PETER
A.
DARBEE                                                                          

     

    Last Four
Digits of Recipient’s Social Security Number:        XXXX      

     

    Number of
Restricted Stock Units Granted:    24,875                            .

     

    

     

    By
signing this cover sheet, you agree to all of the terms and conditions described
in the attached Agreement. You and PG&E Corporation agree to execute such
further instruments and to take such further action as may reasonably be
necessary to carry out the intent of the attached Agreement.  You are
also acknowledging receipt of this Grant, the attached Agreement, and a copy of
the prospectus describing the LTIP dated March 1, 2008.

     

    

     

    Recipient:              
PETER A.
DARBEE                                           

                                           (Signature)

    

    

    Attachment

     

    

     

    Please
sign and return to PG&E Corporation, Human Resources,

    One
Market, Spear Tower, Suite 400, San Francisco, California 94105

     

    
      
         

      

      
         

        
          

        

      

      
         

        
          This
document constitutes part of a

          Prospectus
covering securities that

          have
been registered under the

          Securities
Act of 1933, as amended.

          

        

      

    

    PG&E
CORPORATION

    2006
LONG-TERM INCENTIVE PLAN

     

    RESTRICTED
STOCK UNIT AGREEMENT

     

    
      	
              The
      LTIP and 

              Other
      

              Agreements

            	
              This
      Agreement constitutes the entire understanding between you and PG&E
      Corporation regarding the Restricted Stock Units, subject to the terms of
      the LTIP.  Any prior agreements, commitments, or negotiations
      are superseded.  In the event of any conflict or inconsistency
      between the provisions of this Agreement and the LTIP, the LTIP shall
      govern.  Capitalized terms that are not defined in this
      Agreement are defined in the LTIP.  In the event of any conflict
      or inconsistency between the provisions of this Agreement and the PG&E
      Corporation Officer Severance Policy, this Agreement shall govern. For
      purposes of this Agreement, employment with PG&E Corporation shall
      mean employment with any member of the Participating Company
      Group.

               

            
	
              Grant
      of 

              Restricted
      

              Stock
      Units

               

            	
              PG&E
      Corporation grants you the number of Restricted Stock Units shown on the
      cover sheet of this Agreement.  The Restricted Stock Units are
      subject to the terms and conditions of this Agreement and the
      LTIP.

               

            
	
              Vesting
      of 

              Restricted
      

              Stock
      Units

            	
              As
      long as you remain employed with PG&E Corporation, 100 percent of the
      total number of Restricted Stock Units originally subject to this
      Agreement, as shown above on the cover sheet, will vest on the first
      business day of January of 2013 (the “Vesting Date”).  Except as
      described below, all Restricted Stock Units subject to this Agreement
      which have not vested shall be cancelled upon termination of your
      employment.

               

            
	
              Dividends

            	
              Restricted
      Stock Units will accrue Dividend Equivalents that will be converted into
      additional Restricted Stock Units based on the Fair Market Value of a
      share of PG&E Corporation common stock on the dividend payment
      date.  Such additional Restricted Stock Units will be subject to
      the same terms and conditions as the underlying Restricted Stock
      Units.

               

            
	
              Settlement

            	
              Vested
      Restricted Stock Units will be settled in an equal number of shares of
      PG&E Corporation common stock. PG&E Corporation shall issue such
      shares as soon as practicable after the Restricted Stock Units vest (on
      the Vesting Date or at such other time as described below) but not later
      than ninety (90) days after vesting, except as noted below.

               

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
              Voluntary
      Termination/

              Retirement1

            	
              In
      the event of your voluntary termination/Retirement, a prorated portion of
      the Restricted Stock Units will vest immediately in accordance with the
      percentage of time you were employed with PG&E Corporation during the
      vesting period.  All other unvested Restricted Stock Units shall
      be cancelled on the date of termination.

               

            
	
              Termination
      for Cause

            	
              If
      your employment with PG&E Corporation is terminated by PG&E
      Corporation for cause before the Vesting Date, all Restricted Stock Units
      will be cancelled on the date of termination.  In general,
      termination for “cause” means termination of employment because of
      dishonesty, a criminal offense or violation of a work rule, and will be
      determined by and in the sole discretion of PG&E
      Corporation.

               

            
	
              Termination
      other

              than
      for Cause

            	
              If
      your employment with PG&E Corporation is terminated by PG&E
      Corporation other than for cause before the Vesting Date, a prorated
      portion of the Restricted Stock Units will vest immediately in accordance
      with the percentage of time you were employed with PG&E Corporation
      during the vesting period (except as otherwise provided below in
      connection with a Change in Control).  All other unvested
      Restricted Stock Units shall be cancelled on the date of
      termination.

               

            
	
              Death/Disability

            	
              If
      your employment terminates due to your death or Disability, all of your
      Restricted Stock Units shall vest on the date of termination.

               

            
	
              Termination
      Due to 

              Disposition
      of Subsidiary

            	
              (1)
      If your employment is terminated (other than for cause or your voluntary
      termination) by reason of a divestiture or change in control of a
      subsidiary of PG&E Corporation, which divestiture or change in control
      results in such subsidiary no longer qualifying as a subsidiary
      corporation under Section 424(f) of the Internal Revenue Code of 1986, as
      amended (the “Code”), or (2) if your employment is terminated (other than
      for cause or your voluntary termination) coincident with the sale of all
      or substantially all of the assets of a subsidiary of PG&E
      Corporation, the Restricted Stock Units shall vest in the same manner as
      for a “Termination other than for Cause” described above.

               

            
	
              Change
      in Control

            	
              In
      the event of a Change in Control, the surviving, continuing, successor, or
      purchasing corporation or other business entity or parent thereof, as the
      case may be (the “Acquiror”), may, without your
      consent, either assume or continue PG&E Corporation’s rights and
      obligations under this Agreement or provide a substantially equivalent
      award in substitution for the Restricted Stock Units subject to this
      Agreement.

               

              If
      the Restricted Stock Units are neither assumed nor continued by the
      Acquiror or if the Acquiror does not provide a substantially equivalent
      award in substitution for the Restricted Stock Units, all of your
      outstanding Restricted Stock Units shall automatically vest immediately
      preceding and contingent on, the Change in Control.

               

              
                If
      the Change in Control also is a change in ownership of PG&E
      Corporation, a change in effective control of PG&E Corporation, or a
      change in a substantial portion of the assets of PG&E Corporation as
      defined in Code Section 409A(2)(A)(v) and the related regulations (a “409A
      Change in Control Event’), such vested Restricted Stock Units will be
      settled on the first business day of the year following the Change in
      Control.  If the Change in Control is not a 409A Change in
      Control Event, the vested Restricted Stock Units will be settled as soon
      as practicable following the earlier of (a) your “separation from service”
      (as defined under Code Section 409A) for any reason from PG&E
      Corporation, or (b) the Vesting Date; but in any event within ninety (90)
      days after the date of your “separation from service” or the Vesting Date,
      whichever is earlier.

              

            

    

    
        
        1Because
you have reached age 55 and have been employed by PG&E Corporation for at
least five consecutive years, a voluntary resignation would be treated as a
retirement.

      

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

    
      	
              Termination
      In 

              Connection
      with a 

              Change
      in Control

            	
              If
      your employment is terminated (other than for cause) in connection with a
      Change in Control within three months before the Change in Control occurs
      or within two years following the Change in Control, all of your
      outstanding Restricted Stock Units (to the extent they did not previously
      vest upon, for example, failure of the Acquiror to assume or continue this
      Award) shall automatically vest on the date of the Change in Control or
      the date of termination of your employment, whichever is
      later.

               

              PG&E
      Corporation shall have the sole discretion to determine whether
      termination of your employment was made in connection with a Change in
      Control.

               

            
	
              Delay

            	
              PG&E
      Corporation shall delay the issuance of any shares of common stock to the
      extent it is necessary to comply with Section 409A(a)(2)(B)(i) of the Code
      (relating to payments made to certain “key employees” of certain
      publicly-traded companies); in such event, any shares of common stock to
      which you would otherwise be entitled during the six (6) month period
      following the date of your “separation from service” under Section 409A
      will be issued on the first business day following the expiration of the
      six (6) month period.

               

            
	
              Withholding
      Taxes

            	
              Prior to any event in connection with the
      Restricted Stock Units (e.g., vesting) that PG&E Corporation
      determines may result in any tax withholding obligation, whether United
      States federal, state, local, or
      non-U.S., including any social insurance, employment tax, payment on
      account, or other tax-related obligation (the “Tax
      Withholding Obligation”), you must arrange for the satisfaction of the
      minimum amount of such Tax Withholding Obligation in a manner acceptable
      to PG&E Corporation. 

               

              At any time not less than five (5) business days
      (or such fewer number of business days as determined by PG&E
      Corporation) before any Tax Withholding Obligation arises (e.g., a
      Vesting Date), you
      may instruct PG&E Corporation to withhold from those shares otherwise
      issuable to you the whole number of shares sufficient to satisfy the
      minimum applicable Tax Withholding Obligation.  You acknowledge
      that the withheld shares may not be sufficient to satisfy your minimum Tax
      Withholding Obligation.  Accordingly, you agree to pay to
      PG&E Corporation as soon as practicable, including through additional
      payroll withholding, any amount of the Tax Withholding Obligation that is
      not satisfied by the withholding of shares described
      above.

               

            

    

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

    
      	
              Leaves
      of Absence

            	
              For
      purposes of this Agreement, if you are on an approved leave of absence
      from PG&E Corporation, or a recipient of PG&E Corporation
      sponsored disability benefits, you will continue to be considered as
      employed.  If you do not return to active employment upon the
      expiration of your leave of absence or the expiration of your PG&E
      Corporation sponsored disability benefits, you will be considered to have
      voluntarily terminated your employment.  See above under
      “Voluntary Termination/Retirement.”

               

              Notwithstanding
      the foregoing, if the leave of absence exceeds six (6) months, and a
      return to service upon expiration of such leave is not guaranteed by
      statute or contract, then you shall be deemed for purposes of a
      “separation from service” following a 409A Change in Control Event to have
      a separation from service resulting in a termination of employment on the
      first date following such six-month period.  To the extent an
      authorized leave of absence is due to a medically determinable physical or
      mental impairment that can be expected to result in death or to last for a
      continuous period of at least six (6) months and such impairment causes
      you to be unable to perform the duties of your position of employment or
      any substantially similar position of employment, the six (6) month period
      in the prior sentence shall be twenty-nine (29) months.

               

              PG&E
      Corporation reserves the right to determine which leaves of absence will
      be considered as continuing employment and when your employment terminates
      for all purposes under this Agreement.

               

            
	
              Voting
      and Other Rights

            	
              You
      shall not have voting rights with respect to the Restricted Stock Units
      until the date the underlying shares are issued (as evidenced by
      appropriate entry on the books of PG&E Corporation or its duly
      authorized transfer agent).

               

            
	
              No
      Retention Rights

            	
              This
      Agreement is not an employment agreement and does not give you the right
      to be retained by PG&E Corporation.  Except as otherwise
      provided in an applicable employment agreement, PG&E Corporation
      reserves the right to terminate your employment at any time and for any
      reason.

               

            
	
              Applicable
      Law

            	
              This
      Agreement will be interpreted and enforced under the laws of the State of
      California.

               

            

    

    By
signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the LTIP.

    

      

    

      

    
      
        
        

         

      

      
        A-3Exhibit 10(b)1

DEFERRED COMPENSATION PLAN FOR

OUTSIDE DIRECTORS OF ALABAMA POWER COMPANY

Amended and Restated Effective January 1, 2008

 

SECTION 1

 

Purpose and Adoption of Plan

	
             
  	
            1.1
 	
            Adoption
 

Alabama Power Company previously established the Deferred Compensation Plan for Directors of Alabama Power Company. The Plan was last amended and restated April 26, 2002.  The Plan has been amended from time to time including this good faith amendment and restatement effective January 1, 2008 to comply with Code Section 409A.  Except as otherwise provided herein and consistent with Sections 1.2 and 1.3, the terms of the Plan as in effect prior to the effective date of this Plan shall continue to be applicable to deferrals made pursuant to the Plan prior to January 1, 2008.

	
             
  	
            1.2
 	
            Pre-2005 Deferrals
 

Compensation paid to Directors and deferred under the Plan prior to January 1, 2005 shall be treated by the Company as not subject to Section 409A of the Code and therefore “grandfathered.”  The Account balance (plus earnings thereon) of the “grandfathered” deferrals shall only be subject to the provisions of the Plan in effect prior to January 1, 2005 as set forth in the Schedule of Provisions for Pre-2005 Deferrals attached hereto.  In accordance with transition rules under Section 409A of the Code, Internal Revenue Service Notice 2005-1, and any other applicable guidance from the Department of Treasury, the provisions of the prior Plan are only intended to preserve the rights and features of the “grandfathered” deferrals and are, therefore, not intended to be “materially modified” with respect to any aspect of such rights and features.
Provisions of the prior Plan should be so construed whenever necessary or appropriate.

	
             
  	
            1.3
 	
            409A Good Faith Period
 

For the period from January 1, 2005 to December 31, 2008, the Plan shall be administered in good faith compliance with Section 409A of the Code.  At a time and in a manner determined by the Committee, Directors shall make timely elections to conform to the Plan’s terms effective on and after January 1, 2008.  Such elections shall be made prior to January 1, 2008 and shall apply to elections to defer Cash Compensation and/or Stock Retainer subject to Section 409A of the Code on and after January 1, 2005.  In particular, such elections shall establish the form and timing of commencement of distribution of amounts in Deferred Compensation Accounts pursuant to a new Distribution Election.  Such elections are intended to meet the transition requirements of Section 409A of the Code, Internal Revenue Service Notice 2005-1 and other related guidance promulgated by the Department of Treasury.

SECTION 2

 

Definitions

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

	
             
  	
            2.2
 	
            “Board” or “Board of Directors” means the Board of Directors of the Company.
 

 

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

            2.4       “Cash Compensation” means the annual retainer fees and meeting fees payable to a Director.

	
             
  	
            2.5
 	
            “Code” means the Internal Revenue Code of 1986, as amended, or any successor statute.
 

            2.6       “Committee” means the Compensation Committee of the Board, or such other committee as may be designated by the Board to be responsible for administering the Plan.

            2.7       “Common Stock” means the common stock of Southern including any shares into which it may be split, subdivided, or combined.

	
             
  	
            2.8
 	
            “Company” means Alabama Power Company, or any successor thereto.
 

	
             
  	
            2.9
 	
            “Company Change in Control” means 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 the Company; provided, however, that for purposes of this Section 2.9, any acquisition by an Employee, or Group composed entirely of Employees, any qualified pension plan, any publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any corporation Controlled by Southern shall not constitute a Change in Control;

(b)       Consummation of a reorganization, merger or consolidation of the Company (a “Company Business Combination”), in each case, unless, following such Company Business Combination, Southern Controls the corporation surviving or resulting from such Company Business Combination; or 

(c)       Consummation of the sale or other disposition of all or substantially all of the assets of the Company to an entity which Southern does not Control.

            2.10     “Compensation Payment Date” means the date on which compensation, including Cash Compensation, and the Stock Retainer, is payable to a Director or compensation which would otherwise be payable to a Director if an election to defer such compensation had not been made.

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

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

            2.13     “Deferred Cash Trust” means the Deferred Cash Compensation Trust for Directors of The Southern Company and its Subsidiaries.

 

	
             
 	
            2
 

 

 

            2.14     “Deferred Compensation Account” means the Prime Rate Investment Account, the Phantom Stock Investment Account, the Deferred Stock Account and/or the Stock Dividend Investment Account.

            2.15     “Deferred Stock Account” means the bookkeeping account established under Section 7.3 on behalf of a Director and includes shares of Common Stock credited thereto to reflect the reinvestment of dividends pursuant to Section 7.3(a)(iii).

            2.16     “Deferred Stock Trust” means the Deferred Stock Trust for Directors of The Southern Company and its Subsidiaries.

	
             
  	
            2.17
 	
            “Director” means a member of the Board.
 

            2.18     “Distribution Election” means the designation by a Director of the manner of distribution of the amounts and quantities held in the Director’s Deferred Compensation Accounts upon the director’s termination from the Board pursuant to Section 6.3.

	
             
  	
            2.19
 	
            “Effective Date” of the amendment and restatement means January 1, 2008.
 

            2.20     “Employee” means an employee of Southern or any of its subsidiaries that are “employing companies” as defined in the Southern Company Deferred Compensation Plan as amended and restated effective January 1, 2005, and as may be amended from time to time.

	
             
  	
            2.21
 	
            “Exchange Act” means the Securities Exchange Act of 1934, as amended.
 

	
             
  	
            2.22
 	
            “Funding Change in Control” means any of the following:
 

 (a)       The Consummation of an acquisition by any Person of Beneficial Ownership (during the 12-month period ending on the date of the most recent acquisition by such Person) of 35% or more of Southern’s Voting Securities; provided, however, that for purposes of this subsection (a), the following acquisitions of Southern’s Voting Securities shall not constitute a Funding Change in Control: 

 (i)      any acquisition directly from Southern;

 (ii)      any acquisition by Southern;

 (iii)      any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any corporation controlled by Southern; 

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

(v)       any acquisition by an employee of Southern or its subsidiary or affiliate, or Group composed exclusively of such employees; or 

(vi)      any Business Combination which would not otherwise constitute a Funding Change in Control because of the application of clauses (i), (ii) and (iii) of this Section 2.22(a); 

(b)       The date a majority of members of the Southern Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a 

 

	
             
 	
            3
 

 

 

majority of the members of the Southern Board before the date of the appointment or election; 

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

(i)        all or substantially all of the individuals and entities who held Beneficial Ownership, respectively, of Southern’s Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or more of the combined voting power of the Voting Securities of the corporation surviving or resulting from such Business Combination, (including, without limitation, a corporation which as a result of such transaction holds Beneficial Ownership of all or substantially all of Southern’s Voting Securities or all or substantially all of Southern’s assets) (such surviving or resulting corporation to be referred to as “Surviving Company”), in substantially the same proportions as their ownership, immediately prior to such Business Combination, of Southern’s Voting Securities;

(ii)       no Person (excluding any corporation resulting from such Business Combination, any qualified pension plan, publicly held mutual fund, Group composed exclusively of employees or employee benefit plan (or related trust) of Southern, its subsidiaries or Surviving Company) holds Beneficial Ownership, directly or indirectly, of 35% or more of the combined voting power of the then outstanding Voting Securities of Surviving Company except to the extent that such ownership existed prior to the Business Combination; and 

(iii)      the majority of the members of the board of directors of Surviving Company during the 12-month period following the Business Combination were members of the Southern Board of Directors at the earlier of the date of execution of the initial agreement, or of the action of the Southern Board of Directors, providing for such Business Combination or such members of the board of directors of the Surviving Company are directors whose appointment or election was endorsed by a majority of the members of such Southern Board of Directors.

(d)       The Consummation of an acquisition by any Person of Beneficial Ownership (during the 12-month period ending on the date of the most recent acquisition by such Person) of 50% or more of the combined voting power of the then outstanding Voting Securities of the Company; provided, however, that for purposes of this Subsection 2.22(d), any acquisition by an employee of Southern or its subsidiary or affiliate, or Group composed entirely of such employees, any qualified pension plan, publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any corporation Controlled by Southern shall not constitute a Funding Change in Control;

(e)       The Consummation of a reorganization, merger or consolidation of the Company with another corporation (a “Funding Subsidiary Business Combination”), in each case, unless, following such Funding Subsidiary Business Combination, Southern 

 

	
             
 	
            4
 

 

 

Controls the corporation surviving or resulting from such Funding Subsidiary Business Combination, or

(f)        The Consummation of the sale or other disposition of all or substantially all of the assets of the Company to an entity that Southern does not Control; provided, however, that for purposes of this subsection (f) the following sales or dispositions otherwise described herein shall not constitute a Funding Change in Control: 

(i)        the sale or other disposition of all or substantially all of the assets of the Company to Southern or to a shareholder of Southern in exchange for or with respect to such shareholder’s stock of Southern; 

(ii)       the sale of other disposition of all or substantially all of the assets of the Company to a Person that owns, directly or indirectly, 50% or more of the total value or voting power of the outstanding stock of Southern; or

(iii)      the sale or other disposition of all or substantially all of the assets of the Company to an entity Controlled by shareholders of Southern that hold, directly or indirectly, 50% or more of the total value or voting power of all of the outstanding stock of Southern. 

For purposes of this Section 2.22(f) “all or substantially all of the assets” means at least 80% of the gross value of the assets of the entity immediately before the acquisition.

            2.23     “Funding Event” means the occurrence of any of the following events as administratively determined by the Southern Committee:

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

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

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

(d)       The Southern Board or the Company elects to otherwise fund the Deferred Cash Trust and Deferred Stock Trust in accordance with the provisions of Section 9.

            2.24     “Funding Subsidiary Business Combination” shall have the meaning set forth in Section 2.22(e) hereof.

	
             
  	
            2.25
 	
            “Group” has the meaning set forth in Section 14(d) of the Exchange Act.
 

            2.26     “Incumbent Board” means those individuals who constitute the Southern board of directors as of January 1, 2008, plus any individual who shall become a director subsequent to 

 

	
             
 	
            5
 

 

 

such date whose election or nomination for election by Southern’s shareholders was approved by a vote of at least 75% of the directors then comprising the Incumbent Board. Notwithstanding the foregoing, no individual who shall become a director of the Southern board of directors subsequent to January 1, 2008, whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the regulations promulgated under the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Southern board of directors shall be a member of the Incumbent Board.

            2.27     “Market Value” means the average of the high and low prices of the Common Stock, as published in the Wall Street Journal in its report of New York Stock Exchange composite transactions, on the date such Market Value is to be determined, as specified herein (or the average of the high and low sale prices on the trading day immediately preceding such date if the Common Stock is not traded on the New York Stock Exchange on such date)

            2.28     “Modification Delay” means that the election shall not take effect until twelve (12) months after the date the election is made, the payment which is the subject of the election shall be deferred five (5) years from the date previously elected by the Director, and where applicable in the case of a payment made pursuant to a fixed schedule or specified time, the election must be made at least twelve (12) months prior to the time payment is scheduled to be made.

            2.29     “Participant” means a Director or former Director who has an unpaid Deferred Compensation Account balance under the Plan.

            2.30     “Participating Companies” means those companies that are affiliated with Southern whose boards of directors have authorized the establishment of trust(s) for the funding of their respective directors’ Deferred Compensation Accounts under their respective Deferred Compensation Plans for Directors, including the Company.  

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

            2.32     “Phantom Stock Investment Account” means the bookkeeping account established pursuant to Section 7.2 in which a Director may elect to defer Cash Compensation or make investments, and includes amounts credited thereto to reflect the reinvestment of dividends.

            2.33     “Plan” means the Deferred Compensation Plan for Outside Directors of Alabama Power Company as from time to time in effect.

	
             
  	
            2.34
 	
            “Plan Period” means the period designated in Section 5.
 

            2.35     “Preliminary Change in Control” means the occurrence of any of the following as determined by the Southern Committee:

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

(b)       Southern, the Company or any Person publicly announces an intention to take or to consider taking actions which, if Consummated, would result in a Southern Change in Control or a Company Change in Control under circumstances where the 

 

	
             
 	
            6
 

 

 

Consummation of the announced action or intended action is legally and financially possible;

(c)       Any Person becomes the Beneficial Owner of fifteen percent (15%) or more of the Common Stock; or

(d)       The Southern Board of Directors or the Board of Directors of the Company has declared that a Preliminary Change in Control has occurred.

            2.36     “Prime Interest Rate” means the prime rate of interest as published in the Wall Street Journal or its successor on the 1st day of the quarter.

            2.37     “Prime Rate Investment Account” means the bookkeeping account established pursuant to Section 7.1 in which a Director may elect to defer Cash Compensation or make investments, the investment return on which is computed at the Prime Interest Rate.

            2.38     “Separation from Service” means a ceasing of the obligation to provide service as a Director.

	
             
  	
            2.39
 	
            “Southern” means Southern Company.
 

	
             
  	
            2.40
 	
            “Southern Board” means the Board of Directors of Southern.
 

	
             
  	
            2.41
 	
            “Southern Change in Control” means any of the following:
 

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

	
             
  	
            (i)
 	
            any acquisition directly from Southern,
 

	
             
  	
            (ii)
 	
            any acquisition by Southern,
 

 (iii)      any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any corporation controlled by Southern,  

(iv)      any acquisition by a qualified pension plan or publicly held mutual fund,

(v)       any acquisition by an Employee or Group composed exclusively of Employees, or 

(vi)      any Business Combination which would not otherwise constitute a Change in Control because of the application of clauses (i), (ii) and (iii) of Section 2.41(a) of this Plan; 

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

 

	
             
 	
            7
 

 

 

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

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

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

(iii)      at least a majority of the members of the board of directors of Surviving Company were members of the Incumbent Board at the earlier of the date of execution of the initial agreement, or of the action of the Southern board of directors, providing for such Business Combination.

            2.42     “Southern Committee” means a committee comprised of the Chairman of the Southern Board, the Chief Financial Officer of Southern and the General Counsel of Southern.

            2.43     “Stock Dividend Investment Account” means the bookkeeping account(s) established pursuant to Section 7.4 on behalf of a Director that is credited with shares of stock, other than Common Stock, paid as a dividend to holders of record on shares of Common Stock.

            2.44     “Stock Retainer” means the annual Board retainer fee that is paid to the Director in the form of Common Stock.

            2.45     “Transferred Amount” means an amount (a) equal to the value of a Director’s accounts under the applicable deferred compensation plan for directors of Southern, Georgia Power Company, Gulf Power Company, or Mississippi Power Company and (b) which has been transferred to the Plan in connection with the Director’s transfer from the Southern Board or the board of directors of Georgia Power Company, Gulf Power Company, or Mississippi Power Company.

            2.46     “Trust Administrator” means the individual or committee that is established in the Deferred Stock Trust and the Deferred Cash Trust, to administer such trusts on behalf of the Participating Companies.

 

	
             
 	
            8
 

 

 

            2.47     “Voting Securities” means the outstanding voting securities of a corporation entitling the holder thereof to vote generally in the election of such corporation’s directors.

 

Where the context requires, words in the masculine gender shall include the feminine gender, words in the singular shall include the plural, and words in the plural shall include the singular.

SECTION 3

 

Purpose

The Plan provides Directors with an opportunity to defer compensation paid to them on and after January 1, 2008 until a date following their Separation from Service as a member of the Board.

SECTION 4

 

Eligibility

An individual who serves as a Director and is not otherwise actively employed by the Company or any of its subsidiaries or affiliates is eligible to participate in the Plan.

SECTION 5

 

Plan Periods

Except as pertains to a Director’s initial Plan Period, all Plan Periods shall be on a calendar year basis.  The initial Plan Period applicable to any person elected to the Board who was not a Director on the preceding December 31, shall begin on the first day of the quarter next following the effective date of the Director’s election to the Board where timing permits the transfer of Director compensation data for purposes of administration of an initial deferral election under this Section 5.  Notwithstanding the preceding sentence, the initial Plan Period under this amended and restated Plan for Directors serving as of the Effective Date shall begin January 1, 2008.

SECTION 6

 

Elections

	
             
  	
            6.1
 	
            Cash Compensation
 

 (a)       Prior to the beginning of a Plan Period, a Director may direct that payment of all or any portion of Cash Compensation that otherwise would be paid to the Director for the Plan Period, be deferred in amounts as designated by the Director, and credited to (i) a Prime Rate Investment Account, (ii) a Phantom Stock Investment Account, or (iii) a Deferred Stock Account.  With respect to a Director’s initial Plan Period, such direction to defer shall be made in a timely manner prior to the commencement of the Plan Period 

 

	
             
 	
            9
 

 

 

in accordance with requirements established by the Committee consistent with Section 5.  Upon the Director’s Separation from Service from the Board of Directors, such deferred compensation and accumulated investment return held in the Director’s Deferred Compensation Accounts shall be distributed to the Director in accordance with the Director’s Distribution Election and the provisions of Section 8.

(b)       (i)        An election to defer Cash Compensation is irrevocable for a Plan Period.  Such an election shall continue from Plan Period to Plan Period unless the Director changes his election to defer Cash Compensation payable in a future Plan Period prior to the beginning of such future Plan Period.

(ii)       The Participant may transfer all or a portion of his Deferred Compensation Account(s) to another Deferred Compensation Account(s) as provided below.  No transfer of amounts between investment options shall be permitted under the Plan except during a window period and in accordance with requirements which may be designated by the Committee.  The length and timing of each window period, the restrictions (including whether an election to transfer is subject to a Modification Delay) and procedures for transfer, the valuation of transferred Deferred Compensation Accounts or portions of Deferred Compensation Accounts, and the effective date of such transfers shall be determined by the Committee.  In no event prior to a Director’s Separation of Service from the Board may the Committee permit the transfer of a
Participant’s Stock Retainer.  Notwithstanding the preceding sentence, a transfer of a Participant’s Stock Retainer may occur after a Director’s Separation from Service from the Board as determined by the Committee; provided that if the Committee permits a Participant to transfer such Stock Retainer after a Director’s Separation from Service from the Board, in order to avoid any inadvertent change to the time and form of payment of such Stock Retainer, the initial time and form of payment elected by the Director in accordance with Section 6.3(a) applicable to the Stock Retainer shall apply to any transferred amounts.

(c)       Cash Compensation deferred under this Section 6.1 shall be invested in Deferred Compensation Accounts as directed by the Director in accordance with procedures established by the Committee prior to the Compensation Payment Date.

	
             
  	
            6.2
 	
            Stock Retainer
 

 (a)       Prior to the beginning of a Plan Period, a Director may direct that payment of all of the Stock Retainer that otherwise would be paid to the Director for the Plan Period, be deferred by the Director, and credited to his Deferred Stock Account.  Such deferred compensation and accumulated investment return held in the Director’s Deferred Stock Account shall be distributed to the Director in accordance with the Director’s Distribution Election and the provisions of Section 8.

(b)       An election to defer the Stock Retainer is irrevocable for a Plan Period.  Such an election shall continue from Plan Period to Plan Period unless the Director changes his election to defer his Stock Retainer paid in a future Plan Period prior to the beginning of such future Plan Period.

 

	
             
 	
            10
 

 

 

	
             
  	
            6.3
 	
            Distribution Election
 

 (a)       Except as set forth in Section 6.3(b), prior to the initial establishment of a Deferred Compensation Account for a Director, the Director must elect that upon Separation from Service from the Board of Directors the values and quantities held in the Directors Deferred Compensation Accounts be distributed to the Director, pursuant to the provisions of Section 8 in a single lump sum or in a series of annual or quarterly installments not to exceed fifteen (15) years; provided that the Committee may establish in writing alternative installment payment schedules for any or all of the Deferred Compensation Accounts.  In accordance with this Section 6.3(a), distributions from the Prime Rate Investment Account and Phantom Stock Investment Account can be in a lump sum or in annual or quarterly installments.  In accordance with this
Section 6.3(a), distributions from the Deferred Stock Account and Stock Dividend Investment Account can be lump sum or annual installments.  The time for the commencement of distributions shall be elected by the Director and shall not be later than the first day of the month coinciding with or next following the second anniversary of Separation from Service of Board membership.  Notwithstanding the foregoing, a Director may elect to modify his distribution election under this Section 6.3 provided that such modification is subject to the requirements of the Modification Delay.

(b)       In the event of a Director’s Separation from Service from the Board with Deferred Compensation Accounts established under Section 7.5, the Transferred Amounts and accumulated investment return held in the Accounts shall be distributed to the Director in accordance with the Director’s distribution election in effect under the applicable deferred compensation plan for directors of Alabama Power Company, Georgia Power Company, Gulf Power Company, or Mississippi Power Company on the date the Director transferred to the Board, and the provisions of Section 8, unless such election is changed pursuant to Section 6.3(a).

	
             
  	
            6.4
 	
            Beneficiary Designation
 

A Director or former Director may designate a beneficiary to receive distributions from the Plan in accordance with the provisions of Section 8 upon the death of the Director.  The beneficiary designation may be changed by a Director or former Director at any time, and without the consent of the prior beneficiary.

	
             
  	
            6.5
 	
            Form of Election
 

All elections pursuant to the provisions of this Section 6 of the Plan shall be made in writing to the Secretary of the Company or Assistant Secretary of the Company or such other person designated by the Committee on a form or forms available upon request.

 

	
             
 	
            11
 

 

 

SECTION 7

 

Accounts

	
             
  	
            7.1
 	
            Prime Rate Investment Account
 

A Prime Rate Investment Account shall be established for each Director electing deferral of Cash Compensation for investment at the Prime Interest Rate.  The amount directed by the Director to such account shall be credited to it as of the Compensation Payment Date, as applicable, and credited thereafter with interest computed using the Prime Interest Rate.  Interest shall be computed from the date such compensation is credited to the account and compounded quarterly at the end of each calendar quarter.  The Prime Interest Rate in effect on the first day of a calendar quarter shall be deemed the Prime Interest Rate in effect for that entire quarter.  Interest shall accrue and compound on any balance until the amount credited to the account is fully distributed.

	
             
  	
            7.2
 	
            Phantom Stock Investment Account
 

The Phantom Stock Investment Account established for each Director electing deferral of Cash Compensation for investment at the Common Stock investment rate shall be credited with the number of shares (including fractional shares rounded to the nearest ten-thousandth) of Common Stock which could have been purchased on the Compensation Payment Date, as determined by dividing the applicable compensation by the Market Value on such date.  On the date of the payment of dividends on the Common Stock, the Director’s Phantom Stock Investment Account shall be credited with additional shares (including fractional shares rounded to the nearest ten-thousandth) of Common Stock, as follows:

(a)       In the case of cash dividends, such additional shares as would have been purchased as of the Common Stock dividend record date as if the credited shares had been outstanding on such date and dividends reinvested thereon under the Southern Company Southern Investment Plan;

(b)       In the case of dividends payable in property other than cash or Common Stock, such additional shares as could be purchased at the Market Value as of the date of payment with the fair market value of the property which would have been payable if the credited shares had been outstanding; and

(c)       In the case of dividends payable in Common Stock, such additional shares as would have been payable on the credited shares as if they had been outstanding.

	
             
  	
            7.3
 	
            Deferred Stock Account
 

	
             
  	
            (a)
 	
            A Director’s Deferred Stock Account will be credited:
 

 (i)        with the number of shares of Common Stock (rounded to the nearest ten thousandth of a share) determined by dividing the sum of the amount of Cash Compensation subject to deferral or investment in the Deferred Stock Account and the Stock Retainer (that is denominated in dollars), by the average 

 

	
             
 	
            12
 

 

 

price paid by the Trustee of the Deferred Stock Trust for shares of Common Stock with respect to the Compensation Payment Date, as reported by the Trustee, or if the Trustee shall not at such time purchase any shares of Common Stock, by the Market Value on such date;

(ii)       as of the date on which the Stock Retainer (that is denominated in shares of Common Stock) is paid, with the number of shares of Common Stock payable to the Director as his Stock Retainer; and

(iii)      as of each date on which dividends are paid on the Common Stock, with the number of shares of Common Stock (rounded to the nearest ten thousandth of a share) determined by multiplying the number of shares of Common Stock credited in the Director’s Deferred Stock Account on the dividend record date, by the dividend rate per share of Common Stock, and dividing the product by the price per share of Common Stock attributable to the reinvestment of dividends on the shares of Common Stock held in the Deferred Stock Trust on the applicable dividend payment date or, if the Trustee of the Deferred Stock Trust has not reinvested in shares of Common Stock on the applicable dividend reinvestment date, the product shall be divided by the Market Value on the dividend payment date.

(b)       If Southern enters into transactions involving stock splits, stock dividends, reverse splits or any other recapitalization transactions, the number of shares of Common Stock credited to a Director’s Deferred Stock Account will be adjusted (rounded to the nearest ten thousandth of a share) so that the Director’s Deferred Stock Account reflects the same equity percentage interest in Southern after the recapitalization as was the case before such transaction.  Notwithstanding the preceding sentence and in any event, any adjustment shall comply with the requirements of Section 409A of the Code.

(c)       If at least a majority of Southern’s stock is sold or exchanged by its shareholders pursuant to an integrated plan for cash or property (including stock of another corporation) or if substantially all of the assets of Southern are disposed of and, as a consequence thereof, cash or property is distributed to Southern’s shareholders, each Director’s Deferred Stock Account will, to the extent not already so credited under this Section 7.3, be (i) credited with the amount of cash or property receivable by a  Southern shareholder directly holding the same number of shares of Common Stock as is credited to such Director’s Deferred Stock Account and (ii) debited by that number of shares of Common Stock surrendered by such equivalent Southern shareholder.  Notwithstanding the preceding sentence and in any
event, any adjustment shall comply with the requirements of Section 409A of the Code.

(d)       Each Director who has a Deferred Stock Account also shall be entitled to provide directions to the Trust Administrator to vote the Common Stock in his account in the Deferred Stock Trust with respect to any matter presented for a vote to the shareholders of Southern.  Such Trust Administrator shall arrange for distribution to all Directors in a timely manner of all communications directed generally to the Southern shareholders as to which their votes are solicited.

 

	
             
 	
            13
 

 

 

	
             
  	
            7.4
 	
            Stock Dividend Investment Account
 

 (a)       A Director’s Stock Dividend Investment Account will be credited as of the date on which a dividend is paid in stock other than Common Stock to the Company’s common stockholders with the number of shares of such other corporation’s stock receivable by such Southern common stockholder.  Thereafter, if dividends are paid on the above-described non-Common Stock dividends, such subsequent dividends shall be credited in the same manner as described in Section 7.3(a)(iii).

(b)       Each Director who has a Stock Dividend Investment Account also shall be entitled to provide directions to the Trust Administrator to vote the applicable corporation’s common stock held by the Deferred Stock Trust with respect to any matter presented for a vote to such corporation’s shareholders.  The Trust Administrator shall arrange for distribution to all Directors in a timely manner of all communications directed generally to the applicable corporation’s shareholders as to which their votes are solicited.

	
             
  	
            7.5
 	
            Transferred Amounts
 

 (a)       As soon as administratively practicable, the Company shall establish for a Director transferring to the Board from the Southern Board or from the board of directors of Georgia Power Company, Gulf Power Company, or Mississippi Power Company such Deferred Compensation Accounts as are necessary to implement Section 7.5(b).

(b)       Any Transferred Amounts will be credited to the Deferred Compensation Account(s) established that are comparable to the deferred compensation accounts to which such amounts were credited under the applicable deferred compensation plan for directors of Southern, Georgia Power Company, Gulf Power Company, or Mississippi Power Company as soon as administratively practicable following the date the Transferred Amounts are transferred to the Plan.  Thereafter, the Transferred Amounts shall be credited with investment returns as applicable under this Section 7 of the Plan.

SECTION 8

 

Distributions

	
             
  	
            8.1
 	
            Manner of Distribution
 

Upon the Separation from Service of a Director’s membership on the Board the amount credited to a Director’s Deferred Compensation Accounts will be paid to the Director or his beneficiary, as applicable, in the following manner:

(a)       the amount credited to a Director’s Prime Rate Investment Account and Phantom Stock Investment Account shall be paid in cash;

(b)       the amount credited to a Director’s Deferred Stock Account shall, except as otherwise provided in Section 7.3 and Section 10.5, or to the extent the Company is otherwise, in the reasonable judgment of the Committee, precluded from doing so, be 

 

	
             
 	
            14
 

 

 

paid in shares of Common Stock (with any fractional share interest therein paid in cash to the extent of the then Market Value thereof); and

(c)       the amount credited to a Stock Dividend Investment Account shall, except as otherwise provided in Section 10.5, be paid from the assets in the Deferred Stock Trust in shares of the applicable corporation, provided however if there is not a sufficient number of shares held in the Trust, the remainder shall be paid in cash based upon the Market Value of such shares.

Such payments shall be from the general assets of the Company (including the Deferred Cash Trust and the Deferred Stock Trust) in accordance with this Section 8.

Notwithstanding the foregoing, in the event the Company enters into an agreement described in Section 8.3 with respect to a Director prior to the Director’s Separation from Service as a Director, the Company shall have no obligation to make distributions to the Director under this Section 8.1 in connection with such Director’s Separation from Service of membership on the Board.

	
             
  	
            8.2
 	
            Timing of Distribution(s)
 

Subject to the Committee’s authority to establish in writing alternative payment schedules, deferred amounts shall be paid in the form of (i) a lump sum payment, or (ii) in approximately equal annual or quarterly installments, as elected by the Director pursuant to the provisions of Section 6.3.  Such payments shall be made (or shall commence) as soon as practicable following the Separation from Service of Board membership except that such period shall not exceed ninety (90) days as permitted by Code Section 409A or, if so elected by the Director in the Distribution Election, up to twenty-four (24) months following such Separation from Service.

If at the time of a Director’s Separation from Service of Board membership, his Deferred Compensation Accounts have a cumulative balance of less than the limit in effect under Section 402(g)(1)(B) of the Internal Revenue Code, the balance of the Deferred Compensation Accounts may be distributed in a single lump sum payment.

If the Director elected to receive annual or quarterly installments, the first installment shall be equal to the balance in the Director’s Deferred Compensation Accounts on such date divided by the number of annual or quarterly installment payments.  Each subsequent annual or quarterly payment shall be an amount equal to the balance in the Director’s Deferred Compensation Accounts on the date of payment divided by the number of remaining annual or quarterly payments and shall be paid on the next appropriate date of payment.

The Market Value of any shares of Common Stock credited to a Director’s Phantom Stock Investment Account shall be determined as of the twenty-fifth (25th) day of the month immediately preceding the date of any lump sum or installment distribution or such other date as may be determined by the Committee.

Upon the death of a Director, or a former Director prior to the payment of all amounts credited to the Director’s Deferred Compensation Accounts, the unpaid balance shall be paid in a 

 

	
             
 	
            15
 

 

 

lump sum to the designated beneficiary of such Director or former Director within sixty (60) days of the date of death as permitted by Code Section 409A.  In the event a beneficiary designation has not been made, or the designated beneficiary is deceased or cannot be located, payment shall be made to the estate of the Director or former Director.  

To the maximum extent permitted under Treasury Regulation § 1.409A-3(i)(3), the Committee, in its sole discretion, may determine to pay an amount credited to a Director’s Deferred Compensation Accounts on account of an unforeseeable emergency.

The Market Value of any shares of Common Stock credited to a Director’s Phantom Stock Investment Account shall be determined as of the twenty-fifth (25th) day of the month immediately preceding the date of any lump sum or installment distribution or such other date as may be determined by the Committee.

	
             
  	
            8.3
 	
            Transfers in Lieu of Distribution
 

If the Company enters into a written agreement with the parent, subsidiary, affiliate or former affiliate of the Company under which the parent or affiliate assumes the liability for a Director’s benefits accrued under the Plan in connection with, but prior to, such Director’s Separation from Service from the Board and the Director either has been or will be elected to the board of directors of such parent or subsidiary, affiliate or former affiliate of the Company, the liability for the Director’s benefits which have accrued under the Plan as of the date the Director Separates from Service from the Board shall be transferred from the Company to the parent or subsidiary, affiliate or former affiliate of the Company, and the Company shall have no further obligation to make any distributions to the Director under Section 8.1 or any other section herein.  For the avoidance of
doubt, the event described in the preceding sentence shall not constitute a distribution event whereby deferred amounts under the Plan are paid to the Director in accordance with this Section 8.

SECTION 9

 

Funding Change in Control and Other Special Provisions

	
             
  	
            9.1
 	
            Funding Change in Control
 

Notwithstanding any other terms of the Plan to the contrary, following a Funding Event, the provisions of this Section 9 shall apply to the payment of benefits under the Plan with respect to any Director who is a Participant on such date.

	
             
  	
            9.2
 	
            Funding of Trusts
 

The Deferred Cash Trust and the Deferred Stock Trust (collectively “Trusts”) have been established to hold assets of the Participating Companies under certain circumstances as a reserve for the discharge of the Company’s obligations under the Plan. In the event of a Funding Event involving a Funding Change in Control, the Company shall be obligated to immediately contribute such amounts to the Trusts as may be necessary to fully fund all benefits payable under the Plan in accordance with the procedures set forth in Section 9.3 hereof.  In addition, in order to provide the added protections for certain individuals in accordance with Paragraph 7(b) 

 

	
             
 	
            16
 

 

 

of the Deferred Cash Trust and Paragraph 7(c) of the Deferred Stock Trust, the Company may fund the Trusts prior to a Funding Event of the Company in accordance with the terms of the Trusts.  All assets held in the Trusts remain subject only to the claims of the Participating Companies’ general creditors whose claims against the Participating Companies are not satisfied because of the Participating Companies’ bankruptcy or insolvency (as those terms are defined in the Trusts).  No Participant has any preferred claim on, or beneficial ownership interest in, any assets of the Trusts before the assets are paid to the Participant and all rights created under the Trusts, as under the Plan, are unsecured contractual claims of the Participant against the Company.

	
             
  	
            9.3
 	
            Funding Timing and Dispute Resolution
 

As soon as practicable following a Funding Event, the Company shall contribute to each Trust an amount based upon the funding strategy adopted by the Trust Administrator with the assistance of an appointed actuary necessary to fulfill the Company’s obligations pursuant to this Section 9.  In the event of a dispute over such actuary’s determination with respect to either or both Trusts, the Company and any complaining Participant(s) shall refer such dispute to an independent, third party actuarial consultant, chosen by the Company and such Participant.  If the 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 Company and the applicable Trustee.  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 Company shall be responsible for all of the fees and expenses of the independent actuarial consultant.

	
             
  	
            9.4
 	
            Lump Sum Payment
 

In the event of a Funding Change in Control, notwithstanding anything to the contrary in the Plan, upon a Director’s Separation from Service from the Board, that amount in the Deferred Compensation Plan Account(s) of a Participant who was a Director determined as of the date of such Funding Change in Control shall be paid out in a lump sum provided that such Separation from Service occurred within two calendar years of the Funding Change in Control.  The lump sum payment shall be made within ninety (90) days of such Separation from Service as permitted by Code Section 409A.

SECTION 10

 

General Provisions

10.1     In the event that the Company shall decide to establish an advance accrual reserve on its books against the future expense of payments from any Deferred Compensation Accounts, such reserve shall not under any circumstances be deemed to be an asset of this Plan but, at all times, shall remain a part of the general assets of the Company, subject to claims of the Company’s creditors.

10.2     A person entitled to any amount under this Plan shall be a general unsecured creditor of the Company with respect to such amount.  Furthermore, a person entitled to a 

 

	
             
 	
            17
 

 

 

payment or distribution with respect to a Deferred Compensation Account shall have a claim upon the Company only to the extent of the balance in his Deferred Compensation Accounts.

10.3     The Company will pay all commissions, fees, and expenses that may be incurred in operating the Plan.

10.4     The Company will pay its prorated share of all commissions, fees, and expenses that may be incurred in operating any trust(s) established under the Plan (including the Deferred Stock Trust and the Deferred Cash Trust).

	
             
  	
            10.5
 	
            Notwithstanding any other provision of this Plan:
 

 (a)       elections under this Plan may only be made by Directors while they are directors of the Company; (with the exception of the designation of beneficiaries); and 

(b)       distributions otherwise payable to a Director in the form of Common Stock or other corporation’s stock shall be delayed and/or instead paid in cash in an amount equal to the fair market value thereof if such payment in stock would violate any federal or State securities laws (including Section 16(b) of the Securities Exchange Act of 1934, as amended) and/or rules and regulations promulgated thereunder.

10.6     Directors, their legal representatives and their beneficiaries shall have no right to anticipate, alienate, sell, assign, transfer, pledge or encumber their interests in the Plan, nor shall such interests be subject to attachment, garnishment, levy or execution by or on behalf of creditors of the Directors or of their beneficiaries.

SECTION 11

 

Administration

	
             
  	
            11.1
 	
            General Provisions
 

The 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 may be more particularly set forth herein. The Committee shall interpret the Plan and shall determine all questions arising in the administration, interpretation, and application of the Plan. Any such determination by the Committee shall be conclusive and binding on all persons. The Committee shall be the Plan’s agent for service of process.  

The Committee may delegate to such officers, employees, or departments of the Company or Southern, such authority, duties, and responsibilities of the Committee as it, in its sole discretion, considers necessary or appropriate for the proper and efficient operation of the Plan, including, without limitation, (i) interpretation of the Plan, (ii) approval and payment of claims, and (iii) establishment of procedures for administration of the Plan.

 

	
             
 	
            18
 

 

 

	
             
  	
            11.2
 	
            Claims Process
 

If a claim for benefits under the Plan is denied, in whole or in part, the Committee will provide a written notice of the denial within a reasonable period of time, but not later than 90 days after the claim is received.  If special circumstances require more time to process the claim, the Committee will issue a written explanation of the special circumstances prior to the end of the 90 day period and a decision will be made as soon as possible, but not later than 180 days after the claim is received.

The written notice of claim denial will include:

	
             
 	
            •
 	
            Specific reasons why the claim was denied;
 

	
             
 	
            •
 	
            Specific references to applicable provisions of the Plan document or other relevant records or papers on which the denial is based, and information about where a Participant or his or her beneficiary may see them;
 

	
             
 	
            •
 	
            A description of any additional material or information needed to process the claim, and an explanation of why such material or information is necessary;
 

	
             
 	
            •
 	
            An explanation of the claims review procedure, including the time limits applicable to such procedure, as well as a statement notifying the Participant or his or her beneficiary of their right to file suit if the claim for benefits is denied, in whole or in part, on review.
 

Upon request, a Participant or his or her beneficiary will be provided without charge, reasonable access to, and copies of, all non-confidential documents that are relevant to any denial of benefits.  A claimant has 60 days from the day he or she receives the original denial to request a review.  Such request must be made in writing and sent to the Committee.  The request should state the reasons why the claim should be reviewed and may also include evidence or documentation to support the claimant’s position.

The Committee will reconsider the claimant’s claim, taking into account all evidence, documentation, and other information related to the claim and submitted on the claimant’s behalf, regardless of whether such information was submitted or considered in the initial denial of the claim.  The Committee will make a decision within 60 days.  If special circumstances require more time for this process, the claimant will receive written explanation of the special circumstances prior to the end of the initial 60 day period and a decision will be sent as soon as possible, but not later than 120 days after the Committee receives the request.

No legal action to recover benefits or enforce or clarify rights under a Plan can be commenced until the Participant or his or her beneficiary has first exhausted the claims and review procedures provided under the Plan.

 

	
             
 	
            19
 

 

 

SECTION 12

 

Amendment, Termination and Effective Date

	
             
  	
            12.1
 	
            Amendment of the Plan
 

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 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 Directors who, in the case of a Company Change in Control, are not Directors on the date of the respective Preliminary
Change in Control, or, in the case of a Southern Change in Control, are not Directors on the date of the respective Southern Change in Control. Following a Change in Control, nothing in this Section 12.1 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.

	
             
  	
            12.2
 	
            No Impairment of Benefits
 

Notwithstanding the provisions of Section 12.1 herein, no amendment to or termination of the Plan shall impair any rights to benefits that have accrued hereunder.

	
             
  	
            12.3
 	
            Section 409A of the Code
 

All payments of “non-qualified deferred compensation” (within the meaning of Section 409A of the Code), whether or not expressly designated as such, are intended to comply with the requirements of Section 409A, and shall be interpreted in accordance therewith.  Neither the Participant nor the Company may accelerate any such deferred payment, except in compliance with Section 409A for such events that include but may not be limited to a termination of the Plan.

	
             
  	
            12.4
 	
            Governing Law
 

This Plan shall be construed in accordance with and governed by the laws of the state of the Company to the extent not inconsistent with the requirement of the Employee Retirement Income Security Act of 1974, as amended, and Section 409A of the Code.

 

	
             
 	
            20
 

 

 

IN WITNESS WHEREOF, the Plan, as amended and restated effective January 1, 2008, has been executed pursuant to resolutions of the Board of Directors of Alabama Power Company, this 25th day of April, 2008.

	
             
 	
            ALABAMA POWER COMPANY

 

 

 

By:  /s/Kay I. Worley

Assistant Corporate Secretary
 

 

Attest:

	
            By:
 	
            /s/Ceila H. Shorts
 

Assistant Corporate Secretary

 

	
             
 	
            21
 

 

 

SCHEDULE OF PROVISIONS FOR PRE-2005 DEFERRALS

SECTION 1

Purpose

             1.1       Schedule of Provisions for Pre-2005 Deferrals: This Schedule sets forth the operative provisions of the Plan applicable to “grandfathered” deferrals of Cash Compensation and Stock Retainer made by Participants which are treated by the Company as not subject to Section 409A of the Code.  The Deferred Compensation Account balance (plus earnings thereon) of the grandfathered deferrals shall only be subject to the provisions set forth in this Schedule.  In accordance with transition rules under Section 409A of the Code, Internal Revenue Service Notice 2005-1, Treasury Regulation Section 1.409A-1 et seq.,  or any other applicable guidance from the Department of Treasury, these provisions are only intended t
o preserve the rights and features of the
“grandfathered” deferrals and are, therefore, not intended to “materially modify” any aspect of such rights and features.  Provisions of this Schedule should be so construed whenever necessary or appropriate.  Provisions in this Schedule shall only be amended in accordance with this Schedule’s terms.

SECTION 2

Definitions

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

	
             
  	
            2.2
 	
            “Board” or “Board of Directors” means the Board of Directors of the Company.
 

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

2.4       “Cash Compensation” means the annual retainer fees and meeting fees payable to a Director in cash.

2.5       “Code” means the Internal Revenue Code of 1986, as amended, or any successor statute.

2.6       “Committee” means the Compensation Committee of the Board, or such other committee as may be designated by the Board to be responsible for administering the Plan and this Schedule.

2.7       “Common Stock” means the common stock of Southern, including any shares into which it may be split, subdivided, or combined.

	
             
  	
            2.8
 	
            “Company” means Alabama Power Company, or any successor thereto.
 

 

22

 

 

	
             
  	
            2.9
 	
            “Company Change in Control” means 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 the Company; provided, however, that for purposes of this Section 2.9, any acquisition by an Employee, or Group composed entirely of Employees, any qualified pension plan, any publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any corporation Controlled by Southern shall not constitute a Change in Control;

(b)       Consummation of a reorganization, merger or consolidation of the Company (a “Company Business Combination”), in each case, unless, following such Company Business Combination, Southern Controls the corporation surviving or resulting from such Company Business Combination; or 

(c)       Consummation of the sale or other disposition of all or substantially all of the assets of the Company to an entity which Southern does not Control.

2.10     “Compensation Payment Date” means the date on which compensation, including Cash Compensation, and the Stock Retainer, is payable to a Director or compensation which would otherwise be payable to a Director if an election to defer such compensation had not been made.

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

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

2.13     “Deferred Cash Trust” means the Deferred Cash Compensation Trust for Directors of The Southern Company and its Subsidiaries.

2.14     “Deferred Compensation Account” means the Prime Rate Investment Account, the Phantom Stock Investment Account, the Deferred Stock Account, and/or the Stock Dividend Investment Account applicable to “grandfathered” deferrals of Cash Compensation and Stock Retainer made by Participants which are treated by the Company as not subject to Section 409A of the Code.

2.15     “Deferred Pension Election” means the election by a Director who had a Pension Benefit as of the Termination Date, who made a single one-time election, to credit all his Pension Benefit into (i) the Prime Rate Investment Account or (ii) the Phantom Stock Investment Account in connection with the deferral of receipt of the Director’s Pension Benefit until termination from the Board.

 

23

 

 

2.16     “Deferred Stock Account” means the bookkeeping account established under Section 5.3 of this Schedule on behalf of a Director and includes shares of Common Stock credited thereto to reflect the reinvestment of dividends pursuant to Section 5.3(a)(iii) of this Schedule.

2.17     “Deferred Stock Trust” means the Deferred Stock Trust for Directors of The Southern Company and its Subsidiaries.

	
             
  	
            2.18
 	
            “Director” means a member of the Board.
 

2.19     “Distribution Election” means the designation by a Director of the manner of distribution of the amounts and quantities held in the Director’s Deferred Compensation Accounts upon the director’s termination from the Board pursuant to Section 6.3 of this Schedule.

2.20     “Employee” means an employee of Southern or any of its subsidiaries that are “employing companies” as defined in the Southern Company Deferred Compensation Plan as amended and restated effective January 1, 2005, and as may be amended from time to time.

	
             
  	
            2.21
 	
            “Exchange Act” means the Securities Exchange Act of 1934, as amended.
 

	
             
  	
            2.22
 	
            “Funding Change in Control means any of the following:
 

 (a)       The Consummation of an acquisition by any Person of Beneficial Ownership (during the 12-month period ending on the date of the most recent acquisition by such Person) of 35% or more of Southern’s Voting Securities; provided, however, that for purposes of this subsection (a), the following acquisitions of Southern’s Voting Securities shall not constitute a Funding Change in Control: 

	
             
  	
            (i)
 	
            any acquisition directly from Southern;
 

	
             
  	
            (ii)
 	
            any acquisition by Southern;
 

 (iii)      any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any corporation controlled by Southern; 

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

(v)       any acquisition by an employee of Southern or its subsidiary or affiliate, or Group composed exclusively of such employees; or 

(vi)      any Business Combination which would not otherwise constitute a Funding Change in Control because of the application of clauses (i), (ii) and (iii) of this Section 2.22(a); 

(b)       The date a majority of members of the Southern Board of Directors is replaced during any 12-month period by directors whose appointment or election is not 

 

24

 

 

endorsed by a majority of the members of the Southern Board of Directors before the date of the appointment or election; 

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

(i)        all or substantially all of the individuals and entities who held Beneficial Ownership, respectively, of Southern’s Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or more of the combined voting power of the Voting Securities of the corporation surviving or resulting from such Business Combination, (including, without limitation, a corporation which as a result of such transaction holds Beneficial Ownership of all or substantially all of Southern’s Voting Securities or all or substantially all of Southern’s assets) (such surviving or resulting corporation to be referred to as “Surviving Company”), in substantially the same proportions as their ownership, immediately prior to such Business Combination, of Southern’s Voting Securities;

(ii)       no Person (excluding any corporation resulting from such Business Combination, any qualified pension plan, publicly held mutual fund, Group composed exclusively of employees or employee benefit plan (or related trust) of Southern, its subsidiaries or Surviving Company) holds Beneficial Ownership, directly or indirectly, of 35% or more of the combined voting power of the then outstanding Voting Securities of Surviving Company except to the extent that such ownership existed prior to the Business Combination; and 

(iii)      the majority of the members of the board of directors of Surviving Company during the 12-month period following the Business Combination were members of the Southern Board of Directors at the earlier of the date of execution of the initial agreement, or of the action of the Southern Board of Directors, providing for such Business Combination or such members of the board of directors of the Surviving Company are directors whose appointment or election was endorsed by a majority of the members of such Southern Board of Directors.

(d)       The Consummation of an acquisition by any Person of Beneficial Ownership (during the 12-month period ending on the date of the most recent acquisition by such Person) of 50% or more of the combined voting power of the then outstanding Voting Securities of the Company; provided, however, that for purposes of this Section 2.22(d), any acquisition by an employee of Southern or its subsidiary or affiliate, or Group composed entirely of such employees, any qualified pension plan, publicly held mutual fund or any employee benefit plan (or related trust) sponsored or maintained by Southern or any corporation Controlled by Southern shall not constitute a Funding Change in Control;

(e)       The Consummation of a reorganization, merger or consolidation of the Company with another corporation (a “Funding Subsidiary Business Combination”), in each case, unless, following such Funding Subsidiary Business Combination, Southern 

 

25

 

 

Controls the corporation surviving or resulting from such Funding Subsidiary Business Combination, or 

(f)        The Consummation of the sale or other disposition of all or substantially all of the assets of the Company to an entity that Southern does not Control; provided, however, that for purposes of this subsection (f) the following sales or dispositions otherwise described herein shall not constitute a Funding Change in Control: 

(i)        the sale or other disposition of all or substantially all of the assets of the Company to Southern or to a shareholder of Southern in exchange for or with respect to such shareholder’s stock of Southern; 

(ii)       the sale of other disposition of all or substantially all of the assets of the Company to a Person that owns, directly or indirectly, 50% or more of the total value or voting power of the outstanding stock of Southern; or

(iii)      the sale or other disposition of all or substantially all of the assets of the Company to an entity Controlled by shareholders of Southern that hold, directly or indirectly, 50% or more of the total value or voting power of all of the outstanding stock of Southern. 

For purposes of this Section 2.22(f) “all or substantially all of the assets” means at least 80% of the gross value of the assets of the entity immediately before the acquisition. 

2.23     “Funding Event” shall mean the occurrence of any of the following events as administratively determined by the Southern Committee:

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

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

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

(d)       The Southern Board of Directors or the board of directors of the Company elects to otherwise fund the Deferred Cash Trust and Deferred Stock Trust in accordance with the provisions of Section 7 of this Schedule.

2.24     “Funding Subsidiary Business Combination” shall have the meaning set forth in Section 2.22(e) hereof.

	
             
  	
            2.25
 	
            “Group” has the meaning set forth in Section 14(d) of the Exchange Act.
 

 

26

 

 

2.26     “Incumbent Board” means those individuals who constitute the Southern board of directors as of January 1, 2008, plus any individual who shall become a director subsequent to such date whose election or nomination for election by Southern’s shareholders was approved by a vote of at least 75% of the directors then comprising the Incumbent Board. Notwithstanding the foregoing, no individual who shall become a director of the Southern board of directors subsequent to January 1, 2008, whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the regulations promulgated under the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Southern board
of directors shall be a member of the Incumbent Board.

2.27     “Market Value” means the average of the high and low prices of the Common Stock, as published in the Wall Street Journal in its report of New York Stock Exchange composite transactions, on the date such Market Value is to be determined, as specified herein (or the average of the high and low sale prices on the trading day immediately preceding such date if the Common Stock is not traded on the New York Stock Exchange on such date).

2.28     “Participant” means a Director or former Director who has an unpaid Deferred Compensation Account balance under this Schedule.

2.29     “Participating Companies” means those companies that are affiliated with Southern whose boards of directors have authorized the establishment of trust(s) for the funding of their respective directors’ Deferred Compensation Accounts under their respective Deferred Compensation Plans for Directors, including the Plan as maintained by the Company for its Directors.  

2.30     “Pension Benefit” means the U.S. dollar amount of the actuarially-determined present value of benefits based on a Director’s expected service at the required retirement date under The Southern Company Outside Directors Pension Plan, as calculated as of the Termination Date, plus accrued earnings on such amount calculated as if invested at the Prime Interest Rate from the Termination Date, until such amount is invested in Deferred Compensation Accounts.

2.31     “Pension Benefit Investment Date” means the date to be determined by the Committee, as of which the Director’s Pension Benefit will be credited to a Deferred Compensation Account in accordance with the director’s Deferred Pension Election.

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

2.33     “Phantom Stock Investment Account” means the bookkeeping account established pursuant to Section 5.2 of this Schedule in which a Director may elect to defer Cash Compensation or make investments, and includes amounts credited thereto to reflect the reinvestment of dividends.

2.34     “Plan” means the Deferred Compensation Plan for Outside Directors of Alabama Power Company as from time to time in effect.

 

27

 

 

	
             
  	
            2.35
 	
            “Plan Period” means the period designated in Section 4.
 

2.36     “Preliminary Change in Control” means the occurrence of any of the following as determined by the Southern Committee:

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

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

(c)       Any Person becomes the Beneficial Owner of fifteen percent (15%) or more of the Common Stock; or

(d)       The Southern board of directors or the board of directors of the Company has declared that a Preliminary Change in Control has occurred.

2.37      “Prime Interest Rate” means the prime rate of interest as published in the Wall Street Journal, or its successor on the 1st day of each quarter.

2.38     “Prime Rate Investment Account” means the bookkeeping account established pursuant to Section 5.1 of this Schedule in which a Director may elect to defer Cash Compensation or make investments, the investment return on which is computed at the Prime Interest Rate.

	
             
  	
            2.39
 	
            “Southern” means The Southern Company.
 

	
             
  	
            2.40
 	
            “Southern Change in Control” means any of the following:
 

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

	
             
  	
            (i)
 	
            any acquisition directly from Southern,
 

	
             
  	
            (ii)
 	
            any acquisition by Southern,
 

 (iii)      any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Southern or any corporation controlled by Southern,  

(iv)      any acquisition by a qualified pension plan or publicly held mutual fund,

 

28

 

 

(v)       any acquisition by an Employee or Group composed exclusively of Employees, or 

(vi)      any Business Combination which would not otherwise constitute a Change in Control because of the application of clauses (i), (ii) and (iii) of Section 2.40(a) of this Schedule; 

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

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

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

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

(iii)      at least a majority of the members of the board of directors of Board were members of the Incumbent Board at the earlier of the date of execution of the initial agreement, or of the action of the Southern board of directors, providing for such Business Combination.

2.41     “Southern Committee” means a committee comprised of the Chairman of the Southern Board, the Chief Financial Officer of Southern, and the General Counsel of Southern.

2.42     “Stock Dividend Investment Account” means the bookkeeping account(s) established pursuant to Section 5.4 of this Schedule on behalf of a Director that is credited with shares of stock, other than Common Stock, paid as a dividend on shares of Common Stock.

2.43     “Stock Retainer” means the annual Board retainer fee that is paid to the Director in the form of Common Stock.

 

29

 

 

2.44     “Termination Date” means January 1, 1997, the date as of which The Southern Company Outside Directors Pension Plan was effectively terminated.

2.45     “Trust Administrator” means the individual or committee that is established in the Deferred Stock Trust and the Deferred Cash Trust, to administer such trusts on behalf of the Participating Companies.

2.46     “Voting Securities” means the outstanding voting securities of a corporation entitling the holder thereof to vote generally in the election of such corporation’s directors.

Where the context requires, words in the masculine gender shall include the feminine gender, words in the singular shall include the plural, and words in the plural shall include the singular.

SECTION 3

Eligibility

For so long as a Director has a Deferred Compensation Account balance governed by this Schedule, he or she shall be a Participant in the Plan for purposes of this Schedule, and such Deferred Compensation Account balance shall be maintained and administered solely in accordance with the terms of this Schedule.

SECTION 4

 

Plan Periods

No new deferral elections may be made which are subject to this Schedule.

SECTION 5

 

Accounts

	
             
  	
            5.1
 	
            Prime Rate Investment Account
 

A Prime Rate Investment Account shall be established for each Director electing deferral of Cash Compensation for investment at the Prime Interest Rate.  The amount directed by the Director to such account shall be credited to it as of the Pension Benefit Investment Date or  Compensation Payment Date, as applicable, and credited thereafter with interest computed using the Prime Interest Rate.  Interest shall be computed from the date such compensation is credited to the account and compounded quarterly at the end of each calendar quarter.  The Prime Interest Rate in effect on the first day of a calendar quarter shall be deemed the Prime Interest Rate in effect for that entire quarter.  Interest shall accrue and compound on any balance until the amount credited to the account is fully distributed.

 

30

 

 

	
             
  	
            5.2
 	
            Phantom Stock Investment Account
 

The Phantom Stock Investment Account established for each Director electing deferral of Cash Compensation for investment at the Common Stock investment rate shall be credited with the number of shares (including fractional shares rounded to the nearest ten-thousandth) of Common Stock which could have been purchased on the Pension Benefit Investment Date or the Compensation Payment Date, as applicable, as determined by dividing the applicable compensation by the Market Value on such date.  On the date of the payment of dividends on the Common Stock, the Director’s Phantom Stock Investment Account shall be credited with additional shares (including fractional shares rounded to the nearest ten-thousandth) of Common Stock, as follows:

(a)       In the case of cash dividends, such additional shares as would have been purchased as of the Common Stock dividend record date as if the credited shares had been outstanding on such date and dividends reinvested thereon under the Southern Company Southern Investment Plan;

(b)       In the case of dividends payable in property other than cash or Common Stock, such additional shares as could be purchased at the Market Value as of the date of payment with the fair market value of the property which would have been payable if the credited shares had been outstanding; and

(c)       In the case of dividends payable in Common Stock, such additional shares as would have been payable on the credited shares as if they had been outstanding.

	
             
  	
            5.3
 	
            Deferred Stock Account
 

	
             
  	
            (a)
 	
            A Director’s Deferred Stock Account will be credited:
 

 (i)        with the number of shares of Common Stock (rounded to the nearest ten thousandth of a share) determined by dividing the sum of the amount of Cash Compensation subject to deferral or investment in the Deferred Stock Account and the Stock Retainer (that is denominated in dollars), by the average price paid by the Trustee of the Deferred Stock Trust for shares of Common Stock with respect to the Pension Benefit Investment Date or the Compensation Payment Date, as applicable, as reported by the Trustee, or if the Trustee shall not at such time purchase any shares of Common Stock, by the Market Value on such date;

(ii)       as of the date on which Stock Retainer (that is denominated in shares of Common Stock) is paid, with the number of shares of Common Stock payable to the Director as his Stock Retainer; and

(iii)      as of each date on which dividends are paid on the Common Stock, with the number of shares of Common Stock (rounded to the nearest ten thousandth of a share) determined by multiplying the number of shares of Common Stock credited in the Director’s Deferred Stock Account on the dividend record date, by the dividend rate per share of Common Stock, and dividing the 

 

31

 

 

product by the price per share of Common Stock attributable to the reinvestment of dividends on the shares of Common Stock held in the Deferred Stock Trust on the applicable dividend payment date or, if the Trustee of the Deferred Stock Trust has not reinvested in shares of Common Stock on the applicable dividend reinvestment date, the product shall be divided by the Market Value on the dividend payment date.

(b)       If Southern enters into transactions involving stock splits, stock dividends, reverse splits or any other recapitalization transactions, the number of shares of Common Stock credited to a Director’s Deferred Stock Account will be adjusted (rounded to the nearest ten thousandth of a share) so that the Director’s Deferred Stock Account reflects the same equity percentage interest in Southern after the recapitalization as was the case before such transaction.

(c)       If at least a majority of Southern’s stock is sold or exchanged by its shareholders pursuant to an integrated plan for cash or property (including stock of another corporation) or if substantially all of the assets of Southern are disposed of and, as a consequence thereof, cash or property is distributed to Southern’s shareholders, each Director’s Deferred Stock Account will, to the extent not already so credited under this Section 5.3, be (i) credited with the amount of cash or property receivable by a  Southern shareholder directly holding the same number of shares of Common Stock as is credited to such Director’s Deferred Stock Account and (ii) debited by that number of shares of Common Stock surrendered by such equivalent Southern shareholder.

(d)       Each Director who has a Deferred Stock Account also shall be entitled to provide directions to the Trust Administrator to vote the Common Stock in his account in the Deferred Stock Trust with respect to any matter presented for a vote to the shareholders of Southern.  Such Trust Administrator shall arrange for distribution to all Directors in a timely manner of all communications directed generally to the Southern shareholders as to which their votes are solicited.

	
             
  	
            5.4
 	
            Stock Dividend Investment Account
 

 (a)       A Director’s Stock Dividend Investment Account will be credited as of the date on which a dividend is paid in stock other than Common Stock to the Company’s common stockholders with the number of shares of such other corporation’s stock receivable by such Southern common stockholder.  Thereafter, if dividends are paid on the above-described non-Common Stock dividends, such subsequent dividends shall be credited in the same manner as described in Section 5.3(a)(iii) of this Schedule.

(b)       Each Director who has a Stock Dividend Investment Account also shall be entitled to provide directions to the Trust Administrator to vote the applicable corporation’s common stock held by the Deferred Stock Trust equivalent to the number of shares credited to the Director’s Stock Dividend Investment Account with respect to any matter presented for a vote to such corporation’s shareholders.  The Trust Administrator shall arrange for distribution to all Directors in a timely manner of all 

 

32

 

 

communications directed generally to the applicable corporation’s shareholders as to which their votes are solicited.

SECTION 6

 

Distributions

6.1       Upon the termination of a Director’s membership on the Board the amount credited to a Director’s Deferred Compensation Accounts will be paid to the Director or his beneficiary, as applicable, in the following manner:

(a)       the amount credited to a Director’s Prime Rate Investment Account and Phantom Stock Investment Account shall be paid in cash;

(b)       the amount credited to a Director’s Deferred Stock Account shall, except as otherwise provided in Sections 5.3 and 6.6 of this Schedule, or to the extent the Company is otherwise, in the reasonable judgment of the Committee, precluded from doing so, be paid in shares of Common Stock (with any fractional share interest therein paid in cash to the extent of the then Market Value thereof); and

(c)       the amount credited to a Stock Dividend Investment Account shall, except as otherwise provided in Section 6.6 of this Schedule, be paid from the assets in the Deferred Stock Trust in shares of the applicable corporation, however if there is not a sufficient number of shares held in the Trust, the remainder shall be paid in cash based upon the Market Value of such shares held in the Trust, the remainder shall be paid in cash based upon the Market Value of such shares.

Such payments shall be from the general assets of the Company (including the Deferred Cash Trust and the Deferred Stock Trust) in accordance with this Section 6.

6.2       Unless other arrangements are specified by the Committee on a uniform and nondiscriminatory basis, deferred amounts shall be paid in the form of (i) a lump sum payment, or (ii) in approximately equal annual or quarterly installments, as elected by the Director pursuant to the provisions of Section 6.3 of this Schedule, provided, however, that payments shall be made only in a single lump sum if payment commences due to termination for cause.  Such payments shall be made (or shall commence) as soon as practicable following the termination of Board membership or, if so elected in the Distribution Election, up to twenty-four (24) months following such termination.

If at the time of a Director’s termination of Board membership, his Deferred Compensation Accounts have a cumulative balance of less than $75,000, the balance of the Deferred Compensation Accounts may be distributed in a single lump sum payment or in three or fewer approximately equal annual installments, in the discretion of the Committee if the Director has elected a longer installment payout period.

In the event a Director elected to receive the balance of his Deferred Compensation Accounts in a lump sum, distribution shall be made on the first day of the month selected by the Director on his Distribution Election, or as soon as reasonably possible thereafter.  If the Director 

 

33

 

 

elected to receive annual or quarterly installments, the first payment shall be made on the first day of the month selected by a Director, or as soon as reasonably possible thereafter, and shall be equal to the balance in the Director’s Deferred Compensation Accounts on such date divided by the number of annual or quarterly installment payments.  Each subsequent annual or quarterly payment shall be an amount equal to the balance in the Director’s Deferred Compensation Accounts on the date of payment divided by the number of remaining annual or quarterly payments.

Notwithstanding a Director’s election to receive his Deferred Compensation Account balance in installments, the Committee, upon request of the Director and in its sole discretion, may accelerate the payment of any such installments for cause, such as financial hardship or financial emergency.  The Market Value of any shares of Common Stock credited to a Director’s Phantom Stock Investment Account shall be determined as of the twenty-fifth (25th) day of the month immediately preceding the date of any lump sum or installment distribution or such other date as may be determined by the Committee.

Upon the death of a Director, or a former Director prior to the payment of all amounts credited to the Director’s Deferred Compensation Accounts, the unpaid balance shall be paid in the sole discretion of the Committee (i) in a lump sum to the designated beneficiary of such Director or former Director within thirty (30) days of the date of death (or as soon as reasonably possible thereafter) or (ii) in accordance with the Distribution Election made by such Director or former Director.  In the event a beneficiary designation has not been made, or the designated beneficiary is deceased or cannot be located, payment shall be made to the estate of the Director or former Director.  Notwithstanding a Director’s election to receive his Deferred Compensation Account balance in installments, the Committee, upon request of the legal representative of the Director’s estate and in its
sole discretion, may accelerate the payment of any such installments for cause, such as financial hardship or financial emergency.  The Market Value of any shares of Common Stock credited to a Director’s Phantom Stock Investment Account shall be determined as of the twenty-fifth (25th) day of the month immediately preceding the date of any lump sum or installment distribution or such other date as may be determined by the Committee.

	
             
  	
            6.3
 	
            Distribution Election
 

 (a)       Except as set forth in Section 6.3 (b) of this Schedule, prior to the initial establishment of a Deferred Compensation Account for a Director, the Director must elect, in writing, that upon termination from the Board of Directors the values and quantities held in the Directors Deferred Compensation Accounts be distributed to the Director, pursuant to the provisions of  this Section 6, in a lump sum or in a series of annual or quarterly installments not to exceed fifteen (15) years.  Distributions from the Prime Rate Investment Account and Phantom Stock Investment Account can be in a lump sum or in annual or quarterly installments.  Distributions from the Deferred Stock Account and Stock Dividend Investment Account can be lump sum or annual installments.  The time for the commencement of distribution shall not be later than
the first day of the month or quarter coinciding with or next following the second anniversary of termination of Board membership.

 

34

 

 

(b)       Any Director who made a Deferred Pension Election made a Distribution Election at the time the Deferred Pension Election was made attributable to the Pension Benefit and any accumulated investment return. 

(c)       Distribution Elections made under Sections 6.3(a) and (b) above are irrevocable except that a Director may amend any of the Distribution Elections then in effect while the Director is still a director of the Company as required under Section 6.6 of this Schedule provided the amended election is made not later than the 366th day prior to the Director’s termination of Board membership.  In addition, any amendment to a Distribution Election must be made on a form prescribed by the Committee and delivered to the Secretary or Assistant Secretary of the Company.

	
             
  	
            6.4
 	
            Beneficiary Designation
 

A Director or former Director may designate a beneficiary to receive distributions under this Schedule in accordance with the provisions of this Section 6 upon the death of the director.  The beneficiary designation may be changed by a Director or former Director at any time, and without the consent of the prior beneficiary.

	
             
  	
            6.5
 	
            Form of Election
 

All elections pursuant to the provisions of this Section 6 of the Schedule shall be made in writing to the Secretary or Assistant Secretary of the Company on a form or forms available upon request  of the Secretary or Assistant Secretary.

	
             
  	
            6.6
 	
            Distribution Limitations
 

Notwithstanding any other provision of this Schedule: (i) elections under this Schedule may only be made by Directors while they are directors of the Company (with the exception of the designation of beneficiaries), and (ii) distributions otherwise payable to a Director in the form of Common Stock or other corporation’s stock shall be delayed and/or instead paid in cash in an amount equal to the fair market value thereof if such payment in Common Stock would violate any federal or State securities laws (including Section 16(b) of the Securities Exchange Act of 1934, as amended) and/or rules and regulations promulgated thereunder.

SECTION 7

 

Change in Control and Other Special Provisions

7.1       Notwithstanding any other terms of this Schedule to the contrary, following a Funding Event or a Preliminary Change in Control as the case may be, the provisions of this Section 7 shall apply to the payment of benefits under this Schedule with respect to any Director who is a Participant on such date.  

7.2       The Deferred Cash Trust and the Deferred Stock Trust (collectively “Trusts”) have been established to hold assets of the Participating Companies under certain circumstances as a reserve for the discharge of the Company’s obligations under the Schedule. In the event of a Funding Event involving a Funding Change in Control of Southern or the Company, the 

 

35

 

 

Company shall be obligated to immediately contribute such amounts to the Trusts as may be necessary to fully fund all benefits payable under this Schedule in accordance with the procedures set forth in Section 7.3 hereof.  In addition, in order to provide the added protections for certain individuals in accordance with Paragraph 7(b) of the Deferred Cash Trust and Paragraph 7(c) of the Deferred Stock Trust, the Company may fund the Trusts prior to a Funding Change in Control of Southern or the Company in accordance with the terms of the Trusts.  All assets held in the Trusts remain subject only to the claims of the Participating Companies’ general creditors whose claims against the Participating Companies are not satisfied because of the Participating Companies’ bankruptcy or insolvency (as those terms are defined in the Trusts).  No Participant has any preferred claim on, or beneficial ownership
interest in, any assets of the Trusts before the assets are paid to the Participant and all rights created under the Trusts, as under this Schedule, are unsecured contractual claims of the Participant against the Company. 

7.3       As soon as practicable following a Funding Event, the Company shall contribute an amount based upon the funding strategy adopted by the Trust Administrator with the assistance of an appointed actuary necessary to fulfill the Company’s obligations pursuant to this Section 7.  In the event of a dispute over such actuary’s determination, the Company and any complaining Participant(s) shall refer such dispute to an independent, third party actuarial consultant, chosen by the Company and such Participant.  If the 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 Company and the applicable Trustee.  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 Company shall be responsible for all of the fees and expenses of the independent actuarial consultant.

7.4       In the event of a Southern Change in Control or a Company Change in Control, notwithstanding anything to the contrary in this Schedule, upon termination as a Director, that amount in the Deferred Compensation Plan Account(s) of a Participant who was a Director determined as of such Change in Control shall be paid out in a lump sum if such Participant makes an election pursuant to procedures established by the Trust Administrator, in its sole and absolute discretion.  If no such election is made, the Director shall receive payment of his Accounts solely in accordance with Section 6 of this Schedule. 

SECTION 8

 

Miscellaneous Provisions

8.1       Except for Sections 12.1 and 12.2 of the main body of the Plan, Sections 9, 10 and 11 of the main body of the Plan are hereby incorporated by reference into this Schedule.  Any amendment to Sections 9, 10 and 11 of the main body of the Plan shall operate as an amendment to Sections 9, 10 and 11 of the Schedule except that Section 8.2 below shall set forth the sole method for amending and/or terminating this Schedule.

8.2       Subject to Section 8.1, this Schedule may be amended or terminated at any time by the Board in its sole discretion at any time and from time to time by written resolution expressly modifying this Schedule provided, however, that no such amendment or termination shall impair any rights to any benefits that have accrued hereunder, and further provided that no 

 

36

 

 

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 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 Directors who, in the case of a Company Change in Control, are not Directors on the date of the respective Preliminary Change in Control, or, in the case of a Southern Change in Control, are not Directors on the date of the respective Southern
Change in Control. Following a Change in Control, nothing in this Section 8.2 shall prevent the Board of Directors from amending or terminating the Schedule 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 Schedule as a result of a previous Change in Control.  It is the Company’s intent that any modification to this Schedule shall not constitute nor shall it be interpreted to be a “material modification” of any right or feature of this Schedule as such term is defined under Section 409A of the Code, Internal Revenue Service Notice 2005-1, Treasury Regulation Section 1.409A-1 et seq., or any subsequent guidance promulgated by the Treasury Department, unless the Schedule is amended contemporaneously to comply with Code Section 409A.

 

 

37

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00145-of-00352.parquet"}]]