Exhibit 10.1
PRIVILEGED AND CONFIDENTIAL
July 15, 1998
__________________
__________________
__________________
Dear _____________:
TECO Energy, Inc. (the "Company") considers it essential to
the best interests of its stockholders to ▇▇▇▇▇▇ the continuous
employment of key management personnel. In this connection, the
Board of Directors of the Company (the "Board") recognizes that,
as is the case with many publicly held corporations, the
possibility of a change in control may exist and that such
possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of
key management personnel to the detriment of the Company and its
stockholders.
The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including
yourself, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
In order to induce you to remain in the employ of the
Company and in consideration of your agreement set forth in
Subsection 2(iii) hereof, the Company agrees that you shall
receive the severance benefits set forth in this letter agreement
(the "Agreement") in the event your employment with the Company
is terminated subsequent to a "change in control of the Company"
(as defined in Section 2(i) hereof) (or is deemed to be
terminated subsequent to a change in control of the Company in
accordance with the second sentence of Section 3 hereof) under
the circumstances described below. This Agreement amends and
restates the letter agreement dated March 20, 1996 between you
and the Company.
1. Term of Agreement. Subject to the provisions of
Section 13 hereof, this Agreement shall commence on the date
hereof and shall continue in effect through June 30, 2000;
provided, however, that commencing on July 1, 1999 and each July
1 thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than March 31
of such year, the Company shall have given notice that it does
not wish to extend this Agreement (provided that no such notice
may be given during the pendency of or within two years following
a potential change in control of the Company, as defined in
Section 2(ii) hereof); provided, further, if a change in control
of the Company shall have occurred during the original or
extended term of this Agreement, this Agreement shall continue in
effect for a period of thirty-six (36) months beyond the month in
which such change in control occurred.
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2. Change in Control; Potential Change in Control. (i)
Except as provided in the second sentence of Section 3 hereof, no
benefits shall be payable hereunder unless there shall have been
a change in control of the Company, as set forth below. For
purposes of this Agreement, a "change in control of the Company"
shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company
is in fact required to comply therewith; provided, that, without
limitation, such a change in control shall be deemed to have
occurred if:
(A) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than the
Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a
c o r p o ration owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company is or
becomes the "beneficial owner" (as defined in Rule 13d-3
u n der the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding
securities;
(B) during any period of twenty-four (24) consecutive
months (not including any period prior to the date of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a
director designated by a person who has entered into an
agreement with the Company to effect a transaction described
in paragraphs (A), (C) or (D) of this Section 2(i)) whose
election by the Board or nomination for election by the
stockholders of the Company was approved by a vote of at
least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of such period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof; or
(C) there is consummated a merger or consolidation of
the Company or any direct or indirect subsidiary of the
Company with any other corporation, other than (i) a merger
or consolidation resulting in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at
least 65% of the combined voting securities of the Company
or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation or (ii) a
merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no "person" (as hereinabove defined) acquires 30% or
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more of the combined voting power of the Company's then
outstanding securities; or
(D) the stockholders of the Company approve a plan of
complete liquidation of the Company or there is consummated
t h e sale or disposition by the Company of all or
substantially all of the Company's assets.
(ii) For purposes of this Agreement, a "potential
change in control of the Company" shall be deemed to have
occurred if:
(A) t h e Company enters into an agreement, the
consummation of which would result in the occurrence of a
change in control of the Company;
(B) any person (as hereinabove defined), including the
Company, publicly announces an intention to take or consider
taking actions which if consummated would constitute a
change in control of the Company;
(C) any person (as hereinabove defined), other than
t h e Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or
a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company (a)
is or becomes the beneficial owner, (b) discloses directly
or indirectly to the Company or publicly a plan or intention
to become the beneficial owner, or (c) makes a filing under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, with respect to securities to become the beneficial
owner, directly or indirectly, of securities representing
9.9% or more of the combined voting power of the outstanding
voting securities of the Company; or
(D) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a potential change in
control of the Company has occurred.
(iii) You agree that, subject to the terms and
conditions of this Agreement, in the event of a potential change
in control of the Company, you will remain in the employ of the
Company until the earliest of (a) a date which is one (1) year
from the occurrence of such potential change in control of the
Company, (b) the termination by you of your employment after you
attain "normal retirement age" under the provisions of the TECO
Energy Group Retirement Plan or any successor thereto (the
"Retirement Plan") or by reason of Disability as defined in
Section 3(i), or (c) the date of the occurrence of a change in
control of the Company.
3. Termination Following Change in Control. If (i) your
employment is terminated following a change in control of the
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Company and during the term of this Agreement (as determined
under Section 1 hereof), other than (A) by the Company for Cause,
(B) by reason of death or Disability, or (C) by you without Good
Reason, or (ii) you voluntarily terminate your employment for any
reason during the one-month period commencing on the first
anniversary of the change in control of the Company, then, in
either such case, the Company shall pay you the amounts, and
provide you the benefits, described in Section 4(iii) hereof.
For purposes of this Agreement, your employment shall be deemed
to have been terminated following a change in control of the
Company by the Company without Cause or by you with Good Reason,
if (i) your employment is terminated by the Company without Cause
prior to a change in control of the Company (whether or not such
a change in control ever occurs) and such termination was at the
request or direction of a "person" (as hereinabove defined) who
has entered into an agreement with the Company the consummation
of which would constitute a change in control of the Company,
(ii) you terminate your employment for Good Reason prior to a
change in control of the Company (whether or not such a change in
control ever occurs) and the circumstance or event which
constitutes Good Reason occurs at the request or direction of
such person, or (iii) your employment is terminated by the
Company without Cause or by you for Good Reason and such
termination or the circumstance or event which constitutes Good
Reason is otherwise in connection with or in anticipation of a
change in control of the Company (whether or not such a change in
control ever occurs).
(i) Disability. If, as a result of your incapacity
due to physical or mental illness, you shall have been absent
from the full-time performance of your duties with the Company
for six (6) consecutive months, and within thirty (30) days after
written notice of termination is given you shall not have
returned to the full-time performance of your duties, your
employment may be terminated for "Disability".
(ii) Cause. Termination by the Company of your
employment for "Cause" shall mean termination upon (A) the
willful and continued failure by you to substantially perform
your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness
or any such actual or anticipated failure after the issuance of a
Notice of Termination by you for Good Reason, as defined in
Subsections 3(iv) and 3(iii), respectively) after a written
demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which
the Board believes that you have not substantially performed your
duties, or (B) the willful engaging by you in conduct which is
demonstrably and materially injurious to the Company, monetarily
or otherwise. For purposes of this Subsection, no act, or
failure to act, on your part shall be deemed "willful" unless
done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you
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shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together
with your counsel, to be heard before the Board), finding that in
the good faith opinion of the Board you were guilty of conduct
set forth above in this Subsection and specifying the particulars
thereof in detail.
(iii) Good Reason. "Good Reason" for termination by
you of your employment shall mean the occurrence (without your
express written consent) after any change in control of the
Company, or prior to a change in control of the Company under the
circumstances described in the second sentence of Section 3
hereof (treating all references in paragraphs (A) through (H)
below to a "change in control of the Company" as references to a
"potential change in control of the Company"), of any one of the
following acts by the Company, or failures by the Company to act:
(A) the assignment to you of any duties inconsistent
(except in the nature of a promotion) with the position in
the Company that you held immediately prior to the change in
control of the Company or a substantial adverse alteration
in the nature or status of your position or responsibilities
or the conditions of your employment from those in effect
immediately prior to the change in control of the Company;
(B) a reduction by the Company in your annual base
salary as in effect on the date hereof or as the same may be
increased from time to time;
(C) the Company's requiring you to be based more than
twenty-five (25) miles from the Company's offices at which
you were principally employed immediately prior to the date
of the change in control of the Company except for required
travel on the Company's business to an extent substantially
consistent with your present business travel obligations;
(D) the failure by the Company to pay to you any
portion of your current compensation or compensation under
any deferred compensation program of the Company, within
seven (7) days of the date such compensation is due;
(E) the failure by the Company to continue in effect
any material compensation or benefit plan in which you
participate immediately prior to the change in control of
the Company unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided
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and the level of your participation relative to other
participants, than existed at the time of the change in
control;
(F) the failure by the Company to continue to provide
you with benefits substantially similar to those enjoyed by
you under any of the Company's pension, life insurance,
medical, health and accident, or disability plans in which
you were participating at the time of the change in control
of the Company, the taking of any action by the Company
which would directly or indirectly materially reduce any of
such benefits or deprive you of any material fringe benefit
enjoyed by you at the time of the change in control of the
Company, or the failure by the Company to provide you with
the number of paid vacation days to which you are entitled
on the basis of your years of service with the Company in
accordance with the Company's normal vacation policy in
effect at the time of the change in control of the Company;
(G) t h e f ailure of the Company to obtain a
satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section
6 hereof; or
(H) any purported termination of your employment which
is not effected pursuant to a Notice of Termination
satisfying the requirements of Subsection (iv) below (and,
if applicable, the requirements of Subsection (ii) above),
which purported termination shall not be effective for
purposes of this Agreement.
Your right to terminate your employment pursuant to this
Subsection shall not be affected by your incapacity due to
physical or mental illness. Your continued employment shall not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.
(iv) Notice of Termination. Any purported termination
of your employment by the Company or by you shall be communicated
by written Notice of Termination to the other party hereto in
accordance with Section 7 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(v) Date of Termination, Etc. "Date of Termination"
shall mean (A) if your employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the full-time performance of
your duties during such thirty (30) day period), and (B) if your
employment is terminated pursuant to Subsection (ii) or (iii)
above or for any other reason (other than Disability), the date
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specified in the Notice of Termination (which, in the case of a
termination pursuant to Subsection (ii) above shall not be less
than thirty (30) days, and in the case of a termination pursuant
to Subsection (iii) above shall not be less than fifteen (15) nor
more than sixty (60) days, respectively, from the date such
Notice of Termination is given); provided that if within fifteen
(15) days after any Notice of Termination is given, or, if later,
prior to the Date of Termination (as determined without regard to
this proviso), the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which
the dispute is finally determined, either by mutual written
agreement of the parties or by a binding arbitration award; and
provided further that the Date of Termination shall be extended
by a notice of dispute only if such notice is given in good faith
and the party giving such notice pursues the resolution of such
dispute with reasonable diligence. Notwithstanding the pendency
of any such dispute, the Company will continue to pay you your
full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, base salary)
and continue you as a participant in all compensation, benefit
and insurance plans in which you were participating when the
notice giving rise to the dispute was given, until the dispute is
finally resolved in accordance with this Subsection. Amounts
paid under this Subsection are in addition to all other amounts
due under this Agreement and shall not be offset against or
reduce any other amounts due under this Agreement.
4. Compensation Upon Termination or During Disability.
Following a change in control of the Company, as defined by
Subsection 2(i), or prior to a change in control of the Company
under the circumstances described in the second sentence of
Section 3 hereof, upon termination of your employment or during a
period of disability you shall be entitled to the following
benefits:
(i) During any period that you fail to perform your
full-time duties with the Company as a result of incapacity due
to physical or mental illness, you shall continue to receive your
base salary at the rate in effect at the commencement of any such
period, together with all compensation payable to you under the
Company's disability plan or program or other similar plan during
such period, until this Agreement is terminated pursuant to
Section 3(i) hereof. Thereafter, or in the event your employment
shall be terminated by reason of your death, your benefits shall
be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms
of such programs.
(ii) If your employment shall be terminated by the
Company for Cause or by you other than for Good Reason, the
Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are
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entitled under any compensation plan of the Company at the time
such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(iii) If your employment by the Company terminates in
a manner entitling you to benefits under this Section pursuant to
Section 3 hereof, then you shall be entitled to the benefits
provided below:
(A) the Company shall pay you your full base salary
through the Date of Termination at the rate in effect at the
time Notice of Termination is given, plus all other amounts
to which you are entitled under any compensation plan of the
Company, at the time such payments are due, except as
otherwise provided below;
(B) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company
shall pay as severance pay to you a lump sum severance
payment (together with the payments provided in paragraphs
(D), (E) and (F) below, the "Severance Payments") equal to
three (3) times the sum of (1) the greater of (a) your
annual rate of base salary in effect on the Date of
Termination or (b) your annual rate of base salary in effect
immediately prior to the change in control of the Company
and (2) the greatest of (a) the average of the last two
annual bonuses (annualized in the case of any bonus paid
with respect to a partial year) paid to you preceding the
Date of Termination, (b) the average of the last two annual
bonuses (annualized in the case of any bonus paid with
respect to a partial year) paid to you preceding such change
in control, (c) the most recent annual bonus (annualized in
the case of any bonus paid with respect to a partial year)
paid to you preceding the Date of Termination, or (d) the
most recent annual bonus (annualized in the case of any
bonus paid with respect to a partial year) paid to you
preceding such change in control;
(C) the Company shall also pay to you, within five (5)
days after any such fees or expenses are incurred, all legal
fees and expenses incurred by you as a result of or in
connection with such termination, including all such fees
and expenses, if any, incurred in contesting or disputing
any such termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement (other than any
such fees or expenses incurred in connection with any such
claim which is determined by arbitration, in accordance with
Section 11 of this Agreement, to be frivolous) or in
connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code
to any payment or benefit provided hereunder;
(D) for a thirty-six (36) month period after such
termination, the Company shall arrange to provide you with
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life, disability, accident and health insurance benefits
substantially similar to those which you are receiving
immediately prior to the Notice of Termination. Benefits
otherwise receivable by you pursuant to this Subsection
4(iii)(D) shall be reduced to the extent comparable benefits
are actually received by you from a subsequent employer
during the thirty-six (36) month period following your
termination, and any such benefits actually received by you
shall be reported to the Company;
(E) in addition to the retirement benefits to which
you are entitled under the Retirement Plan, any supplemental
retirement or excess benefit plan maintained by the Company
or any of its subsidiaries or any successor plans thereto
(hereinafter collectively referred to as the "Pension
Plans"), the Company shall pay you in cash a lump sum equal
to the excess of (a) the actuarial equivalent of the
retirement pension (taking into account any early retirement
subsidies associated therewith and determined as a straight
life annuity commencing at age sixty-five (65) or any
earlier date, but in no event earlier than the third
anniversary of the Date of Termination, whichever annuity
the actuarial equivalent of which is greatest) which you
would have accrued under the terms of the Pension Plans
(without regard to the limitations imposed by Section
401(a)(17) of the Internal Revenue Code of 1986, as amended
(the "Code"), or any amendment to the Pension Plans made
subsequent to a change in control of the Company and on or
prior to the Date of Termination, which amendment adversely
affects in any manner the computation of retirement benefits
t h ereunder), determined as if you were fully vested
thereunder and had continued to be employed by the Company
( a fter the Date of Termination) for thirty-six (36)
additional months and as if you had accumulated thirty-six
(36) additional months of compensation (for purposes of
determining your pension benefits thereunder), each in an
amount equal to the sum of the amounts determined under
clauses (1) and (2) of Section 4(iii)(B) hereof over (b) the
actuarial equivalent of the vested retirement pension
( ▇ ▇ ▇▇▇▇ into account any early retirement subsidies
associated therewith and determined as a straight life
annuity commencing at age sixty-five (65) or any earlier
date, but in no event earlier than the Date of Termination,
whichever annuity the actuarial equivalent of which is
greatest) which you had then accrued pursuant to the
provisions of the Pension Plans. For purposes of this
Subsection, "actuarial equivalent" shall be determined using
the same actuarial assumptions utilized in determining the
amount of alternate forms of benefits under the Retirement
Plan immediately prior to the change in control of the
Company; and
(F) should you move your residence in order to pursue
other business opportunities within one (1) year of the Date
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of Termination, the Company will pay you, within five (5)
days after any such expenses are incurred, an amount equal
to the expenses incurred by you in connection with such
relocation (including expenses incurred in selling your home
to the extent such expenses were customarily reimbursed by
the Company to transferred executives prior to the change in
control of the Company) and which are not reimbursed by
another employer.
(iv) Except as otherwise specifically provided in
paragraph (C) and (F) thereof, the payments provided for in
Subsection (iii) shall be made not later than the fifth day
following the Date of Termination; provided, however, that if the
amounts of such payments cannot be finally determined on or
before such day, the Company shall pay to you on such day an
estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of
such payments (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof
can be determined but in no event later than the thirtieth day
after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the
Company to you payable on the fifth day after demand therefor by
the Company (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code).
(v) You shall not be required to mitigate the amount
of any payment provided for in this Section 4 or Section 5 hereof
by seeking other employment or otherwise, nor, except as
specifically provided in Sections 4(iii)(D) and (F) above, shall
the amount of any payment or benefit provided for in this Section
4 or Section 5 hereof be reduced by any compensation earned by
you as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be
owed by you to the Company, or otherwise.
5. Certain Additional Payments by the Company.
(i) Whether or not you become entitled to payments under
this Agreement, if any of the payments or benefits received or to
be received by you in connection with a change in control of the
Company or the termination of your employment (whether pursuant
to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a
change in control of the Company or any person affiliated with
the Company or such person) (such payments or benefits, including
the Severance Payments but excluding the Gross-Up Payment, being
hereinafter referred to as the "Total Payments") will be subject
to the excise tax imposed by section 4999 of the Code or any
interest or penalties are incurred by you with respect to such
excise tax (such excise tax, together with any such interest and
penalties, being hereinafter referred to as the "Excise Tax"),
the Company shall pay to you an additional amount (the "Gross-Up
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Payment") such that the net amount retained by you, after paying
any Excise Tax on the Total Payments and any federal, state and
local income and employment taxes and Excise Tax on the Gross-Up
Payment, shall be equal to the Total Payments.
(ii) For purposes of determining whether any of the Total
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (A) all of the Total Payments shall be treated as
"parachute payments" (within the meaning of section 280G(b)(2) of
the Code) unless, in the opinion of tax counsel ("Tax Counsel")
acceptable to you and selected by the accounting firm which was,
immediately prior to the change in control of the Company, the
Company's independent auditor (the "Auditor"), such payments or
benefits (in whole or in part) do not constitute parachute
payments, including by reason of section 280G(b)(4)(A) of the
Code, (B) all "excess parachute payments" (within the meaning of
section 280G(b)(1) of the Code) shall be treated as subject to
the Excise Tax unless, in the opinion of Tax Counsel, such excess
parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered (within the meaning
of section 280G(b)(4)(B) of the Code) in excess of the "base
amount" (within the meaning of section 280G(b)(3) of the Code)
allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax, and (C) the value of any noncash
benefits or any deferred payment or benefit shall be determined
b y t h e Auditor in accordance with the principles of
sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, you shall be
deemed to pay federal income tax at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-
Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of
your residence on the Date of Termination, net of the maximum
reduction in federal income taxes which could be obtained from
deduction of such state and local taxes.
(iii) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time of the termination of your employment, you
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus that
portion of the Gross-Up Payment attributable to the Excise Tax
and federal, state and local income and employment taxes imposed
on the Gross-Up Payment being repaid by you to the extent that
such repayment results in a reduction in Excise Tax and/or a
federal, state or local income or employment tax deduction) plus
interest on the amount of such repayment at 120% of the rate
provided in section 1274(b)(2)(B) of the Code. In the event that
the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of the termination of your
employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional Gross-Up Payment
47
in respect of such excess (plus any interest, penalties or
additions payable by you with respect to such excess) at the time
that the amount of such excess is finally determined. You and
the Company shall each reasonably cooperate with the other in
connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax
with respect to the Total Payments.
6. Successors; Binding Agreement. (i) The Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same
amount and on the same terms as you would be entitled to
hereunder if you terminate your employment for Good Reason
following a change in control of the Company, except that for
purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives,
e x ecutors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount would
still be payable to you hereunder if you had continued to live,
all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such designee, to
your estate.
7. Notice. For the purpose of this Agreement, notices and
all other communications provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the
Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
8. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by you and such
48
officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of Florida, without giving effect to the conflicts of
law principles thereof. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding
required under federal, state or local law. The obligations of
the Company under Sections 4 and 5 shall survive the expiration
of the term of this Agreement.
9. Validity. The invalidity or unenforceability or any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
11. Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively
by arbitration conducted before a panel of three arbitrators in
the State of Florida in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction;
provided, however, that you shall be entitled to seek specific
performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
12. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and during the term of the Agreement supersedes
the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties,
w h e t h er oral or written, by any officer, employee or
representative of any party hereto with respect to the subject
matter hereof.
13. Effective Date; Pooling. This Agreement shall become
effective as of the date set forth above. In the event that the
Company is party to an agreement with respect to a transaction
that is intended to qualify for "pooling of interests" accounting
49
t r eatment, then (A) this Agreement shall, to the extent
practicable, be interpreted so as to permit such accounting
treatment, and (B) to the extent that the application of clause
(A) of this Section 13 does not preserve the availability of such
accounting treatment, then the Company shall have the unilateral
right to amend this Agreement to the extent necessary to enable
the Company s accountants to issue a "pooling" opinion with
respect to such transaction, and any such amendment shall be
effective as of the date hereof.
50
If this letter sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed
copy of this letter which will then constitute our agreement on
this subject.
Sincerely,
TECO Energy, Inc.
By______________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: CEO and Chairman of the
Board
Agreed to this _______ day
of __________________, 1998.
______________________________
51
PRIVILEGED AND CONFIDENTIAL
July 15, 1998
__________________
__________________
__________________
Dear _____________:
TECO Energy, Inc. (the "Company") considers it essential to
the best interests of its stockholders to ▇▇▇▇▇▇ the continuous
employment of key management personnel. In this connection, the
Board of Directors of the Company (the "Board") recognizes that,
as is the case with many publicly held corporations, the
possibility of a change in control may exist and that such
possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of
key management personnel to the detriment of the Company and its
stockholders.
The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including
yourself, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
In order to induce you to remain in the employ of the
Company and in consideration of your agreement set forth in
Subsection 2(iii) hereof, the Company agrees that you shall
receive the severance benefits set forth in this letter agreement
(the "Agreement") in the event your employment with the Company
is terminated subsequent to a "change in control of the Company"
(as defined in Section 2(i) hereof) (or is deemed to be
terminated subsequent to a change in control of the Company in
accordance with the second sentence of Section 3 hereof) under
the circumstances described below. This Agreement amends and
restates the letter agreement dated March 20, 1996 between you
and the Company.
14. Term of Agreement. Subject to the provisions of
Section 13 hereof, this Agreement shall commence on the date
hereof and shall continue in effect through June 30, 2000;
provided, however, that commencing on July 1, 1999 and each July
1 thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than March 31
of such year, the Company shall have given notice that it does
not wish to extend this Agreement (provided that no such notice
may be given during the pendency of or within two years following
a potential change in control of the Company, as defined in
Section 2(ii) hereof); provided, further, if a change in control
of the Company shall have occurred during the original or
extended term of this Agreement, this Agreement shall continue in
52
effect for a period of twenty-four (24) months beyond the month
in which such change in control occurred.
15. Change in Control; Potential Change in Control. (i)
Except as provided in the second sentence of Section 3 hereof, no
benefits shall be payable hereunder unless there shall have been
a change in control of the Company, as set forth below. For
purposes of this Agreement, a "change in control of the Company"
shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company
is in fact required to comply therewith; provided, that, without
limitation, such a change in control shall be deemed to have
occurred if:
(A) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than the
Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a
c o r p o ration owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company is or
becomes the "beneficial owner" (as defined in Rule 13d-3
u n der the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding
securities;
(B) during any period of twenty-four (24) consecutive
months (not including any period prior to the date of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a
director designated by a person who has entered into an
agreement with the Company to effect a transaction described
in paragraphs (A), (C) or (D) of this Section 2(i)) whose
election by the Board or nomination for election by the
stockholders of the Company was approved by a vote of at
least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of such period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof; or
(C) there is consummated a merger or consolidation of
the Company or any direct or indirect subsidiary of the
Company with any other corporation, other than (i) a merger
or consolidation resulting in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at
least 65% of the combined voting securities of the Company
or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation or (ii) a
merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
53
which no "person" (as hereinabove defined) acquires 30% or
more of the combined voting power of the Company's then
outstanding securities; or
(D) the stockholders of the Company approve a plan of
complete liquidation of the Company or there is consummated
t h e sale or disposition by the Company of all or
substantially all of the Company's assets.
(ii) For purposes of this Agreement, a "potential
change in control of the Company" shall be deemed to have
occurred if:
(A) t h e Company enters into an agreement, the
consummation of which would result in the occurrence of a
change in control of the Company;
(B) any person (as hereinabove defined), including the
Company, publicly announces an intention to take or consider
taking actions which if consummated would constitute a
change in control of the Company;
(C) any person (as hereinabove defined), other than
t h e Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or
a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company (a)
is or becomes the beneficial owner, (b) discloses directly
or indirectly to the Company or publicly a plan or intention
to become the beneficial owner, or (c) makes a filing under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, with respect to securities to become the beneficial
owner, directly or indirectly, of securities representing
9.9% or more of the combined voting power of the outstanding
voting securities of the Company; or
(D) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a potential change in
control of the Company has occurred.
(iii) You agree that, subject to the terms and
conditions of this Agreement, in the event of a potential change
in control of the Company, you will remain in the employ of the
Company until the earliest of (a) a date which is one (1) year
from the occurrence of such potential change in control of the
Company, (b) the termination by you of your employment after you
attain "normal retirement age" under the provisions of the TECO
Energy Group Retirement Plan or any successor thereto (the
"Retirement Plan") or by reason of Disability as defined in
Section 3(i), or (c) the date of the occurrence of a change in
control of the Company.
16. Termination Following Change in Control. If your
employment is terminated following a change in control of the
Company and during the term of this Agreement (as determined
54
under Section 1 hereof), other than (A) by the Company for Cause,
(B) by reason of death or Disability, or (C) by you without Good
Reason, then the Company shall pay you the amounts, and provide
you the benefits, described in Section 4(iii) hereof. For
purposes of this Agreement, your employment shall be deemed to
have been terminated following a change in control of the Company
by the Company without Cause or by you with Good Reason, if (i)
your employment is terminated by the Company without Cause prior
to a change in control of the Company (whether or not such a
change in control ever occurs) and such termination was at the
request or direction of a "person" (as hereinabove defined) who
has entered into an agreement with the Company the consummation
of which would constitute a change in control of the Company,
(ii) you terminate your employment for Good Reason prior to a
change in control of the Company (whether or not such a change in
control ever occurs) and the circumstance or event which
constitutes Good Reason occurs at the request or direction of
such person, or (iii) your employment is terminated by the
Company without Cause or by you for Good Reason and such
termination or the circumstance or event which constitutes Good
Reason is otherwise in connection with or in anticipation of a
change in control of the Company (whether or not such a change in
control ever occurs).
(i) Disability. If, as a result of your incapacity
due to physical or mental illness, you shall have been absent
from the full-time performance of your duties with the Company
for six (6) consecutive months, and within thirty (30) days after
written notice of termination is given you shall not have
returned to the full-time performance of your duties, your
employment may be terminated for "Disability".
(ii) Cause. Termination by the Company of your
employment for "Cause" shall mean termination upon (A) the
willful and continued failure by you to substantially perform
your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness
or any such actual or anticipated failure after the issuance of a
Notice of Termination by you for Good Reason, as defined in
Subsections 3(iv) and 3(iii), respectively) after a written
demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which
the Board believes that you have not substantially performed your
duties, or (B) the willful engaging by you in conduct which is
demonstrably and materially injurious to the Company, monetarily
or otherwise. For purposes of this Subsection, no act, or
failure to act, on your part shall be deemed "willful" unless
done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you
shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together
55
with your counsel, to be heard before the Board), finding that in
the good faith opinion of the Board you were guilty of conduct
set forth above in this Subsection and specifying the particulars
thereof in detail.
(iii) Good Reason. "Good Reason" for termination by
you of your employment shall mean the occurrence (without your
express written consent) after any change in control of the
Company, or prior to a change in control of the Company under the
circumstances described in the second sentence of Section 3
hereof (treating all references in paragraphs (A) through (H)
below to a "change in control of the Company" as references to a
"potential change in control of the Company"), of any one of the
following acts by the Company, or failures by the Company to act:
(A) the assignment to you of any duties inconsistent
(except in the nature of a promotion) with the position in
the Company that you held immediately prior to the change in
control of the Company or a substantial adverse alteration
in the nature or status of your position or responsibilities
or the conditions of your employment from those in effect
immediately prior to the change in control of the Company;
(B) a reduction by the Company in your annual base
salary as in effect on the date hereof or as the same may be
increased from time to time;
(C) the Company's requiring you to be based more than
twenty-five (25) miles from the Company's offices at which
you were principally employed immediately prior to the date
of the change in control of the Company except for required
travel on the Company's business to an extent substantially
consistent with your present business travel obligations;
(D) the failure by the Company to pay to you any
portion of your current compensation or compensation under
any deferred compensation program of the Company, within
seven (7) days of the date such compensation is due;
(E) the failure by the Company to continue in effect
any material compensation or benefit plan in which you
participate immediately prior to the change in control of
the Company unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other
participants, than existed at the time of the change in
control;
(F) the failure by the Company to continue to provide
you with benefits substantially similar to those enjoyed by
you under any of the Company's pension, life insurance,
medical, health and accident, or disability plans in which
56
you were participating at the time of the change in control
of the Company, the taking of any action by the Company
which would directly or indirectly materially reduce any of
such benefits or deprive you of any material fringe benefit
enjoyed by you at the time of the change in control of the
Company, or the failure by the Company to provide you with
the number of paid vacation days to which you are entitled
on the basis of your years of service with the Company in
accordance with the Company's normal vacation policy in
effect at the time of the change in control of the Company;
(G) t h e f ailure of the Company to obtain a
satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section
6 hereof; or
(H) any purported termination of your employment which
is not effected pursuant to a Notice of Termination
satisfying the requirements of Subsection (iv) below (and,
if applicable, the requirements of Subsection (ii) above),
which purported termination shall not be effective for
purposes of this Agreement.
Your right to terminate your employment pursuant to this
Subsection shall not be affected by your incapacity due to
physical or mental illness. Your continued employment shall not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.
(iv) Notice of Termination. Any purported termination
of your employment by the Company or by you shall be communicated
by written Notice of Termination to the other party hereto in
accordance with Section 7 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(v) Date of Termination, Etc. "Date of Termination"
shall mean (A) if your employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the full-time performance of
your duties during such thirty (30) day period), and (B) if your
employment is terminated pursuant to Subsection (ii) or (iii)
above or for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the case of a
termination pursuant to Subsection (ii) above shall not be less
than thirty (30) days, and in the case of a termination pursuant
to Subsection (iii) above shall not be less than fifteen (15) nor
more than sixty (60) days, respectively, from the date such
Notice of Termination is given); provided that if within fifteen
(15) days after any Notice of Termination is given, or, if later,
prior to the Date of Termination (as determined without regard to
this proviso), the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the
57
termination, the Date of Termination shall be the date on which
the dispute is finally determined, either by mutual written
agreement of the parties or by a binding arbitration award; and
provided further that the Date of Termination shall be extended
by a notice of dispute only if such notice is given in good faith
and the party giving such notice pursues the resolution of such
dispute with reasonable diligence. Notwithstanding the pendency
of any such dispute, the Company will continue to pay you your
full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, base salary)
and continue you as a participant in all compensation, benefit
and insurance plans in which you were participating when the
notice giving rise to the dispute was given, until the dispute is
finally resolved in accordance with this Subsection. Amounts
paid under this Subsection are in addition to all other amounts
due under this Agreement and shall not be offset against or
reduce any other amounts due under this Agreement.
17. Compensation Upon Termination or During Disability.
Following a change in control of the Company, as defined by
Subsection 2(i), or prior to a change in control of the Company
under the circumstances described in the second sentence of
Section 3 hereof, upon termination of your employment or during a
period of disability you shall be entitled to the following
benefits:
(i) During any period that you fail to perform your
full-time duties with the Company as a result of incapacity due
to physical or mental illness, you shall continue to receive your
base salary at the rate in effect at the commencement of any such
period, together with all compensation payable to you under the
Company's disability plan or program or other similar plan during
such period, until this Agreement is terminated pursuant to
Section 3(i) hereof. Thereafter, or in the event your employment
shall be terminated by reason of your death, your benefits shall
be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms
of such programs.
(ii) If your employment shall be terminated by the
Company for Cause or by you other than for Good Reason, the
Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are
entitled under any compensation plan of the Company at the time
such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(iii) If your employment by the Company terminates in
a manner entitling you to benefits under this Section pursuant to
Section 3 hereof, then you shall be entitled to the benefits
provided below:
(A) the Company shall pay you your full base salary
through the Date of Termination at the rate in effect at the
time Notice of Termination is given, plus all other amounts
58
to which you are entitled under any compensation plan of the
Company, at the time such payments are due, except as
otherwise provided below;
(B) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company
shall pay as severance pay to you a lump sum severance
payment (together with the payments provided in paragraphs
(D), (E) and (F) below, the "Severance Payments") equal to
two (2) times the sum of (1) the greater of (a) your annual
rate of base salary in effect on the Date of Termination or
(b) your annual rate of base salary in effect immediately
prior to the change in control of the Company and (2) the
greatest of (a) the average of the last two annual bonuses
(annualized in the case of any bonus paid with respect to a
partial year) paid to you preceding the Date of Termination,
(b) the average of the last two annual bonuses (annualized
in the case of any bonus paid with respect to a partial
year) paid to you preceding such change in control, (c) the
most recent annual bonus (annualized in the case of any
bonus paid with respect to a partial year) paid to you
preceding the Date of Termination, or (d) the most recent
annual bonus (annualized in the case of any bonus paid with
respect to a partial year) paid to you preceding such change
in control;
(C) the Company shall also pay to you, within five (5)
days after any such fees or expenses are incurred, all legal
fees and expenses incurred by you as a result of or in
connection with such termination, including all such fees
and expenses, if any, incurred in contesting or disputing
any such termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement (other than any
such fees or expenses incurred in connection with any such
claim which is determined by arbitration, in accordance with
Section 11 of this Agreement, to be frivolous) or in
connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code
to any payment or benefit provided hereunder;
(D) for a twenty-four (24) month period after such
termination, the Company shall arrange to provide you with
life, disability, accident and health insurance benefits
substantially similar to those which you are receiving
immediately prior to the Notice of Termination. Benefits
otherwise receivable by you pursuant to this Subsection
4(iii)(D) shall be reduced to the extent comparable benefits
are actually received by you from a subsequent employer
during the twenty-four (24) month period following your
termination, and any such benefits actually received by you
shall be reported to the Company;
(E) in addition to the retirement benefits to which
you are entitled under the Retirement Plan, any supplemental
retirement or excess benefit plan maintained by the Company
or any of its subsidiaries or any successor plans thereto
59
(hereinafter collectively referred to as the "Pension
Plans"), the Company shall pay you in cash a lump sum equal
to the excess of (a) the actuarial equivalent of the
retirement pension (taking into account any early retirement
subsidies associated therewith and determined as a straight
life annuity commencing at age sixty-five (65) or any
earlier date, but in no event earlier than the third
anniversary of the Date of Termination, whichever annuity
the actuarial equivalent of which is greatest) which you
would have accrued under the terms of the Pension Plans
(without regard to the limitations imposed by Section
401(a)(17) of the Internal Revenue Code of 1986, as amended
(the "Code"), or any amendment to the Pension Plans made
subsequent to a change in control of the Company and on or
prior to the Date of Termination, which amendment adversely
affects in any manner the computation of retirement benefits
t h ereunder), determined as if you were fully vested
thereunder and had continued to be employed by the Company
(after the Date of Termination) for twenty-four (24)
additional months and as if you had accumulated twenty-four
(24) additional months of compensation (for purposes of
determining your pension benefits thereunder), each in an
amount equal to the sum of the amounts determined under
clauses (1) and (2) of Section 4(iii)(B) hereof over (b) the
actuarial equivalent of the vested retirement pension
( ▇ ▇ ▇▇▇▇ into account any early retirement subsidies
associated therewith and determined as a straight life
annuity commencing at age sixty-five (65) or any earlier
date, but in no event earlier than the Date of Termination,
whichever annuity the actuarial equivalent of which is
greatest) which you had then accrued pursuant to the
provisions of the Pension Plans. For purposes of this
Subsection, "actuarial equivalent" shall be determined using
the same actuarial assumptions utilized in determining the
amount of alternate forms of benefits under the Retirement
Plan immediately prior to the change in control of the
Company; and
(F) should you move your residence in order to pursue
other business opportunities within one (1) year of the Date
of Termination, the Company will pay you, within five (5)
days after any such expenses are incurred, an amount equal
to the expenses incurred by you in connection with such
relocation (including expenses incurred in selling your home
to the extent such expenses were customarily reimbursed by
the Company to transferred executives prior to the change in
control of the Company) and which are not reimbursed by
another employer.
(iv) Except as otherwise specifically provided in
paragraph (C) and (F) thereof, the payments provided for in
Subsection (iii) shall be made not later than the fifth day
following the Date of Termination; provided, however, that if the
amounts of such payments cannot be finally determined on or
before such day, the Company shall pay to you on such day an
estimate, as determined in good faith by the Company, of the
60
minimum amount of such payments and shall pay the remainder of
such payments (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof
can be determined but in no event later than the thirtieth day
after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the
Company to you payable on the fifth day after demand therefor by
the Company (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code).
(v) You shall not be required to mitigate the amount
of any payment provided for in this Section 4 by seeking other
employment or otherwise, nor, except as specifically provided in
Sections 4 (iii)(D) and (F) above, shall the amount of any
payment or benefit provided for in this Section 4 be reduced by
any compensation earned by you as the result of employment by
another employer, by retirement benefits, by offset against any
amount claimed to be owed by you to the Company, or otherwise.
18. Limit on Severance Payments. In the event that (i) any
payment or benefit received or to be received by you in
connection with a change in control of the Company or the
termination of your employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with
the Company, any person whose actions result in a change in
control or any person affiliated with the Company or such person)
(collectively with the Severance Payments, "Total Payments")
would not be deductible (in whole or part) as a result of section
280G of the Code by the Company, an affiliate or other person
making such payment or providing such benefit and (ii) the net
amount retained by you, after paying the excise tax imposed by
section 4999 of the Code and any federal, state and local income
and employment taxes on the Total Payments, would not exceed the
net amount that would have been retained by you after the
reduction of the Severance Payments as set forth below and the
payment of any federal, state and local income and employment
taxes on the Total Payments as so reduced, the Severance Payments
shall be reduced until no portion of the Total Payments is not
deductible, or the Severance Payments are reduced to zero. For
purposes of this limitation (a) no portion of the Total Payments
the receipt or enjoyment of which you shall have effectively
waived in writing prior to the date of payment of the Severance
Payments shall be taken into account, (b) no portion of the Total
Payments shall be taken into account which in the opinion of tax
counsel selected by the Company's independent auditors and
acceptable to you does not constitute a "parachute payment"
within the meaning of section 280G(b)(2) of the Code, (c) the
Severance Payments shall be reduced only to the extent necessary
so that the Total Payments (other than those referred to in
clauses (a) or (b)) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of
section 280G(b)(4) of the Code or are otherwise not subject to
disallowance as deductions, in the opinion of the tax counsel
referred to in clause (b); and (d) the value of any non-cash
benefit or any deferred payment or benefit included in the Total
61
Payments shall be determined by the Company's independent
auditors in accordance with the principles of sections 280G(d)(3)
and (4) of the Code. For purposes of determining the income
taxes on the Total Payments, you shall be deemed to pay federal
income tax at the highest marginal rate of federal income
taxation in the calendar year in which the Total Payments are to
be made and local income taxes at the highest marginal rate of
taxation in the state and locality of your residence on the Date
of Termination, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and
local taxes.
19. Successors; Binding Agreement. (i) The Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same
amount and on the same terms as you would be entitled to
hereunder if you terminate your employment for Good Reason
following a change in control of the Company, except that for
purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives,
e x ecutors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount would
still be payable to you hereunder if you had continued to live,
all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such designee, to
your estate.
20. Notice. For the purpose of this Agreement, notices and
all other communications provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the
Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
62
21. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by you and such
officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of Florida, without giving effect to the conflicts of
law principles thereof. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding
required under federal, state or local law. The obligations of
the Company under Section 4 shall survive the expiration of the
term of this Agreement.
22. Validity. The invalidity or unenforceability or any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
23. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
24. Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively
by arbitration conducted before a panel of three arbitrators in
the State of Florida in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction;
provided, however, that you shall be entitled to seek specific
performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
25. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and during the term of the Agreement supersedes
the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties,
w h e t h er oral or written, by any officer, employee or
representative of any party hereto with respect to the subject
matter hereof.
26. Effective Date; Pooling. This Agreement shall become
effective as of the date set forth above. In the event that the
Company is party to an agreement with respect to a transaction
63
that is intended to qualify for "pooling of interests" accounting
t r eatment, then (A) this Agreement shall, to the extent
practicable, be interpreted so as to permit such accounting
treatment, and (B) to the extent that the application of clause
(A) of this Section 13 does not preserve the availability of such
accounting treatment, then the Company shall have the unilateral
right to amend this Agreement to the extent necessary to enable
the Company s accountants to issue a "pooling" opinion with
respect to such transaction, and any such amendment shall be
effective as of the date hereof.
If this letter sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed
copy of this letter which will then constitute our agreement on
this subject.
Sincerely,
TECO Energy, Inc.
By_________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: CEO and Chairman of
the Board
Agreed to this _______ day
of __________________, 1998.
______________________________
64
PRIVILEGED AND CONFIDENTIAL
July 15, 1998
__________________
__________________
__________________
Dear _____________:
TECO Energy, Inc. (the "Company") considers it essential to
the best interests of its stockholders to ▇▇▇▇▇▇ the continuous
employment of key management personnel. In this connection, the
Board of Directors of the Company (the "Board") recognizes that,
as is the case with many publicly held corporations, the
possibility of a change in control may exist and that such
possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of
key management personnel to the detriment of the Company and its
stockholders.
The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including
yourself, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
In order to induce you to remain in the employ of the
Company and in consideration of your agreement set forth in
Subsection 2(iii) hereof, the Company agrees that you shall
receive the severance benefits set forth in this letter agreement
(the "Agreement") in the event your employment with the Company
is terminated subsequent to a "change in control of the Company"
(as defined in Section 2(i) hereof) (or is deemed to be
terminated subsequent to a change in control of the Company in
accordance with the second sentence of Section 3 hereof) under
the circumstances described below. This Agreement amends and
restates the letter agreement dated July 19, 1994 between you and
the Company.
1. Term of Agreement. Subject to the provisions of
Section 13 hereof, this Agreement shall commence on the date
hereof and shall continue in effect through June 30, 2000;
provided, however, that commencing on July 1, 1999 and each July
1 thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than March 31
of such year, the Company shall have given notice that it does
not wish to extend this Agreement (provided that no such notice
may be given during the pendency of or within two years following
a potential change in control of the Company, as defined in
Section 2(ii) hereof); provided, further, if a change in control
of the Company shall have occurred during the original or
extended term of this Agreement, this Agreement shall continue in
65
effect for a period of twenty-four (24) months beyond the month
in which such change in control occurred.
2. Change in Control; Potential Change in Control. (i)
Except as provided in the second sentence of Section 3 hereof, no
benefits shall be payable hereunder unless there shall have been
a change in control of the Company, as set forth below. For
purposes of this Agreement, a "change in control of the Company"
shall mean a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), whether or not the Company
is in fact required to comply therewith; provided, that, without
limitation, such a change in control shall be deemed to have
occurred if:
(A) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act), other than the
Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a
c o r p o ration owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company is or
becomes the "beneficial owner" (as defined in Rule 13d-3
u n der the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding
securities;
(B) during any period of twenty-four (24) consecutive
months (not including any period prior to the date of this
Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a
director designated by a person who has entered into an
agreement with the Company to effect a transaction described
in paragraphs (A), (C) or (D) of this Section 2(i)) whose
election by the Board or nomination for election by the
stockholders of the Company was approved by a vote of at
least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of such period or
whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority
thereof; or
(C) there is consummated a merger or consolidation of
the Company or any direct or indirect subsidiary of the
Company with any other corporation, other than (i) a merger
or consolidation resulting in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at
least 65% of the combined voting securities of the Company
or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation or (ii) a
merger or consolidation effected to implement a
66
recapitalization of the Company (or similar transaction) in
which no "person" (as hereinabove defined) acquires 30% or
more of the combined voting power of the Company's then
outstanding securities; or
(D) the stockholders of the Company approve a plan of
complete liquidation of the Company or there is consummated
t h e sale or disposition by the Company of all or
substantially all of the Company's assets.
(ii) For purposes of this Agreement, a "potential
change in control of the Company" shall be deemed to have
occurred if:
(A) t h e Company enters into an agreement, the
consummation of which would result in the occurrence of a
change in control of the Company;
(B) any person (as hereinabove defined), including the
Company, publicly announces an intention to take or consider
taking actions which if consummated would constitute a
change in control of the Company;
(C) any person (as hereinabove defined), other than
t h e Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or
a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company (a)
is or becomes the beneficial owner, (b) discloses directly
or indirectly to the Company or publicly a plan or intention
to become the beneficial owner, or (c) makes a filing under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, with respect to securities to become the beneficial
owner, directly or indirectly, of securities representing
9.9% or more of the combined voting power of the outstanding
voting securities of the Company; or
(D) the Board adopts a resolution to the effect that,
for purposes of this Agreement, a potential change in
control of the Company has occurred.
(iii) You agree that, subject to the terms and
conditions of this Agreement, in the event of a potential change
in control of the Company, you will remain in the employ of the
Company until the earliest of (a) a date which is one (1) year
from the occurrence of such potential change in control of the
Company, (b) the termination by you of your employment after you
attain "normal retirement age" under the provisions of the TECO
Energy Group Retirement Plan or any successor thereto (the "
Retirement Plan") or by reason of Disability as defined in
Section 3(i), or (c) the date of the occurrence of a change in
control of the Company.
67
3. Termination Following Change in Control. If your
employment is terminated following a change in control of the
Company and during the term of this Agreement (as determined
under Section 1 hereof), other than (A) by the Company for Cause,
(B) by reason of death or Disability, or (C) by you without Good
Reason, then the Company shall pay you the amounts, and provide
you the benefits, described in Section 4(iii) hereof. For
purposes of this Agreement, your employment shall be deemed to
have been terminated following a change in control of the Company
by the Company without Cause or by you with Good Reason, if (i)
your employment is terminated by the Company without Cause prior
to a change in control of the Company (whether or not such a
change in control ever occurs) and such termination was at the
request or direction of a "person" (as hereinabove defined) who
has entered into an agreement with the Company the consummation
of which would constitute a change in control of the Company,
(ii) you terminate your employment for Good Reason prior to a
change in control of the Company (whether or not such a change in
control ever occurs) and the circumstance or event which
constitutes Good Reason occurs at the request or direction of
such person, or (iii) your employment is terminated by the
Company without Cause or by you for Good Reason and such
termination or the circumstance or event which constitutes Good
Reason is otherwise in connection with or in anticipation of a
change in control of the Company (whether or not such a change in
control ever occurs).
(i) Disability. If, as a result of your incapacity
due to physical or mental illness, you shall have been absent
from the full-time performance of your duties with the Company
for six (6) consecutive months, and within thirty (30) days after
written notice of termination is given you shall not have
returned to the full-time performance of your duties, your
employment may be terminated for "Disability".
(ii) Cause. Termination by the Company of your
employment for "Cause" shall mean termination upon (A) the
willful and continued failure by you to substantially perform
your duties with the Company (other than any such failure
resulting from your incapacity due to physical or mental illness
or any such actual or anticipated failure after the issuance of a
Notice of Termination by you for Good Reason, as defined in
Subsections 3(iv) and 3(iii), respectively) after a written
demand for substantial performance is delivered to you by the
Board, which demand specifically identifies the manner in which
the Board believes that you have not substantially performed your
duties, or (B) the willful engaging by you in conduct which is
demonstrably and materially injurious to the Company, monetarily
or otherwise. For purposes of this Subsection, no act, or
failure to act, on your part shall be deemed "willful" unless
done, or omitted to be done, by you not in good faith and without
reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you
shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a
68
resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice to you and an opportunity for you, together
with your counsel, to be heard before the Board), finding that in
the good faith opinion of the Board you were guilty of conduct
set forth above in this Subsection and specifying the particulars
thereof in detail.
(iii) Good Reason. "Good Reason" for termination by
you of your employment shall mean the occurrence (without your
express written consent) after any change in control of the
Company, or prior to a change in control of the Company under the
circumstances described in the second sentence of Section 3
hereof (treating all references in paragraphs (A) through (H)
below to a "change in control of the Company" as references to a
"potential change in control of the Company"), of any one of the
following acts by the Company, or failures by the Company to act:
(A) the assignment to you of any duties inconsistent
(except in the nature of a promotion) with the position in
the Company that you held immediately prior to the change in
control of the Company or a substantial adverse alteration
in the nature or status of your position or responsibilities
or the conditions of your employment from those in effect
immediately prior to the change in control of the Company;
(B) a reduction by the Company in your annual base
salary as in effect on the date hereof or as the same may be
increased from time to time;
(C) the Company's requiring you to be based more than
twenty-five (25) miles from the Company's offices at which
you were principally employed immediately prior to the date
of the change in control of the Company except for required
travel on the Company's business to an extent substantially
consistent with your present business travel obligations;
(D) the failure by the Company to pay to you any
portion of your current compensation or compensation under
any deferred compensation program of the Company, within
seven (7) days of the date such compensation is due;
(E) the failure by the Company to continue in effect
any material compensation or benefit plan in which you
participate immediately prior to the change in control of
the Company unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to
continue your participation therein (or in such substitute
or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided
and the level of your participation relative to other
participants, than existed at the time of the change in
control;
69
(F) the failure by the Company to continue to provide
you with benefits substantially similar to those enjoyed by
you under any of the Company's pension, life insurance,
medical, health and accident, or disability plans in which
you were participating at the time of the change in control
of the Company, the taking of any action by the Company
which would directly or indirectly materially reduce any of
such benefits or deprive you of any material fringe benefit
enjoyed by you at the time of the change in control of the
Company, or the failure by the Company to provide you with
the number of paid vacation days to which you are entitled
on the basis of your years of service with the Company in
accordance with the Company's normal vacation policy in
effect at the time of the change in control of the Company;
(G) t h e f ailure of the Company to obtain a
satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in Section
6 hereof; or
(H) any purported termination of your employment which
is not effected pursuant to a Notice of Termination
satisfying the requirements of Subsection (iv) below (and,
if applicable, the requirements of Subsection (ii) above),
which purported termination shall not be effective for
purposes of this Agreement.
Your right to terminate your employment pursuant to this
Subsection shall not be affected by your incapacity due to
physical or mental illness. Your continued employment shall not
constitute consent to, or a waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.
(iv) Notice of Termination. Any purported termination
of your employment by the Company or by you shall be communicated
by written Notice of Termination to the other party hereto in
accordance with Section 7 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(v) Date of Termination, Etc. "Date of Termination"
shall mean (A) if your employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided
that you shall not have returned to the full-time performance of
your duties during such thirty (30) day period), and (B) if your
employment is terminated pursuant to Subsection (ii) or (iii)
above or for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the case of a
termination pursuant to Subsection (ii) above shall not be less
than thirty (30) days, and in the case of a termination pursuant
to Subsection (iii) above shall not be less than fifteen (15) nor
more than sixty (60) days, respectively, from the date such
70
Notice of Termination is given); provided that if within fifteen
(15) days after any Notice of Termination is given, or, if later,
prior to the Date of Termination (as determined without regard to
this proviso), the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which
the dispute is finally determined, either by mutual written
agreement of the parties or by a binding arbitration award; and
provided further that the Date of Termination shall be extended
by a notice of dispute only if such notice is given in good faith
and the party giving such notice pursues the resolution of such
dispute with reasonable diligence. Notwithstanding the pendency
of any such dispute, the Company will continue to pay you your
full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, base salary)
and continue you as a participant in all compensation, benefit
and insurance plans in which you were participating when the
notice giving rise to the dispute was given, until the dispute is
finally resolved in accordance with this Subsection. Amounts
paid under this Subsection are in addition to all other amounts
due under this Agreement and shall not be offset against or
reduce any other amounts due under this Agreement.
4. Compensation Upon Termination or During Disability.
Following a change in control of the Company, as defined by
Subsection 2(i), or prior to a change in control of the Company
under the circumstances described in the second sentence of
Section 3 hereof, upon termination of your employment or during a
period of disability you shall be entitled to the following
benefits:
(i) During any period that you fail to perform your
full-time duties with the Company as a result of incapacity due
to physical or mental illness, you shall continue to receive your
base salary at the rate in effect at the commencement of any such
period, together with all compensation payable to you under the
Company's disability plan or program or other similar plan during
such period, until this Agreement is terminated pursuant to
Section 3(i) hereof. Thereafter, or in the event your employment
shall be terminated by reason of your death, your benefits shall
be determined under the Company's retirement, insurance and other
compensation programs then in effect in accordance with the terms
of such programs.
(ii) If your employment shall be terminated by the
Company for Cause or by you other than for Good Reason, the
Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are
entitled under any compensation plan of the Company at the time
such payments are due, and the Company shall have no further
obligations to you under this Agreement.
(iii) If your employment by the Company terminates in
a manner entitling you to benefits under this Section pursuant to
71
Section 3 hereof, then you shall be entitled to the benefits
provided below:
(A) the Company shall pay you your full base salary
through the Date of Termination at the rate in effect at the
time Notice of Termination is given, plus all other amounts
to which you are entitled under any compensation plan of the
Company, at the time such payments are due, except as
otherwise provided below;
(B) in lieu of any further salary payments to you for
periods subsequent to the Date of Termination, the Company
shall pay as severance pay to you a lump sum severance
payment (together with the payments provided in paragraphs
(D), (E) and (F) below, the "Severance Payments") equal to
two (2) times the sum of (1) the greater of (a) your annual
rate of base salary in effect on the Date of Termination or
(b) your annual rate of base salary in effect immediately
prior to the change in control of the Company and (2) the
greatest of (a) the average of the last two annual bonuses
(annualized in the case of any bonus paid with respect to a
partial year) paid to you preceding the Date of Termination,
(b) the average of the last two annual bonuses (annualized
in the case of any bonus paid with respect to a partial
year) paid to you preceding such change in control, (c) the
most recent annual bonus (annualized in the case of any
bonus paid with respect to a partial year) paid to you
preceding the Date of Termination, or (d) the most recent
annual bonus (annualized in the case of any bonus paid with
respect to a partial year) paid to you preceding such change
in control;
(C) the Company shall also pay to you, within five (5)
days after any such fees or expenses are incurred, all legal
fees and expenses incurred by you as a result of or in
connection with such termination, including all such fees
and expenses, if any, incurred in contesting or disputing
any such termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement (other than any
such fees or expenses incurred in connection with any such
claim which is determined by arbitration, in accordance with
Section 11 of this Agreement, to be frivolous) or in
connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code
to any payment or benefit provided hereunder;
(D) for a twenty-four (24) month period after such
termination, the Company shall arrange to provide you with
life, disability, accident and health insurance benefits
substantially similar to those which you are receiving
immediately prior to the Notice of Termination. Benefits
otherwise receivable by you pursuant to this Subsection
4(iii)(D) shall be reduced to the extent comparable benefits
are actually received by you from a subsequent employer
during the twenty-four (24) month period following your
72
termination, and any such benefits actually received by you
shall be reported to the Company;
(E) in addition to the retirement benefits to which
you are entitled under the Retirement Plan, any supplemental
retirement or excess benefit plan maintained by the Company
or any of its subsidiaries or any successor plans thereto
(hereinafter collectively referred to as the "Pension
Plans"), the Company shall pay you in cash a lump sum equal
to the excess of (a) the actuarial equivalent of the
retirement pension (taking into account any early retirement
subsidies associated therewith and determined as a straight
life annuity commencing at age sixty-five (65) or any
earlier date, but in no event earlier than the third
anniversary of the Date of Termination, whichever annuity
the actuarial equivalent of which is greatest) which you
would have accrued under the terms of the Pension Plans
(without regard to the limitations imposed by Section
401(a)(17) of the Internal Revenue Code of 1986, as amended
(the "Code"), or any amendment to the Pension Plans made
subsequent to a change in control of the Company and on or
prior to the Date of Termination, which amendment adversely
affects in any manner the computation of retirement benefits
t h ereunder), determined as if you were fully vested
thereunder and had continued to be employed by the Company
(after the Date of Termination) for twenty-four (24)
additional months and as if you had accumulated twenty-four
(24) additional months of compensation (for purposes of
determining your pension benefits thereunder), each in an
amount equal to the sum of the amounts determined under
clauses (1) and (2) of Section 4(iii)(B) hereof over (b) the
actuarial equivalent of the vested retirement pension
( ▇ ▇ ▇▇▇▇ into account any early retirement subsidies
associated therewith and determined as a straight life
annuity commencing at age sixty-five (65) or any earlier
date, but in no event earlier than the Date of Termination,
whichever annuity the actuarial equivalent of which is
greatest) which you had then accrued pursuant to the
provisions of the Pension Plans. For purposes of this
Subsection, "actuarial equivalent" shall be determined using
the same actuarial assumptions utilized in determining the
amount of alternate forms of benefits under the Retirement
Plan immediately prior to the change in control of the
Company; and
(F) should you move your residence in order to pursue
other business opportunities within one (1) year of the Date
of Termination, the Company will pay you, within five (5)
days after any such expenses are incurred, an amount equal
to the expenses incurred by you in connection with such
relocation (including expenses incurred in selling your home
to the extent such expenses were customarily reimbursed by
the Company to transferred executives prior to the change in
control of the Company) and which are not reimbursed by
another employer.
73
(iv) Except as otherwise specifically provided in
paragraph (C) and (F) thereof, the payments provided for in
Subsection (iii) shall be made not later than the fifth day
following the Date of Termination; provided, however, that if the
amounts of such payments cannot be finally determined on or
before such day, the Company shall pay to you on such day an
estimate, as determined in good faith by the Company, of the
minimum amount of such payments and shall pay the remainder of
such payments (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof
can be determined but in no event later than the thirtieth day
after the Date of Termination. In the event that the amount of
the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the
Company to you payable on the fifth day after demand therefor by
the Company (together with interest at the rate provided in
section 1274(b)(2)(B) of the Code).
(v) You shall not be required to mitigate the amount
of any payment provided for in this Section 4 by seeking other
employment or otherwise, nor, except as specifically provided in
Sections 4 (iii)(D) and (F) above, shall the amount of any
payment or benefit provided for in this Section 4 be reduced by
any compensation earned by you as the result of employment by
another employer, by retirement benefits, by offset against any
amount claimed to be owed by you to the Company, or otherwise.
5. Limit on Severance Payments. In the event that any
payment or benefit received or to be received by you in
connection with a change in control of the Company or the
termination of your employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with
the Company, any person whose actions result in a change in
control or any person affiliated with the Company or such person)
(collectively with the Severance Payments, "Total Payments")
would not be deductible (in whole or part) as a result of section
280G of the Code by the Company, an affiliate or other person
making such payment or providing such benefit the Severance
Payments shall be reduced until no portion of the Total Payments
is not deductible, or the Severance Payments are reduced to zero.
For purposes of this limitation (a) no portion of the Total
Payments the receipt or enjoyment of which you shall have
effectively waived in writing prior to the date of payment of the
Severance Payments shall be taken into account, (b) no portion of
the Total Payments shall be taken into account which in the
opinion of tax counsel selected by the Company's independent
auditors and acceptable to you does not constitute a "parachute
payment" within the meaning of section 280G(b)(2) of the Code,
(c) the Severance Payments shall be reduced only to the extent
necessary so that the Total Payments (other than those referred
to in clauses (a) or (b)) in their entirety constitute reasonable
compensation for services actually rendered within the meaning of
section 280G(b)(4) of the Code or are otherwise not subject to
disallowance as deductions, in the opinion of the tax counsel
referred to in clause (b); and (d) the value of any non-cash
74
benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Company's independent
auditors in accordance with the principles of sections 280G(d)(3)
and (4) of the Code.
6. Successors; Binding Agreement. (i) The Company will
require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company to expressly assume
and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if
no such succession had taken place. Failure of the Company to
obtain such assumption and agreement prior to the effectiveness
of any such succession shall be a breach of this Agreement and
shall entitle you to compensation from the Company in the same
amount and on the same terms as you would be entitled to
hereunder if you terminate your employment for Good Reason
following a change in control of the Company, except that for
purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
(ii) This Agreement shall inure to the benefit of and
be enforceable by your personal or legal representatives,
e x ecutors, administrators, successors, heirs, distributees,
devisees and legatees. If you should die while any amount would
still be payable to you hereunder if you had continued to live,
all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to your devisee,
legatee or other designee or, if there is no such designee, to
your estate.
7. Notice. For the purpose of this Agreement, notices and
all other communications provided for in the Agreement shall be
in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the
Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
8. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification
or discharge is agreed to in writing and signed by you and such
officer as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
75
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not expressly set forth in this
Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of Florida, without giving effect to the conflicts of
law principles thereof. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for
hereunder shall be paid net of any applicable withholding
required under federal, state or local law. The obligations of
the Company under Section 4 shall survive the expiration of the
term of this Agreement.
9. Validity. The invalidity or unenforceability or any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
10. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the
same instrument.
11. Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively
by arbitration conducted before a panel of three arbitrators in
the State of Florida in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction;
provided, however, that you shall be entitled to seek specific
performance of your right to be paid until the Date of
Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
12. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter
contained herein and during the term of the Agreement supersedes
the provisions of all prior agreements, promises, covenants,
arrangements, communications, representations or warranties,
w h e t h er oral or written, by any officer, employee or
representative of any party hereto with respect to the subject
matter hereof.
13. Effective Date; Pooling. This Agreement shall become
effective as of the date set forth above. In the event that the
Company is party to an agreement with respect to a transaction
that is intended to qualify for "pooling of interests" accounting
t r eatment, then (A) this Agreement shall, to the extent
practicable, be interpreted so as to permit such accounting
treatment, and (B) to the extent that the application of clause
(A) of this Section 13 does not preserve the availability of such
accounting treatment, then the Company shall have the unilateral
76
right to amend this Agreement to the extent necessary to enable
the Company s accountants to issue a "pooling" opinion with
respect to such transaction, and any such amendment shall be
effective as of the date hereof.
If this letter sets forth our agreement on the subject
matter hereof, kindly sign and return to the Company the enclosed
copy of this letter which will then constitute our agreement on
this subject.
Sincerely,
TECO Energy, Inc.
By_________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: CEO and Chairman of
the Board
Agreed to this _______ day
of __________________, 1998.
______________________________
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