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Exhibit 10.5
TAMPA ELECTRIC COMPANY
FORMS OF SEVERANCE AGREEMENTS BETWEEN TECO ENERGY, INC. AND
CERTAIN SENIOR EXECUTIVES
AMENDED AND RESTATED AS OF OCT. 22, 1999
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PRIVILEGED AND CONFIDENTIAL
Date
Name
Address
Address 2
Dear First Name:
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. Amd Date
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, 2001; provided, however, that commencing on July 1, 2000 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);
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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.
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 corporation 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 under 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 more of
the combined voting power of the Company's then outstanding securities;
or
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(D) the stockholders of the Company approve a plan of complete
liquidation of the Company or there is consummated the 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) the 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 the
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 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
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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 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
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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 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) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6
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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 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.
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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 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
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bonus (annualized in the case of any bonus paid with respect to a
partial year) paid to you preceding such change in control, or (e) in
the event that on the date of the change in control of the the Company
you have been employed by the Company for less than two years and have
not yet been considered for receipt of an annual bonus, your annual
incentive target award in effect immediately prior to 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 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 TECO 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 (computed at your
date of termination) of the retirement pension (taking into account any
early retirement subsidies and post-retirement surviving spouse
benefits associated therewith and determined as an annuity payable in
the normal form under the Pension Plans commencing at your normal
retirement age under the Retirement Plan 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
thereunder), determined as if you were fully vested thereunder and had
continued to be a participant in each of the Pension Plans 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
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amounts determined under clauses (1) and (2) of Section 4(iii)(B)
hereof over (b) the actuarial equivalent (computed at your date of
termination) of the vested retirement pension (taking into account any
early retirement subsidies and post-retirement surviving spouse
benefits associated therewith and determined as an annuity payable in
the normal form under the Pension Plans commencing at your normal
retirement age under the Retirement Plan 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 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
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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 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 by the 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
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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 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. (iv) 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,
executors, 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
13
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, whether 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 treatment, 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.
14
Sincerely,
TECO Energy, Inc.
By /s/
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President-Human Resources
Agreed to this _______ day
of __________________, 2000.
_____________________________
Signature
15
PRIVILEGED AND CONFIDENTIAL
Date
Name
Address 1
Address 2
Dear First Name:
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. Amd Date
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, 2001; provided, however, that commencing on July 1, 2000 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
16
term of this Agreement, this Agreement shall continue in 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 corporation 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 under 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 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
17
the Company or there is consummated the 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) the 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 the
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 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
18
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 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
19
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 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) the failure 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
20
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 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
21
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 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, or (e) in the event that on the date of the change in control
of the the Company you have been employed by the Company for less than
two
22
years and have not yet been considered for receipt of an annual bonus,
your annual incentive target award in effect immediately prior to 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 TECO 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 (computed at your
date of termination) of the retirement pension (taking into account any
early retirement subsidies and post-retirement surviving spouse
benefits associated therewith and determined as an annuity payable in
the normal form under the Pension Plans commencing at your normal
retirement age under the Retirement Plan or any earlier date, but in no
event earlier than the second 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
thereunder), determined as if you were fully vested thereunder and had
continued to be a participant in each of the Pension Plans 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 (computed at
your date of termination) of the vested retirement pension (taking into
account any early retirement subsidies and post-retirement surviving
23
spouse benefits associated therewith and determined as an annuity
payable in the normal form under the Pension Plans commencing at your
normal retirement age under the Retirement Plan 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 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 (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
24
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 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.
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,
executors, 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
25
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 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.
26
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, whether 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 treatment, 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 /s/
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President-Human Resources
Agreed to this _______ day
of __________________, 2000.
____________________________
Signature
27
PRIVILEGED AND CONFIDENTIAL
Date
Name
Address 1
Address 2
Dear First Name:
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. Amd Date
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, 2001; provided, however, that commencing on July 1, 2000 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 twenty-four
(24) months beyond the month in which such change in control occurred.
28
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 corporation 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 under 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 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 the sale or
disposition by the Company of all or substantially all of the Company's
assets.
29
(ii) For purposes of this Agreement, a "potential
change in control of the Company" shall be deemed to have
occurred if:
(A) the 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 the
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 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
30
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 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
31
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 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) the failure 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.
32
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 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
33
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 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, or (e) in the event that on the date of the change in control
of the the Company you have been employed by the Company for less than
two years and have not yet been considered for receipt of an annual
bonus, your annual incentive target award in effect immediately prior
to such change in control;
(C) the Company shall also pay to you, within five (5) days
after any such fees
34
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 TECO 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 (computed at your
date of termination) of the retirement pension (taking into account any
early retirement subsidies and post-retirement surviving spouse
benefits associated therewith and determined as an annuity payable in
the normal form under the Pension Plans commencing at your normal
retirement age under the Retirement Plan or any earlier date, but in no
event earlier than the second 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
thereunder), determined as if you were fully vested thereunder and had
continued to be a participant in each of the Pension Plans 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 (computed at
your date of termination) of the vested retirement pension (taking into
account any early retirement subsidies and post-retirement surviving
spouse benefits associated therewith and determined as an annuity
payable in the normal form under the Pension Plans commencing at your
normal retirement age under the Retirement Plan 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
35
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 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
36
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 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,
executors, 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
37
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.
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, whether 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 treatment, 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.
38
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 /s/
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President-Human Resources
Agreed to this _______ day
of __________________, 2000.
____________________________
Signature