Document:

Terms of R.D. Fagan

   

	  
 	 Exhibit 10.1
 
	  
 	  
 
	  
 	  
 

 
 January 28,
2003
 Mr. Robert D. Fagan
TECO Energy, Inc.
702 N. Franklin Street
Tampa, FL 33602
 Dear Mr. Fagan:
 This will confirm certain terms and conditions relating to your employment by TECO
Energy, Inc. (the “Company”).
 1.
Duties. You shall serve at the pleasure of the Company’s Board of Directors and you shall perform such executive duties for the Company and its subsidiaries as may be assigned to you by the Company’s Board of
Directors. While so employed, you shall devote your full employable time to the performance of such duties and use your best efforts to promote the interests of the Company and its subsidiaries. You shall, at the pleasure of the Company, serve on
such boards of directors and committees of the Company and its subsidiaries and hold such offices with the Company and its subsidiaries to which you may be duly elected or appointed.
 2.
Compensation Upon Other Termination. If, within three years of the date hereof, your employment shall be terminated by the Company other than for Cause or Disability or if it is terminated by you for Good Reason, then you shall be entitled to the following benefits:

(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.
 (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 within five days after the date of termination equal to two times the sum of (1) the highest annual rate of base salary in
effect at any time within the 12 months preceding the date of termination and (2) the greater of (A) your targeted annual incentive award as of the 
 

   

	 Letter to Mr. Fagan
 	 Exhibit 10.1
 
	 Page 2
 	  
 
	 January 28, 2003
 	  
 

 
 date of termination and (B) the
most recent annual incentive award paid to you by the Company preceding the date of termination.
 (c)
For a 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 that you were receiving immediately prior to termination. Benefits otherwise receivable by you under this subsection will be reduced to the extent comparable benefits are actually received by you from a
subsequent employer during the 24-month period following your termination, and any such benefits actually received by you shall be reported to the Company.
 (d)
In addition to the retirement benefits to which you are entitled under the TECO Energy Group Retirement Plan
(“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 your
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 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 2(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 your 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.
 

   

	 Letter to Mr. Fagan
 	 Exhibit 10.1
 
	 Page 3
 	  
 
	 January 28, 2003
 	  
 

 
 (e)
All time-based restricted stock previously issued to you shall immediately vest and restrictions upon such stock shall be removed, the
performance period for all performance-based restricted stock previously issued to you shall immediately end and the corresponding number of shares (after performance measurement) shall vest and restrictions upon such stock shall be removed, and all
stock options previously issued to you shall vest immediately and shall remain exercisable for the remainder of the original term of such option and you will be considered to have a normal retirement for purposes of each stock option
agreement.
 “Cause” is defined as (i) willful and continued failure to substantially perform your obligations under this agreement (other than by
reason of physical or mental illness) after written demand specifically identifying such failure is given to you by the Company or (ii) willful conduct by you that is demonstrably and materially injurious to the Company. For purposes of this
definition, “willful” conduct requires an act, or failure to act, that is not in good faith and that is without reasonable belief that the 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 of Directors at a meeting of the Board of Directors 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 of Directors), finding that in the the good faith opinion of the Board of Directors you were guilty of conduct set forth above in this paragraph and specifying the particulars thereof in detail.
 “Disability” is defined as (i) being absent from the full-time performance of your duties with the Company for six consecutive months as a result of your incapacity due to physical or
mental illness and (ii) after subsequent written notice of termination is given, not returning to the full-time performance of your duties within 30 days.
 “Good Reason” is defined as (i) the assignment to you of any duties inconsistent (except in the nature of a promotion) with the position in the Company that you then held or a substantial adverse alteration in the nature or status
of your position or responsibilities or the conditions of your employment from those then in effect or (ii) 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, in
each case that is not corrected by the Company within 15 days after you give written notice specifying the Good Reason. Such termination of employment must occur within one year after the date of the event constituting Good Reason.
 

   

	 Letter to Mr. Fagan
 	 Exhibit 10.1
 
	 Page 4
 	  
 
	 January 28, 2003
 	  
 

 
 3.
Non-Competition. For and in consideration of the payments and benefits provided to you under paragraph 2 hereof, you
agree that while you are employed by the Company under this agreement and for two years after your employment ceases hereunder, you shall not (i)(a) engage in any business, or acquire an interest in any business as a partner, stockholder, proprietor
or otherwise (except as the beneficial owner of publicly-traded stock), or become affiliated as an agent, consultant, employee, director or officer of or provide any consulting services to any business having its principal place of business within
the State of Florida that is in competition with any business in which the Company is engaged or (b) be employed by, own an interest in (except as the beneficial owner of publicly traded stock), provide consulting services to, or act on behalf
of any business engaged in strategic planning, marketing or sales of natural gas, electricity (capacity, energy, or related ancillary services), or owning and/or operating power plants in the States of Florida, Virginia, Mississippi, Arkansas,
Louisiana, and Arizona, as well as the energy control areas generally known as PJM, WSPP or Entergy, regardless of such business’ principal place of business; (ii) solicit, divert, do business with, or accept business from any person who is or
has been a customer of the Company if such solicitation, diversion or business has the effect of or results in the Company’s loss of all or a portion of such customer’s business or potential business; (iii) influence or attempt to
influence any employee of the Company to terminate his/her employment with the Company or (iv) influence or attempt to influence any agent, customer, supplier or distributor who has a business relationship with the Company to cease or adversely
alter its business relations with the Company. For purposes of the above paragraph, “Company” shall be deemed to include all of its subsidiaries.
 4.
Confidential Information. You agree to receive confidential and proprietary information of the
Company and its subsidiaries acquired or developed by you during your employment with the Company in confidence, and except as authorized by the Company, not to disclose or use such information to or for the benefit of others during the period of
your employment and for a period of ten years thereafter except to the extent such disclosure may be required by law or such information has become public knowledge without breach of this agreement.
 5.
Nontransferability; Successors. No payment hereunder shall be subject to anticipation, sale, transfer, assignment, pledge or other charge. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to expressly assume and agree to perform this agreement.
 

   

	 Letter to Mr. Fagan
 	 Exhibit 10.1
 
	 Page 5
 	  
 
	 January 28, 2003
 	  
 

 
 6.
Costs of Enforcement; Interest. The Company shall reimburse you, within five days after demand, for all reasonable
legal fees and expenses incurred by you in enforcing your rights under this agreement. The Company shall also pay to you interest on any amount that the Company fails to pay in accordance with the terms of this agreement at an annual rate equal to
the prime rate as reported in The Wall Street Journal (Southeastern Edition) plus 2% from the date such amount became due until payment is made.
 7.
Governing Law. This agreement
shall be governed by the laws of the State of Florida, without giving effect to the conflicts of law principles thereof.
  

	  
 	  
 	 Very truly yours,
 
 TECO ENERGY, INC.
 
 
 
	 
 
 
 	  
 	 By: 
 	 
 
 
 
	  
 	  
 	  
 	 
 
	  
 	  
 	  
 	 William P. Sovey
 Chairman, Compensation Committee
 Board of Directors
 TECO Energy, Inc.
 

  
 Agreed to this ____day of _______ 2003.

 

	  
 	  
 	  
 	  
 	  
 
	  
 
 
 	  
 	  
 	 
 
 
 
	 
 	  
 	  
 	  
 
	 Robert D. FaganRestricted Stock Agreement

  Exhibit 10.2
 TECO ENERGY,
INC.
1996 EQUITY INCENTIVE PLAN
 Restricted Stock Agreement
 TECO Energy, Inc. (the “Company”) and ___________________________ (the “Grantee”)
have entered into this Restricted Stock Agreement (the “Agreement”) dated April 21, 2003 under the Company’s 1996 Equity Incentive Plan (the “Plan”). Capitalized terms not otherwise defined herein have the meanings given to them in the Plan.
 1.
Grant of Restricted Stock. Pursuant to the Plan and subject to the terms and conditions set forth in this Agreement,
the Company hereby grants, issues and delivers to the Grantee ____________ shares of its Common Stock (the “Restricted Stock”).
 2.
Restrictions on Stock. Until
the restrictions terminate under Section 3, unless otherwise determined by the Committee:
 (a)
the Restricted Stock may not be sold, assigned, pledged or transferred by the Grantee; and
 (b)
all shares of Restricted Stock will be forfeited and
returned to the Company if the Grantee ceases to be an employee of the Company or any business entity in which the Company owns directly or indirectly 50% or more of the total voting power or has a significant financial interest as determined by the
Committee (an “Affiliate”).
 3.
Termination of Restrictions. The restrictions on all shares of Restricted Stock will terminate on the earliest to
occur of the following events:
 (a)
the
Grantee’s death;
 (b)
the termination of
Grantee’s employment with the Company or any Affiliate because of a disability that would entitle the Grantee to benefits under the long-term disability benefits program of the Company for which the Grantee is eligible, as determined by the
Committee;
 (c)
the termination by the Company
or any Affiliate of Grantee’s employment other than for Cause as determined by the Committee. “Cause” means (i) willful and continued failure of the Grantee to substantially perform his duties with the Company or such Affiliate (other
than by reason of physical or mental illness) after written demand specifically identifying such failure is given to the Grantee by the Company, or (ii) willful conduct by the Grantee that is demonstrably and materially injurious to the Company. For
purposes of this subsection, “willful” conduct requires an act, or failure to act, that is not in good faith and that is without reasonable belief that the action or omission was in the best interest of the Company or the
Affiliate;
 

  Exhibit 10.2
 (d)
upon a resignation of employment in which the Committee determines in its sole discretion that the removal of restrictions is
appropriate;
 (e)
upon a Change in Control. For
purposes of this Agreement, a “Change in Control” means a change in control of the Company 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:
 (1)
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 shareholders 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;
 (2)
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 of Directors of the Company 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 subsections (1),
(3) or (4) of this Section 3(e)) whose election by the Board of Directors of the Company or nomination for election by the shareholders 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;
 (3)
the shareholders of the
Company approve a merger or consolidation of the Company with any other corporation, other than (i) a merger or consolidation which would result 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 50% of the combined voting securities of the Company or such surviving entity 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 defined above) acquires 30% or more of the combined voting power of the Company’s then
outstanding securities; or
 (4)
the
shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or
 
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  Exhibit 10.2
 (f)
the third anniversary of the date of this Agreement.
 4.
Rights as Shareholder. Subject to the restrictions and other limitations and conditions
provided in this Agreement, the Grantee as owner of the Restricted Stock will have all the rights of a shareholder, including but not limited to the right to receive all dividends paid on, and the right to vote, such Restricted Stock.
 5.
Stock Certificates. Each
certificate issued for shares of Restricted Stock will be registered in the name of the Grantee and deposited by the Grantee, together with a stock power endorsed in blank, with the Company and will bear a legend in substantially the following
form:
 THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS, CONDITIONS AND RESTRICTIONS (INCLUDING
RESTRICTIONS ON TRANSFER AND FORFEITURE PROVISIONS) CONTAINED IN AN AGREEMENT BETWEEN THE REGISTERED OWNER AND TECO ENERGY, INC. A COPY OF SUCH AGREEMENT WILL BE FURNISHED TO THE HOLDER OF THIS CERTIFICATE UPON WRITTEN REQUEST AND WITHOUT
CHARGE.
 Upon the termination of the restrictions imposed under this Agreement as to any shares of Restricted Stock deposited with the Company hereunder, the
Company will return to the Grantee (or to such Grantee’s legal representative, beneficiary or heir) certificates, without such legend, for such shares.
 6.
Adjustment of Terms. In the event of corporate transactions affecting the Company’s
outstanding Common Stock, the Committee will equitably adjust the number and kind of shares subject to this Agreement to the extent provided by the Plan.
 7.
Notice of Election Under Section 83(b). If the Grantee makes an election under Section 83(b)
of the Internal Revenue Code of 1986, as amended, he will provide a copy thereof to the Company within thirty days of the filing of such election with the Internal Revenue Service.
 8.
Withholding Taxes. The
Grantee will pay to the Company, or make provision satisfactory to the Committee for payment of, any taxes required by law to be withheld in respect of the Restricted Stock no later than the date of the event creating the tax liability. In the
Committee’s discretion, such tax obligations may be paid in whole or in part in shares of Common Stock, including the Restricted Stock, valued at fair market value on the date of delivery. The Company and its Affiliates may, to the extent
permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Grantee.
 9.
The Committee. Any determination by the Committee under, or interpretation of the terms of, this Agreement or the
Plan will be final and binding on the Grantee.
 10.
Limitation of Rights. The Grantee will have no right to continued employment by virtue of this grant of Restricted
Stock.
  
 
3

  Exhibit 10.2
 11.
Amendment. The Company may amend, modify or terminate this Agreement, including substituting another Award of the
same or a different type and changing the date of realization, provided that the Grantee’s consent to such action will be required unless the action, taking into account any related action, would not adversely affect the Grantee.
 12.
Governing Law. This
Agreement will be governed by and interpreted in accordance with the laws of Florida.
  

	  
 	  
 	 TECO ENERGY, INC.
 
	 
 
 
 	  
 	 By: 
 	 
 
 
 
	  
 	  
 	  
 	 
 
	  
 	  
 	  
 	 C.E. Childress
 Chief Human Resources Officer
 
	  
 	  
 	  
 	  
 
	  
 	  
 	  
 	  
 
	  
 	  
 	  
 	  
 
	  
 	  
 	  
 	 
 
	  
 	  
 	  
 	  
 
	  
 	  
 	  
 	 
 

  
 
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