SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-5007
TAMPA ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
FLORIDA 59-0475140
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
702 North Franklin Street, Tampa, Florida 33602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 228-4111
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
Number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date (July 31, 1999):
Common Stock, Without Par Value 10
The registrant meets the conditions set forth in General Instruction
(H)(1)(a) and (b) of Form 10-Q and is therefore filing this form with
the reduced disclosure format.
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
In the opinion of management, the unaudited condensed
financial statements include all adjustments necessary to
present fairly the results for the three- and six-month
periods ended June 30, 1999 and 1998. Reference should be
made to the explanatory notes affecting the income and
balance sheet accounts contained in Tampa Electric Company's
Annual Report on Form 10-K for the year ended Dec. 31, 1998
and to the notes on pages 7 through 8 of this report.
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FORM 10-Q
BALANCE SHEETS
unaudited
(in millions)
June 30, Dec. 31,
1999 1998
Assets
Property, plant and equipment,
at original cost
Utility plant in service
Electric $3,780.6 $3,742.6
Gas 555.9 518.5
Construction work in progress 103.8 71.5
4,440.3 4,332.6
Accumulated depreciation (1,777.8) (1,722.2)
2,662.5 2,610.4
Other property 8.5 8.1
2,671.0 2,618.5
Current assets
Cash and cash equivalents 1.6 .8
Receivables, less allowance
for uncollectibles 143.1 142.8
Inventories, at average cost
Fuel 99.4 87.3
Materials and supplies 47.8 45.5
Prepayments 10.9 8.4
302.8 284.8
Deferred debits
Unamortized debt expense 15.2 16.1
Deferred income taxes 119.1 116.1
Regulatory asset - tax related 37.7 39.0
Other 71.1 72.0
243.1 243.2
$3,216.9 $3,146.5
Liabilities and Capital
Capital
Common stock $1,038.1 $1,026.1
Retained earnings 298.8 288.5
1,336.9 1,314.6
Long-term debt, less amount due
within one year 774.1 774.5
2,111.0 2,089.1
Current liabilities
Long-term debt due within one year 4.6 4.6
Notes payable 116.4 79.7
Accounts payable 146.6 189.1
Customer deposits 78.5 77.5
Interest accrued 14.0 8.8
Taxes accrued 60.7 8.8
420.8 368.5
Deferred credits
Deferred income taxes 452.8 447.6
Investment tax credits 42.8 45.1
Regulatory liability - tax related 71.0 73.0
Other 118.5 123.2
685.1 688.9
$3,216.9 $3,146.5
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF INCOME
unaudited
(in millions)
For the three months ended June 30, 1999 1998
Operating revenues
Electric $304.2 $320.9
Gas 56.7 58.0
360.9 378.9
Operating expenses
Operation
Fuel - electric generation 70.1 94.7
Purchased power 41.2 22.9
Natural gas sold 23.4 26.4
Other 52.6 54.1
Maintenance 24.5 24.6
Depreciation 41.7 41.7
Taxes, federal and state income 22.3 25.2
Taxes, other than income 30.8 29.5
306.6 319.1
Operating income 54.3 59.8
Other income (expense) (.2) (.8)
Income before interest charges 54.1 59.0
Interest charges
Interest on long-term debt 12.9 12.5
Other interest 3.0 3.6
15.9 16.1
Net Income-balance applicable to
common stock $ 38.2 $ 42.9
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
STATEMENTS OF INCOME
unaudited
(in millions)
For the six months ended June 30, 1999 1998
Operating revenues
Electric $565.0 $594.3
Gas 127.9 138.6
692.9 732.9
Operating expenses
Operation
Fuel - electric generation 137.6 183.8
Purchased power 61.6 34.2
Natural gas sold 52.7 64.4
Other 105.5 105.3
Maintenance 44.0 46.4
Non-recurring charge -- 9.6
Depreciation 84.4 83.0
Taxes, federal and state income 42.8 41.2
Taxes, other than income 60.5 59.3
589.1 627.2
Operating income 103.8 105.7
Other income (expense) .5 (2.7)
Income before interest charges 104.3 103.0
Interest charges
Interest on long-term debt 25.7 24.7
Other interest 5.8 8.2
31.5 32.9
Net Income-balance applicable to
common stock $ 72.8 $ 70.1
The accompanying notes are an integral part of the financial statements.
5
FORM 10-Q
STATEMENTS OF CASH FLOWS
unaudited
(in millions)
For the six months ended June 30, 1999 1998
Cash flows from operating activities
Net income $ 72.8 $ 70.1
Adjustments to reconcile net income
to net cash:
Depreciation 84.4 83.0
Deferred income taxes 1.6 11.2
Investment tax credits, net (2.3) (2.3)
Allowance for funds used
during construction (.2) (.1)
Deferred recovery clause (13.8) 9.0
Deferred revenue 3.9 (19.8)
Non-recurring charge, pretax -- 9.6
Receivables, less allowance
for uncollectibles (.3) 5.8
Inventories (14.4) (14.0)
Taxes accrued 51.9 33.8
Accounts payable (42.5) .2
Other 11.0 15.2
152.1 201.7
Cash flows from investing activities
Capital expenditures (137.4) (90.6)
Allowance for funds used
during construction .2 .1
(137.2) (90.5)
Cash flows from financing activities
Proceeds from contributed capital
from parent 12.0 44.0
Repayment of long-term debt (.3) (.3)
Net increase (decrease) in short-term debt 36.7 (92.7)
Dividends (62.5) (63.0)
(14.1) (112.0)
Net increase (decrease) in cash
and cash equivalents .8 (.8)
Cash and cash equivalents at
beginning of period .8 2.8
Cash and cash equivalents at end of period $ 1.6 $ 2.0
The accompanying notes are an integral part of the financial statements.
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FORM 10-Q
NOTES TO FINANCIAL STATEMENTS
A. Tampa Electric Company is a wholly owned subsidiary of TECO
Energy, Inc.
B. The company has made certain commitments in connection with
its continuing construction program. Total construction
expenditures during 1999 are estimated to be $224 million for its
electric division (referred to as Tampa Electric) and $75 million
for its gas division (referred to as Peoples Gas System).
C. Revenues in the three- and six-month periods ended June 30,
1999 reflected the deferral for refund to customers of $2.5
million and $3.9 million, respectively, of revenues at Tampa
Electric under its current regulatory agreement. Revenues for
the three- and six-month periods ended June 30, 1998 included
recognition of $11.1 million and $19.8 million, respectively, of
previously deferred revenues, which were partially offset by a
stipulated temporary base rate reduction totaling $5.1 million
and $9.5 million, in the same three-and six-month periods ended
in 1998. In accordance with the agreement, the temporary base
rate reduction and recognition of previously deferred revenues
ended in December 1998.
D. As discussed in its Annual Report on Form 10-K for the year
ended Dec. 31, 1998, the company recognized, in the first quarter
of 1998, a $5.9-million after-tax charge at the electric division
associated with ongoing actions to mitigate the effects of a 1997
Florida Public Service Commission (FPSC) ruling.
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FORM 10-Q
E. Contributions by operating division
(millions)
Operating Net
Revenues Income Income
Three months ended June 30, 1999
Electric division(1)(2) $304.2 $ 48.1 $ 34.8
Peoples Gas System(3) 56.7 6.2 3.4
Tampa Electric Company $360.9 $ 54.3 $ 38.2
Three months ended June 30, 1998
Electric division(1)(2) $320.9 $ 55.9 $ 41.1
Peoples Gas System(3) 58.0 3.9 1.8
Tampa Electric Company $378.9 $ 59.8 $ 42.9
Six months ended June 30, 1999
Electric division(1)(2) $565.0 $ 87.6 $ 62.1
Peoples Gas System(3) 127.9 16.2 10.7
Tampa Electric Company $692.9 $103.8 $ 72.8
Six months ended June 30, 1998
Electric division(1)(2)(4) $594.3 $ 97.3 $ 67.1
Peoples Gas System(3) 138.6 14.3 8.9
732.9 111.6 76.0
Non-recurring charge, after tax -- (5.9) (5.9)
Tampa Electric Company $732.9 $105.7 $ 70.1
(1) Operating income is net of income tax expense of $20.0 million
and $35.7 million, respectively, for the three- and six-months
ended June 30, 1999, and $24.3 million and $39.1 million,
respectively, for the three- and six-months ended June 30,
1998.
(2) The electric division deferred revenues of $2.5 million and
$3.9 million, respectively, for the three and six months ended
June 30, 1999, for refund to customers and recognized revenues
previously deferred of $11.1 million and $19.8 million,
respectively, for the three and six-months ended June 30,
1998. See Note C on page 7.
(3) Operating income is net of income tax expense of $2.3 million
and $7.1 million, respectively, for the three- and six-months
ended June 30, 1999, and $.9 million and $5.8 million,
respectively, for the three- and six-months ended June 30,
1998.
(4) 1998 operating income and net income exclude the $5.9-million
after-tax non-recurring charge discussed in Note D on page 7.
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FORM 10-Q
Item 2. Management's Narrative Analysis of Results of Operations
This Quarterly Report on Form 10-Q contains forward-looking
statements which are subject to the inherent uncertainties in
predicting future results and conditions. Certain factors that
could cause actual results to differ materially from those
p r o j ected in these forward-looking statements include the
following: general economic conditions, particularly those in Tampa
Electric's service area affecting energy sales; weather variations
affecting energy sales and operating costs; potential competitive
changes in the electric and gas industries, particularly in the
area of retail competition; regulatory actions affecting Tampa
Electric and Peoples Gas System; commodity price changes affecting
the competitive positions of Tampa Electric and Peoples Gas System;
and changes in and compliance with environmental regulations that
may impose additional costs or curtail some activities. These
factors are discussed more fully under "Investment Considerations"
in TECO Energy's Annual Report on Form 10-K for the year ended Dec.
31, 1998, and reference is made thereto.
Three months ended June 30, 1999:
Tampa Electric Company's second quarter net income of $38.2
million was 11 percent lower than in 1998's second quarter due to
lower revenues at the electric division partially offset by
better results at Peoples Gas System.
Operating income of $54.3 million was down 9 percent from
that of the same period in 1998 as no deferred revenues were
recognized at the electric division in 1999.
Electric division operating results
Tampa Electric reported second quarter operating income of
$48.1 million and revenues of $304.2 million compared with $55.9
million and $320.9 million, respectively, for the same period
last year. Lower retail sales in the quarter were a result of
milder-than-normal weather, which was in contrast to 1998 s
e x c eptionally hot spring when record demand levels were
experienced. In addition, as discussed in Note C on page 7,
quarterly revenue comparisons reflect recognition of $11.1
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FORM 10-Q
million of previously deferred revenues in 1998 (partially offset
by a temporary base rate reduction of $5.1 million) that were not
available in 1999 under the current regulatory agreement. The
current year period included $2.5 million of revenue deferral for
refund to customers. Customer growth remained strong at 2.5
percent for the quarter.
On April 8, 1999, an explosion at Tampa Electric's Gannon
Station Unit Six, a 375-megawatt generator that was off line for
scheduled spring maintenance, resulted in damage to Unit Six, the
shut down of the other five units at the Station and injuries to
45 employees and contractors, including three fatalities. The
units at Gannon Station that were affected by the accident have
returned to service.
Replacement power purchased from neighboring utilities, at a
cost estimated at $2 million, is expected to be recovered through
Tampa Electric's fuel and purchased power clause, with little
impact on customer rates. Although the financial impact to Tampa
Electric has not been fully determined, the costs resulting from
the accident are expected to be substantially covered by
insurance. The impact on current year operation and maintenance
expenses is estimated to be $1 to 2 million.
Peoples Gas System operating results
Peoples Gas System reported operating income of $6.2 million
and revenues of $56.7 million for the quarter compared with
operating income of $3.9 million and revenues of $58.0 million
last year. Commercial therm sales were 2 percent over last year,
reflecting customer growth of nearly 3.5 percent. Residential
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FORM 10-Q
customer growth also was strong at 2.7 percent, but residential
therm sales were below last year, due to milder-than-normal
weather in 1999 s second quarter. Operations and maintenance
expenses were lower in 1999 due to cost reductions from last
year s restructuring.
Six months ended June 30, 1999:
Tampa Electric Company's year-to-date net income of $72.8
million was 4 percent higher than in 1998 primarily due to
improved results at Peoples Gas System partially offset by lower
electric revenues. Lower interest charges in 1999, the result of
lower short-term debt rates and balances, had a favorable effect
on net income. Current period net income, excluding the non-
recurring charge in 1998, was down 4 percent.
Operating income of $103.8 million was down 7 percent from
that of the same period in 1998 excluding the non-recurring
charge at the electric division, as the growth in retail electric
energy sales was more than offset by weather-related lower demand
at both the electric and natural gas divisions in 1999.
Electric division operating results
Tampa Electric s year-to-date operating income was $87.6
million compared with $97.3 million last year, excluding a one-
time after-tax charge of $5.9 million last year. Revenues were
$565.0 million compared with $594.3 million last year, which
included recognition in 1998 of previously deferred revenues of
$19.8 million, partially offset by a temporary base rate
reduction of $9.5 million. The effects of mild weather were
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FORM 10-Q
offset by customer growth of 2.5 percent with retail sales levels
increasing overall. Wholesale sales levels were down due to
wether and lower gas prices compared to 1998. The company
expects to offset the impact of the unfavorable weather during
the first half of the year through continued strong customer
growth and expense control in the second half of the year.
Peoples Gas System
Year-to-date results at Peoples Gas System were 13 percent
higher with operating income of $16.2 million compared with $14.3
million last year. Mild winter weather led to lower year-to-date
revenues of $127.9 million in 1999 compared with $138.6 million
last year, customer growth was 2.9 percent. Operating expenses
were lower in 1999, the result of last year s restructuring.
Other Income (Expense)
During 1998, Tampa Electric recorded $1.1 million of after-
tax charges in Other Income (Expense). These charges related to
its 1996 earnings, the result of an FPSC audit of that year which
involved several adjustments. No such charges were recognized in
the 1999 period.
Interest Charges
Year-to-date interest charges for 1999 were 4 percent lower
than the same period in 1998 due to lower short-term debt
balances and rates, and lower interest accrued on deferred
revenues.
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FORM 10-Q
Recent Developments
The United States Environmental Protection Agency (EPA) has
commenced an investigation under the Clean Air Act of coal-fired
e l e c t ric power generators to determine compliance with
environmental permitting requirements associated with repairs,
m a intenance, modifications and operations changes made to
facilities that were in commercial operation prior to 1977 and
were "grandfathered" with respect to such requirements. The
EPA's focus is on whether new source performance standards should
be applied to the changes and further, whether the best available
control technology was or should have been used. Tampa Electric
is one of several electric utilities that have been visited by
E P A personnel and received a comprehensive request for
information pursuant to Section 114 of the Clean Air Act. Tampa
Electric has provided its response in compliance with the
information request. It believes that it has constructed,
repaired, maintained, modified and operated its facilities in
compliance with relevant environmental permitting requirements.
T h e timing of completion and the outcome of the EPA's
investigation are uncertain.
Year 2000 Computer Systems Readiness:
Background
There is a global awareness that many computer programs use
only two digits to refer to a year and, therefore, may not
correctly recognize and process date information beyond the year
1999. This is referred to as the "Year 2000" issue.
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FORM 10-Q
The Year 2000 issue exists in two primary areas of Tampa
Electrics s operations: the critical business systems (such as
the financial reporting, procurement, payroll and customer
information and billing systems) and the control systems (such as
t h o se used in the operation of electric generation and
transmission facilities, and gas and electric distribution
facilities).
Readiness
The company began work on Year 2000 readiness in August
1995. Prior to June 30, 1999, the company completed the necessary
inventory, assessment, renovation and testing of its mission
c r itical systems, including critical business, generation,
transmission and distribution systems. Thus, Tampa Electric
Company and Peoples Gas System believe the mission critical
systems used in the production of electricity and the delivery of
electricity and natural gas to its customers are now ready for
reliable operation through the Year 2000.
Critical Business Systems
Critical business systems, including mainframe hardware
which was replaced in 1998, have been renovated and tested and
are believed to be ready for the Year 2000. To assist in assuring
readiness, the renovation work and the integrated system testing
were handled by separate outside consulting firms.
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FORM 10-Q
Control Systems
Tampa Electric believes that its mission critical electric
generation, and electric and gas transmission and distribution
systems, including energy management and control and related
embedded systems, are now ready for the Year 2000. Tampa Electric
retained industry specialty firms to assist in identifying areas
where renovations were needed in the embedded systems associated
with generator unit controls and with making these renovations.
A number of tests have been successfully completed on these
systems, including future date scenarios.
Coordination with Others
Tampa Electric has surveyed its largest suppliers and
customers with respect to their Year 2000 readiness, including
all providers of technology supplies and services. As part of its
Year 2000 project, the company is coordinating with its suppliers
and customers based on their responses to these surveys. At the
request of the U. S. Department of Energy (DOE), the North
American Electric Reliability Council (NERC) is coordinating
monthly readiness monitoring and reporting, information sharing
and contingency planning for the industry. The latest quarterly
report was published in early August of 1999. The NERC activity
addresses all aspects of the interconnected electric grid. The
aggregated results are being reported to the DOE and other
regulatory bodies in the U.S., Canada and Mexico. The Natural Gas
Council, through the American Gas Association, is coordinating
similar processes within the gas industry, reporting to the
Federal Energy Regulatory Commission (FERC). Tampa Electric and
15
FORM 10-Q
Peoples Gas System are active participants in these industry
groups.
Costs
The total cost of Year 2000 remediation is expected to
remain under $9 million, which includes contracted resources,
purchases and internal labor. An estimated breakdown of project
costs is as follows: Tampa Electric - $6 million and Peoples Gas
System - $2.5 million. Approximately 40 percent of the these
costs are attributable to testing expenses, and the remainder
consists primarily of renovation or replacement costs. Through
June 30, 1999, approximately $8 million had been spent.
Risks
Tampa Electric believes the most reasonably likely worst
case scenario would be the occurrence of isolated outages of
limited duration for electric utility customers, similar to those
occurring during the utilities' storm season. The utilities have
assessed the risk of this scenario, and believe that their
contingency efforts, primarily the ability to bypass automated
controls, would mitigate the effect of such a scenario.
Contingency Plans
Tampa Electric has prepared contingency plans for critical
functions. The Tampa Electric and Peoples Gas System plans have
been filed with by the Florida Public Service Commission and are
being coordinated with local emergency planning organizations.
The plans provide for an incident management center; designated
16
FORM 10-Q
on-site and on-call response teams for critical systems and
c u stomer communication functions; appropriate inventory of
critical materials and supplies; verification of computer-
generated utility service orders; adjusted maintenance schedules;
and alternate means of communications, both internally and with
other industry participants. Tampa Electric will continue to test
less critical systems and refine contingency plans throughout the
remainder of this year.
Forward-Looking Statements
The costs of Tampa Electric's Year 2000 efforts and the
dates on which the company believes it will complete such efforts
are based upon management's best estimates, which were derived
using numerous assumptions regarding future events, including the
c o n t inued availability of certain resources, third-party
remediation plans and other factors. There can be no assurance
that these estimates will prove to be accurate, and actual
results could differ materially from those currently projected.
Specific factors that could cause such differences include, but
are not limited to, the availability and cost of personnel
trained in Year 2000 issues, the ability to identify, assess,
remediate and test all relevant computer codes and embedded
technology and similar uncertainties.
Accounting Standards
Accounting for Derivative Instruments and Hedging
In 1998, the Financial Accounting Standards Board (FASB)
issued Financial Accounting Standard (FAS) 133, Accounting for
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FORM 10-Q
Derivative Instruments and Hedging. This standard was initially
to be effective for fiscal years beginning after June 15, 1999.
In July 1999, the FASB delayed the effective date of this
pronouncement until fiscal years beginning after June 15, 2000.
The company does not use derivatives or other financial products
for speculative purposes. The company has not yet determined to
what extent the standard will impact its financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk
Tampa Electric Company is exposed to changes in interest
rates primarily as a result of its borrowing activities. A
hypothetical increase in interest rates of 10 percent of the
company's weighted average interest rate on its variable rate
debt would not have a significant impact on the company's pretax
earnings over the next fiscal year.
A hypothetical 10-percent decrease in interest rates would
not have a significant impact on the estimated fair value of the
company's long-term debt at June 30, 1999.
From time to time, the company enters into futures, swaps
and option contracts to moderate its exposure to interest rate
changes. The benefits of these arrangements are at risk only in
the event of non-performance by the other party to the agreement,
which the company does not anticipate. The company does not use
derivatives or other financial products for speculative purposes.
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FORM 10-Q
Commodity Price Risk
Currently, at the company s electric division and at Peoples
Gas System, the commodity price increases due to changes in
market conditions for fuel, purchased power and natural gas are
recovered through cost recovery clauses, with no effect on
earnings.
From time to time, Peoples Gas System enters into futures,
swaps and options contracts to limit the effects of natural gas
price increases on the prices it charges customers. The benefits
of these financial arrangements are at risk only in the event of
non-performance by the other party to the agreement, which the
company does not anticipate.
The company does not use derivatives or other financial
products for speculative purposes.
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FORM 10-Q
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Supplemental Executive Retirement Plan for R. D. Fagan,
dated as of May 24, 1999.
10.2 Terms of R. D. Fagan s employment, dated as of May 24,
1999.
10.3 Nonstatutory Stock Option granted to R. D. Fagan, dated as
of May 24, 1999.
10.4 Restricted Stock Agreement between TECO Energy, Inc. and
R. D. Fagan, dated as of May 24, 1999.
10.5 Form of Nonstatutory Stock Option under the TECO Energy,
Inc. 1996 Equity Incentive Plan.
10.6 Form of Performance Shares Agreement between TECO Energy,
Inc. and certain senior executives under the TECO Energy,
Inc. 1996 Equity Incentive Plan.
12 Ratio of earnings to fixed charges.
27 Financial data schedule - six months ended June 30, 1999.
(EDGAR filing only)
(b) Reports on Form 8-K
The registrant filed a Current Report on Form 8-K dated
April 27, 1999 reporting under "Item 5. Other Events" the
election of Robert D. Fagan as Chief Executive Officer of
Tampa Electric Company effective June 1, 1999.
20
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
TAMPA ELECTRIC COMPANY
(Registrant)
Dated: August 13, 1999 By: /s/G. L. Gillette
G. L. Gillette
Vice President - Finance
and Chief Financial Officer
(Principal Financial Officer)
21
FORM 10-Q
INDEX TO EXHIBITS
Exhibit No. Description of Exhibits Page No.
10.1 Supplemental Executive Retirement Plan for 22
R. D. Fagan, dated as of May 24, 1999.
10.2 Terms of R. D. Fagan's employment, dated as of 27
May 24, 1999.
10.3 Nonstatutory Stock Option granted to R. D. Fagan, 31
dated as of May 24, 1999.
10.4 Restricted Stock Agreement between TECO Energy, 35
Inc. and R. D. Fagan, dated as of May 24, 1999.
10.5 Form of Nonstatutory Stock Option under the TECO 39
Energy, Inc. 1996 Equity Incentive Plan.
10.6 Form of Performance Shares Agreement between 43
TECO Energy, Inc. and certain senior executives
under the TECO Energy, Inc. 1996 Equity Incentive
Plan.
12 Ratio of earnings to fixed charges 48
27 Financial data schedule - six months ended
June 30, 1999 (EDGAR filing only) --
22
Exhibit 10.1
TECO ENERGY GROUP
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR ROBERT D. FAGAN
SECTION 1. PURPOSE AND EFFECTIVE DATE
The purpose of this plan is to provide Robert D. Fagan, Chief
Executive Officer of TECO Energy, Inc. with additional retirement
income by supplementing the retirement benefits provided under the
retirement plan. The plan is effective as of May 24, 1999.
SECTION 2. DEFINITIONS
This section contains definitions of terms used in the plan.
Where the context so requires, the singular includes the plural,
and the plural includes the singular.
2.1 Annual earnings will have the same meaning as in the
retirement plan, except that the same will be determined without
regard to (a) any dollar limitation on such annual earnings that
may be imposed under the retirement plan or (b) any reduction in
taxable income as a result of voluntary salary reduction deferrals
under the TECO Energy Group Retirement Savings Excess Benefit Plan.
2.2 Average annual earnings of Mr. Fagan as of any date of
reference means the average of his annual earnings during the 36
consecutive months of active employment preceding the date of
reference. Bonuses are included as compensation for the period in
which paid, provided that if more than three regular annual bonuses
are paid in any 36 consecutive month period, only the largest three
bonuses will be counted.
2.3 Board means the Board of Directors of TECO Energy.
2.4 C o m mittee means the retirement plan committee as
constituted under the retirement plan.
2.5 TECO Energy means TECO Energy, Inc. and any successor to
all or a major portion of its assets or business which assumes the
obligations of TECO Energy, Inc. under this plan.
2.6 Disability income plan means the TECO Energy Group
Disability Income Plan, as amended from time to time.
2.7 Plan means the TECO Energy Group Supplemental Executive
Retirement Plan for Robert D. Fagan, as set forth in this plan
instrument, and as it may be amended from time to time.
2.8 Retirement means termination of Mr. Fagan s employment
with TECO Energy by Mr. Fagan or TECO Energy for any reason.
2.9 Retirement plan means the TECO Energy Group Retirement
Plan, as amended from time to time.
2.10 Service will have the same meaning as plan service in
the retirement plan.
2.11 Social security benefit of Mr. Fagan as of any date of
reference (the computation date ) means the primary insurance
amount to which he is or would be entitled, payable under Title II
of the Social Security Act as in effect on such date, based on the
assumptions: (a) that no changes in the benefit levels payable or
the wage base under Title II occur after the computation date; (b)
that, if the computation date falls before his 63 birthday, his
annual earnings during the calendar year in which the computation
date falls and during any subsequent calendar year before the
calendar year in which his 63 birthday falls is zero; (c) that
22
payment of his primary insurance amount begins for the month after
he reaches age 63, or his retirement date if later, without
reduction or delay because of future gainful employment or delay in
applying for benefits; and (d) that his earnings for calendar years
before the calendar year in which the computation date falls will
be determined using his actual earnings history if available, and
otherwise by applying a six percent retrospective salary scale to
his rate of annual earnings in effect on the computation date. The
social security benefit of Mr. Fagan if he retires after his 66
birthday will include any delayed retirement credit.
2.12 Survivor income plan means the TECO Energy Group Survivor
Income Plan, as amended from time to time.
SECTION 3. RETIREMENT BENEFITS
3.1 Amount. Subject to the reductions in Section 6.1 below,
Mr. Fagan will receive a supplemental monthly retirement benefit
equal to one-twelfth of the greater of (a) (1) the sum of (A) 20
percent and (B) four percent multiplied by his years of service (or
portions thereof), multiplied by (2) his average annual earnings,
up to a maximum benefit of 60 percent of his average earnings (60
percent is equal to 20 percent plus four percent multiplied by a
maximum of ten years of service), and (b) $160,000. Mr. Fagan s
retirement benefit hereunder will be calculated using his years of
service (or portions thereof) and average annual earnings as of his
actual date of retirement.
3.2 Form of Payment.
(a) Normal form of retirement benefits. The normal form
of retirement benefit payable to Mr. Fagan under the plan is a life
annuity. Benefits payable in the normal form will begin on the
first day of the month coinciding with or next following the date
of Mr. Fagan s retirement.
(b) Optional lump sum benefit. In lieu of the normal
form of benefit, Mr. Fagan may elect to receive payment of his
benefit in the form of a commuted single sum payment that is the
actuarial equivalent of the normal form of benefit (including the
value of the post-retirement surviving spouse benefit under Section
4.2(c)). If Mr. Fagan elects to receive a lump sum payment, such
payment will be made on the first day of the month coinciding with
or next following the date Mr. Fagan s employment terminates.
Actuarial equivalence will be based on the actuarial assumptions
specified from time to time in the retirement plan for lump sum
payments. Mr. Fagan s election to receive a lump sum payment will
be effective only with respect to a retirement occurring at least
12 months after the date Mr. Fagan submits the election, provided
that elections submitted on or before June 30, 1999 will be
immediately effective.
SECTION 4. SURVIVING SPOUSE BENEFIT
4.1 Eligibility. Mr. Fagan s surviving spouse will receive
the surviving spouse benefit if Mr. Fagan and his spouse were
married to each other for at least the 12 months preceding Mr.
Fagan s death and, in the case of Mr. Fagan s death after
retirement, Mr. Fagan and his spouse were married to each other on
Mr. Fagan s date of retirement.
4.2 Amount of surviving spouse benefit. Subject to the
reductions described in Section 6.2 below, the benefit provided
under the plan to Mr. Fagan s surviving spouse will be determined
as follows:
23
(a) Pre-retirement before age 63. If Mr. Fagan dies
during employment with TECO Energy and before his 63rd birthday,
his surviving spouse will receive a monthly survivor income payment
equal to 50 percent of his monthly projected retirement benefit.
Mr. Fagan s monthly projected retirement benefit is the monthly
benefit he would have received if he had retired at age 63 under
Section 3.1 calculated using his average annual earnings determined
as of his date of death.
(b) Pre-retirement on or after age 63. If Mr. Fagan
dies during employment with TECO Energy on or after his 63rd
birthday, his surviving spouse will receive a monthly survivor
income payment equal to 50 percent of his monthly retirement
benefit earned under Section 3.1 using his years of service (or
portions thereof) and his average annual earnings as of his date of
death.
(c) Post-retirement. If Mr. Fagan dies on or after the
date of his retirement, his surviving spouse will receive a monthly
survivor income payment equal to 50 percent of the monthly benefit
payment he was receiving at his death (or would have received if he
had survived until the first payment date).
4.3 Form and time of surviving spouse benefit. Surviving
spouse benefits under this Section 4 will be payable in the form of
a life annuity to the surviving spouse. Benefit payments will
begin on the first day of the month coinciding with or next
following the date of Mr. Fagan s death.
4.4 Death benefit where lump sum paid. If Mr. Fagan received
a lump sum payment of his benefit under Section 3.2(b), no
surviving spouse benefit or other death benefit will be payable
under the plan to any person.
SECTION 5. DISABILITY
5.1 If Mr. Fagan suffers a total disability (as defined in
the disability income plan) before his 63rd birthday, he will
continue to be credited with service as if he were actively
employed by TECO Energy during his period of total disability. Mr.
Fagan may not receive benefits under this plan at any time when he
is receiving disability income payments under the disability income
plan. Benefits under this plan will begin when payments cease
under the disability income plan.
5.2 Mr. Fagan s disability date is his last day of work for
TECO Energy before becoming unable to continue working because of
his total disability. A period of total disability of Mr. Fagan
will begin on his disability date and will end on the earlier of
the last day of the month in which his final disability income
payment is due under the disability income plan or on the date he
retires hereunder and starts receiving benefit payments.
5.3 If Mr. Fagan does not return to active service with TECO
Energy after suffering a total disability, his retirement benefits
under Section 3 will be calculated using his average annual
earnings as of his disability date, his total service including
service credited under Section 5.1 above, and his primary social
security benefit as of his date of disability.
5.4 If Mr. Fagan dies while disabled, his surviving spouse
will, if eligible, receive the pre-retirement surviving spouse
benefit determined under Section 4.2(a) or (b).
SECTION 6. OFFSET FOR OTHER PAYMENTS
24
6.1 Mr. Fagan s retirement benefit will be reduced (but not
below zero) by the following payments, with such reductions
starting when such payments are assumed to begin: (a) 100 percent
of the social security benefit of Mr. Fagan assuming such benefit
begins on the later of his 63rd birthday or the date of his actual
retirement and (b) the amount of his benefit payments under the
retirement plan and any tax-qualified or nonqualified defined
benefit retirement plan of former employers of Mr. Fagan (converted
in all cases to a life annuity if such payments are in a form other
than a life annuity, using the actuarial assumptions in the TECO
Energy retirement plan), assuming such payments begin on the later
of the earliest date on which he could begin receiving payments
from such plan or the date of his actual retirement.
6.2 The benefit of Mr. Fagan s surviving spouse will be
reduced (but not below zero) by the following payments to her: (a)
payments under the survivor income plan, and (b) payments under the
retirement plan and any tax-qualified or nonqualified defined
benefit retirement plans of former employers of Mr. Fagan.
SECTION 7. BENEFITS NOT CURRENTLY FUNDED
7.1 Nothing in this plan will be construed to create a trust
or to obligate TECO Energy or any other employer to segregate a
fund, purchase an insurance contract, or in any other way currently
to fund the future payment of any benefits hereunder, nor will
anything herein be construed to give Mr. Fagan or any other person
rights to any specific assets of TECO Energy or of any other
employer or entity.
7.2 Notwithstanding Section 7.1, TECO Energy has established
a grantor trust of which it is treated as the owner under Section
671 of the Internal Revenue Code to provide for the payment of
benefits hereunder.
SECTION 8. ADMINISTRATION
The plan will be administered by the committee, which will
have full power and authority to construe, interpret and administer
the plan. Decisions of the committee will be final and binding on
all persons. The committee may, in its discretion, adopt, amend
and rescind rules and regulations relating to the administration of
the plan.
SECTION 9. RIGHTS NON-ASSIGNABLE
Neither Mr. Fagan, his surviving spouse, nor any other person
will have any right to assign or otherwise to alienate the right to
receive payments under the plan, in whole or in part.
SECTION 10. OTHER BENEFIT PLANS
This plan will supersede any obligation to pay benefits to Mr.
Fagan under the excess benefit plan contained in the retirement
plan or the TECO Energy Group Supplemental Executive Retirement
Plan, as they may be amended from time to time. No benefits will
be payable to Mr. Fagan under such excess benefit plan or the TECO
Energy Group Supplemental Executive Retirement Plan.
25
SECTION 11. AMENDMENT
TECO Energy reserves the right at any time by action of the
board to amend the plan in any way. However, no amendment of the
plan may reduce the benefits to be paid to Mr. Fagan or his
surviving spouse below those that would have been paid if the plan
had continued without change to the date of Mr. Fagan s retirement.
Executed as of May 24, 1999
TECO ENERGY, INC.
By: /s/ G. F. Anderson
G. F. Anderson
Chairman of the Board
26
Exhibit 10.2
May 24, 1999
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
s u bsidiaries 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 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
27
Letter to Mr. Fagan
Page 2
May 24, 1999
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.
"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
a l t e r a t ion in the nature or status of your position or
responsibilities or the conditions of your employment from those then
in effect, (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 or (iii) the failure by the Company to name you as
Chairman of the Board by January 1, 2000, 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.
28
Letter to Mr. Fagan
Page 3
May 24, 1999
3. Non-Competition. You agree that while you are employed by
the Company and for two years thereafter, 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
o f 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) engage in, or provide services with
respect to, strategic planning, marketing or sales in the State of
Florida for any such business regardless of its 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.
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
29
Letter to Mr. Fagan
Page 4
May 24, 1999
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: /s/ G. F. Anderson
G. F. Anderson
Chairman of the Board
Agreed to this 24 day of May, 1999.
/s/ Robert D. Fagan
Robert D. Fagan
30
Exhibit 10.3
TECO ENERGY, INC.
1996 EQUITY INCENTIVE PLAN
Nonstatutory Stock Option
TECO Energy, Inc. (the Company ) grants to Robert D. Fagan (the
Optionee ) a nonstatutory stock option (the Option ) dated May 24,
1999 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 Stock Option. Pursuant to the Plan and subject to
the terms and conditions set forth in this Option, the Company hereby
grants to the Optionee the right and option to purchase from the
Company the following number of shares of Common Stock of the Company
at $21.4063 per share at the earlier of the dates listed below and the
date determined under Section 2.
Number of shares Price per Time Option is first
share exercisable
15,556 $21.4063 May 24, 2000
15,556 $22.4766 May 24, 2000
15,556 $23.5469 May 24, 2000
15,556 $21.4063 May 24, 2001
15,556 $22.4766 May 24, 2001
15,555 $23.5469 May 24, 2001
15,555 $21.4063 May 24, 2002
15,555 $22.4766 May 24, 2002
15,555 $23.5469 May 24, 2002
The Option may be exercised at any time and from time to time
after the first time it may be exercised in accordance with the
foregoing schedule and prior to the expiration of ten years from the
date hereof (the Expiration Date ), except as otherwise provided
herein. The Option may be exercised only with respect to whole
shares.
This Option will not be treated as an incentive stock option
under Section 422 of the Internal Revenue Code of 1986, as amended.
2. Effects of Certain Events. Notwithstanding Section 1, the
Option will become immediately exercisable in full upon the earliest
to occur of the following events:
(a) the Optionee s death;
(b) the termination of Optionee s employment with 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 )
because of a disability that would entitle the Optionee to benefits
31
under the long-term disability benefits program of the Company for
which the Optionee is eligible, as determined by the Committee;
(c) the termination by the Company or any Affiliate of
Optionee s employment other than for Cause as determined by the
Committee. Cause means (i) willful and continued failure of the
Optionee 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
Optionee by the Company, or (ii) willful conduct by the Optionee 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;
(d) the Optionee s retirement from the Company or an
Affiliate at or after attainment of the age at which benefits are
payable under the TECO Energy Group Retirement Plan or any successor
thereto without reduction for commencement of benefits before normal
retirement age, or any earlier date that the Committee determines will
constitute a normal retirement for purposes of this Agreement; or
(e) upon a Change in Control. For purposes of this Option,
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 24 consecutive months (not
including any period prior to the date of this Option), 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 2(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;
32
(3) 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
(4) the shareholders 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.
3. Exercise and Payment. To exercise this Option, the Optionee
will deliver written notice to the Secretary of the Company specifying
the date of this Option, the number of shares as to which this Option
is being exercised, the price at which the Option on those shares is
exercisable, and a date not later than 30 days after the date of
delivery of the notice when the Optionee will take up and pay for such
shares. On the date specified in such notice, the Company will issue
to the Optionee the number of shares purchased against payment
therefor in cash, including by check, or in such other form as the
Committee may approve.
4. Termination of Employment. If the Optionee s employment
with the Company or an Affiliate terminates for any reason (a
Termination of Employment ) coincident with or after the first time
this Option may be exercised, the Option will remain exercisable, with
respect to the shares with respect to which the Option was exercisable
as of the date of Termination of Employment, for the longest
applicable period provided below. This Option will terminate, and no
rights will be exercisable hereunder, after the expiration of the
applicable exercise period.
(a) The Optionee may exercise the rights available under
this Option at the time of Termination of Employment for a period of
three months thereafter, but in no event after the Expiration Date.
(b) I f Termination of Employment occurs because of
disability, the Optionee or the Optionee s guardian or legal
representative may exercise the rights available under this Option at
the time of Termination of Employment at any time on or before the
later of (i) twelve months after the Termination of Employment or
(ii) the Expiration Date. The Committee will determine whether and
when Termination of Employment because of disability has occurred for
purposes of this Section 4(b).
(c) If Termination of Employment occurs for any reason on
or after the age at which benefits are payable to the Optionee without
reduction for commencement of such benefits before normal retirement
age under the TECO Energy Group Retirement Plan (or any successor
thereto), or any earlier age that the Committee determines will
33
constitute a normal retirement for purposes of this Option, the
Optionee (or the Optionee s guardian or legal representative or, after
death, the Optionee s Designated Beneficiary under the Plan or, if
none has been designated, those entitled to do so by the Optionee s
will or the laws of descent and distribution) may exercise the rights
available under this Option at the time of Termination of Employment
at any time on or before the Expiration Date.
(d) Upon the death of the Optionee, the Optionee s
Designated Beneficiary under the Plan or, if none has been designated,
those entitled to do so by the Optionee s will or the laws of descent
and distribution, may exercise the rights available under this Option
at the time of death for a period of twelve months thereafter or, if
Termination of Employment occurs because of death, at any time on or
before the later of (i) twelve months after the date of death or
(ii) the Expiration Date.
The Committee will determine whether an authorized leave of
absence constitutes Termination of Employment for purposes of this
Option.
5. 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 Option
and the respective exercise prices hereunder to the extent provided by
the Plan.
6. No Transfer. This Option will not be transferable other
than by will or the laws of descent and distribution and will be
exercisable during the Optionee s lifetime only by the Optionee or the
Optionee s guardian or legal representative.
7. Securities Laws. The purchase of any shares by the Optionee
upon exercise of this Option will be subject to the conditions that
(i) the Company may in its discretion require that a registration
statement under the Securities Act of 1933 with respect to the sale of
such shares to the Optionee will be in effect, and such shares will be
duly listed, subject to notice of issuance, on any securities exchange
on which the Common Stock may then be listed, (ii) all such other
action as the Company considers necessary to comply with any law, rule
or regulation applicable to the sale of such shares to the Optionee
will have been taken and (iii) the Optionee will have made such
representations and agreements as the Company may require to comply
with applicable law.
8. Withholding Taxes. The Optionee 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 exercise of the
Option 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 shares retained
from the exercise of this Option, 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 Optionee.
9. The Committee. Any determination by the Committee under, or
interpretation of the terms of, this Option or the Plan will be final
34
and binding on the Optionee.
10. Limitation of Rights. The Optionee will have no rights as a
shareholder with respect to any shares subject to this Option until
such shares are issued against payment therefor. The Optionee will
have no right to continued employment by virtue of this Option.
11. Amendment. The Company may amend, modify or terminate this
Option, including substituting another Award of the same or a
different type and changing the date of realization, provided that the
Optionee s consent to such action will be required unless the action,
taking into account any related action, would not adversely affect the
Optionee.
12. Governing Law. This Option will be governed by and
interpreted in accordance with the laws of Florida.
TECO ENERGY, INC.
By: /s/ G. F. Anderson
G. F. Anderson
Chairman of the Board
35
Exhibit 10.4
TECO ENERGY, INC.
1996 EQUITY INCENTIVE PLAN
Restricted Stock Agreement
TECO Energy, Inc. (the "Company") and Robert D. Fagan (the
"Grantee") have entered into this Restricted Stock Agreement (the
"Agreement") dated May 24, 1999 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 14,015 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,
35
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. Notwithstanding the foregoing, the Grantee shall not be
deemed to have been terminated for Cause unless and until there shall
have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of 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
the Grantee and an opportunity for him, together with his counsel, to
be heard before the Board of Directors), finding that in the the good
faith opinion of the Board of Directors the Grantee was guilty of
conduct set forth above in this subsection and specifying the
particulars thereof in detail;
(d) the Grantee's attainment of the age at which benefits
are payable under the TECO Energy Group Retirement Plan or any
successor thereto without reduction for commencement of benefits
before normal retirement age, or any earlier date that the Committee
determines will constitute a normal retirement for purposes of this
Agreement;
(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;
36
(3) t h e re 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
(4) the shareholders 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;
(f) January 2, 2000, if the Grantee has not become Chairman
of the Board of the Company by that date; or
(g) the fifth 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. 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
37
Service.
7. 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.
8. 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.
9. Limitation of Rights. The Grantee will have no right to
continued employment by virtue of this grant of Restricted Stock.
10. 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.
11. Governing Law. This Agreement will be governed by and
interpreted in accordance with the laws of Florida.
TECO ENERGY, INC.
By: /s/ G. F. Anderson
G. F. Anderson
Chairman of the Board
/s/ Robert D. Fagan
Robert D. Fagan
38
Exhibit 10.5
TECO ENERGY, INC.
1996 EQUITY INCENTIVE PLAN
Nonstatutory Stock Option
TECO Energy, Inc. (the Company ) grants to _______________ (the
Optionee ) a nonstatutory stock option (the Option ) dated
______________ 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 Stock Option. Pursuant to the Plan and subject to
the terms and conditions set forth in this Option, the Company hereby
grants to the Optionee the right and option to purchase from the
Company the following number of shares of Common Stock of the Company
at $______________ per share at the earlier of the dates listed below
and the date determined under Section 2.
Number of Shares Date Exercisable
[1/3 of total] [one year from date of grant]
[1/3 of total] [two years from date of grant]
[1/3 of total] [three years from date of
grant]
The Option may be exercised at any time and from time to time
after the first time it may be exercised in accordance with the
foregoing schedule and prior to the expiration of ten years from the
date hereof (the Expiration Date ), except as otherwise provided
herein. The Option may be exercised only with respect to whole
shares.
This Option will not be treated as an incentive stock option
under Section 422 of the Internal Revenue Code of 1986, as amended.
2. Effects of Certain Events. Notwithstanding Section 1, the
Option will become immediately exercisable in full upon the earliest
to occur of the following events:
(a) the Optionee s death;
(b) the termination of Optionee s employment with 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 )
because of a disability that would entitle the Optionee to benefits
under the long-term disability benefits program of the Company for
which the Optionee is eligible, as determined by the Committee;
(c) the termination by the Company or any Affiliate of
Optionee s employment other than for Cause as determined by the
Committee. Cause means (i) willful and continued failure of the
Optionee to substantially perform his duties with the Company or such
39
Affiliate (other than by reason of physical or mental illness) after
written demand specifically identifying such failure is given to the
Optionee by the Company, or (ii) willful conduct by the Optionee 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;
(d) the Optionee s retirement from the Company or an
Affiliate at or after attainment of the age at which benefits are
payable under the TECO Energy Group Retirement Plan or any successor
thereto without reduction for commencement of benefits before normal
retirement age, or any earlier date that the Committee determines will
constitute a normal retirement for purposes of this Agreement; or
(e) upon a Change in Control. For purposes of this Option,
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 24 consecutive months (not
including any period prior to the date of this Option), 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 2(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) 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
40
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
(4) the shareholders 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.
3. Exercise and Payment. To exercise this Option, the Optionee
will deliver written notice to the Secretary of the Company specifying
the date of this Option, the number of shares as to which this Option
is being exercised, the price at which the Option on those shares is
exercisable, and a date not later than 30 days after the date of
delivery of the notice when the Optionee will take up and pay for such
shares. On the date specified in such notice, the Company will issue
to the Optionee the number of shares purchased against payment
therefor in cash, including by check, or in such other form as the
Committee may approve.
4. Termination of Employment. If the Optionee s employment
with the Company or an Affiliate terminates for any reason (a
Termination of Employment ) coincident with or after the first time
this Option may be exercised, the Option will remain exercisable, with
respect to the shares with respect to which the Option was exercisable
as of the date of Termination of Employment, for the longest
applicable period provided below. This Option will terminate, and no
rights will be exercisable hereunder, after the expiration of the
applicable exercise period.
(a) The Optionee may exercise the rights available under
this Option at the time of Termination of Employment for a period of
three months thereafter, but in no event after the Expiration Date.
(b) I f Termination of Employment occurs because of
disability, the Optionee or the Optionee s guardian or legal
representative may exercise the rights available under this Option at
the time of Termination of Employment at any time on or before the
later of (i) twelve months after the Termination of Employment or
(ii) the Expiration Date. The Committee will determine whether and
when Termination of Employment because of disability has occurred for
purposes of this Section 4(b).
(c) If Termination of Employment occurs for any reason on
or after the age at which benefits are payable to the Optionee without
reduction for commencement of such benefits before normal retirement
age under the TECO Energy Group Retirement Plan (or any successor
thereto), or any earlier age that the Committee determines will
constitute a normal retirement for purposes of this Option, the
Optionee (or the Optionee s guardian or legal representative or, after
death, the Optionee s Designated Beneficiary under the Plan or, if
none has been designated, those entitled to do so by the Optionee s
will or the laws of descent and distribution) may exercise the rights
available under this Option at the time of Termination of Employment
at any time on or before the Expiration Date.
41
(d) Upon the death of the Optionee, the Optionee's
Designated Beneficiary under the Plan or, if none has been designated,
those entitled to do so by the Optionee s will or the laws of descent
and distribution, may exercise the rights available under this Option
at the time of death for a period of twelve months thereafter or, if
Termination of Employment occurs because of death, at any time on or
before the later of (i) twelve months after the date of death or
(ii) the Expiration Date.
The Committee will determine whether an authorized leave of
absence constitutes Termination of Employment for purposes of this
Option.
5. 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 Option
and the respective exercise prices hereunder to the extent provided by
the Plan.
6. No Transfer. This Option will not be transferable other
than by will or the laws of descent and distribution and will be
exercisable during the Optionee s lifetime only by the Optionee or the
Optionee s guardian or legal representative.
7. Securities Laws. The purchase of any shares by the Optionee
upon exercise of this Option will be subject to the conditions that
(i) the Company may in its discretion require that a registration
statement under the Securities Act of 1933 with respect to the sale of
such shares to the Optionee will be in effect, and such shares will be
duly listed, subject to notice of issuance, on any securities exchange
on which the Common Stock may then be listed, (ii) all such other
action as the Company considers necessary to comply with any law, rule
or regulation applicable to the sale of such shares to the Optionee
will have been taken and (iii) the Optionee will have made such
representations and agreements as the Company may require to comply
with applicable law.
8. Withholding Taxes. The Optionee 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 exercise of the
Option 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 shares retained
from the exercise of this Option, 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 Optionee.
9. The Committee. Any determination by the Committee under, or
interpretation of the terms of, this Option or the Plan will be final
and binding on the Optionee.
10. Limitation of Rights. The Optionee will have no rights as a
shareholder with respect to any shares subject to this Option until
such shares are issued against payment therefor. The Optionee will
have no right to continued employment by virtue of this Option.
11. Amendment. The Company may amend, modify or terminate this
Option, including substituting another Award of the same or a
42
different type and changing the date of realization, provided that the
Optionee s consent to such action will be required unless the action,
taking into account any related action, would not adversely affect the
Optionee.
12. Governing Law. This Option will be governed by and
interpreted in accordance with the laws of Florida.
TECO ENERGY, INC.
By:
D. E. Schwartz
Secretary
43
Exhibit 10.6
TECO ENERGY, INC.
1996 EQUITY INCENTIVE PLAN
Performance Shares Agreement
TECO Energy, Inc. (the Company ) and _______________ (the
Grantee ) have entered into this Performance Shares Agreement (the
Agreement ) dated April 21, 1999 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 Performance Shares. Pursuant to the Plan and
subject to the terms and conditions set forth in this Agreement, the
C o m p a ny hereby grants, issues and delivers to the Grantee
_____________ shares ( Number of Restricted Performance Shares ) of
its Common Stock (the Restricted Performance Shares ) as of the date
of this Agreement and will grant, issue and deliver to the Grantee the
Performance Reward Percentage of _____________ shares ( Number of
Additional Performance Shares ) of its Common Stock (the Additional
Performance Shares ) no later than 30 days after the end of the
Performance Period.
The Performance Period is the period beginning April 1, 1999
and ending on the date determined under Section 3.
Total Shareholder Return is the amount obtained by dividing (1)
the sum of (a) the amount of dividends with respect to the Performance
Period, assuming dividend reinvestment, and (b) the difference between
the share price at the end and beginning of the Performance Period, by
(2) the share price at the beginning of the Performance Period, with
the share price in each case being determined by using the average
closing price during the 20 trading days preceding the date of
determination.
The Performance Increment is the Total Shareholder Return with
respect to the Company s Common Stock minus the Total Shareholder
Return with respect to the Dow Jones US Electrical Utilities Index-All
Regions (ELC).
The Performance Reward Percentage is the percentage shown in
column B for Restricted Performance Shares and in column C for
A d ditional Performance Shares corresponding to the Performance
Increment in column A, with interpolation of the percentages in
columns B and C in proportion to the corresponding percentage points
in column A for whole percentage Performance Increments of more than 0
but less than 30; provided that if the Performance Period ends less
than three years after it began, the respective Performance Reward
P e r c entages for Restricted Performance Shares and Additional
Performance Shares will be prorated based on the portion of three
years from the beginning of the Performance Period that has elapsed by
43
t h e end of the Performance Period, and before proration the
Performance Reward Percentage for Restricted Performance Shares will
be 100%.
A B C
Performance Performance Performance Reward
Increment Reward Percentage for
Percentage for Additional
Restricted Performance Shares
Performance
Shares
0 50% 0%
15 percentage points 100% 0%
25 percentage points 100% 50%
30 or more 100% 100%
percentage points
2. Restrictions on Restricted Performance Shares. Until the
restrictions terminate under Section 3, unless otherwise determined by
the Committee:
(a) the Restricted Performance Shares may not be sold,
assigned, pledged or transferred by the Grantee; and
(b) all Restricted Performance Shares 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. End of Performance Period and Termination of Restrictions.
The Performance Period will end, the restrictions on the Performance
Reward Percentage of the Number of Restricted Performance Shares will
terminate, the remainder of the Restricted Performance Shares will be
forfeited and returned to the Company, and the Grantee will cease to
have any right to receive any Additional Performance Shares in excess
of the Performance Reward Percentage of the Number of Additional
Performance Shares, 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,
44
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;
(d) the Grantee s retirement from the Company or an
Affiliate at or after attainment of the age at which benefits are
payable under the TECO Energy Group Retirement Plan or any successor
thereto without reduction for commencement of benefits before normal
retirement age, or any earlier date that the Committee determines will
constitute a normal retirement for purposes of this Agreement;
(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
e n tered 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) there is consummated a merger or consolidation of
the Company or any direct or indirect subsidiary of the Company
w i th 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
45
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
(4) the shareholders 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; or
(f) March 31, 2002.
4. Rights as Shareholder. Subject to the restrictions and
other limitations and conditions provided in this Agreement, the
Grantee as owner of the Restricted Performance Shares 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, the Restricted
Performance Shares.
5. Stock Certificates. Each certificate issued for shares of
Restricted Performance Shares 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
S T O CK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS,
CONDITIONS AND RESTRICTIONS (INCLUDING RESTRICTIONS ON
T R A NSFER 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 Performance Shares deposited
with the Company hereunder under conditions that do not result in the
forfeiture of those shares, the Company will return to the Grantee (or
t o 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 Additional Performance 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, with respect to Restricted Performance Shares, he or
she will provide a copy thereof to the Company within 30 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
Performance Shares and Additional Performance Shares 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 Performance Shares
and the Additional Performance Shares, valued at fair market value on
the date of delivery. The Company and its Affiliates may, to the
46
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 Agreement.
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: ___________________________
R. A. Dunn
Vice President-Human Resources
___________________________
47
Exhibit 12
TAMPA ELECTRIC COMPANY
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the company's ratio of earnings to
fixed charges for the periods indicated.
Six Months Twelve Months
Ended Ended Year Ended December 31,
June 30, 1999 June 30, 1999 1998 1997 1996(2) 1995(2) 1994(2)
4.50x 4.65x(1) 4.51x(3) 4.38x 4.40x 4.28x 3.88x(4)
For the purposes of calculating these ratios, earnings consist of
income before income taxes and fixed charges. Fixed charges consist of
interest on indebtedness, amortization of debt premium, the interest
component of rentals and preferred stock dividend requirements.
(1) Includes the effect of a fourth quarter 1998 $7.3-million pretax
charge at the Electric division associated with a regulatory ruling
denying recovery of coal expenses over an established benchmark for
coal purchases from an affiliate since 1992. The effect of this charge
was to reduce the ratio of earnings to fixed charges. Had this charge
been excluded from the calculation, the ratio of earnings to fixed
charges would have been 4.76x for the 12-month period ended June 30,
1999.
(2) Amounts have been restated to reflect the merger of Peoples Gas
System, Inc., with and into Tampa Electric Company.
(3) Includes the effect of one-time, pretax charges totaling $16.9
million. The effect of these charges was to reduce the ratio of
earnings to fixed charges. Had these charges been excluded from the
calculation, the ratio of earnings to fixed charges would have been
4.66x for the year ended Dec. 31, 1998.
(4) Includes the effect of a $21.3-million pretax restructuring charge.
The effect of this charge was to reduce the ratio of earnings to fixed
charges. Had this non-recurring charge been excluded from the
calculation, the ratio of earnings to fixed charges would have been
4.23x for the year ended Dec. 31, 1994.
48
<TABLE> <S> <C>
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<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
TAMPA ELECTIC COMPANY BALANCE SHEETS, STATEMENTS OF INCOME AND
STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000096271
<NAME> Tampa Electric Company
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