Exhibit 10(g)(1)
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
between
TUCSON ELECTRIC POWER COMPANY
and
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dated as of December 6, 1996
This AGREEMENT, made effective as of the date on which a
Change in Control (as defined in Section 2) occurs by and between
Tucson Electric Power Company (the "Company"), an Arizona
corporation, and , of Tucson, Arizona (the
"Employee"). This Agreement amends and supersedes the prior
Employment Agreement between the Company and the Employee in
respect to a Change in Control.
W I T N E S S E T H T H A T:
WHEREAS, the Employee is an officer of the Company and an
integral part of its management who participates in the decision
making process relative to short and long-term planning and
policy for the Company; and
WHEREAS, the Board of Directors of the Company has
determined that it would be in the best interests of the Company,
its shareholders and the Employee to assure continuity in the
management of the Company's administration and operations in the
event of a Change in Control by entering into employment
agreements to retain the services of the Employee and certain
other key members of the Company's management; and
WHEREAS, the Employee agrees to the terms of the employment
agreement offered by the Company as set forth herein;
NOW, THEREFORE, it is hereby agreed by and between the
parties hereto as follows:
1. Employment. The Company agrees to continue the
Employee in its employ, and the Employee agrees to remain in the
employ of the Company, for the period stated in paragraph 4
hereof and upon the other terms and conditions herein provided.
2. Change in Control. The term, "Change in Control,"
shall mean the happening of any of the following:
(i) the Company receives a report on Schedule 13D
filed with the Securities and Exchange Commission pursuant
to Section 13(d) of the Securities Exchange Act of 1934
(hereinafter referred to as the "Exchange Act") disclosing
that any person, group, corporation or other entity is the
beneficial owner directly or indirectly of thirty percent or
more of the outstanding common stock of the Company;
(ii) any person (as such term is defined in Section
13(d) of the Exchange Act), group, corporation or other
entity other than the Company, a wholly-owned subsidiary of
the Company, or an entity formed by the Company for the
purpose of creating a holding company structure purchases
shares pursuant to a tender offer or exchange offer to
acquire any common stock of the Company (or securities
convertible into common stock) for cash, securities or any
other consideration, provided that after consummation of the
offer, the person, group, corporation or other entity in
question is the beneficial owner (as such term is defined in
Rule 13d-3 under the Exchange Act), directly or indirectly,
of thirty percent or more of the outstanding common stock of
the Company (calculated as provided in paragraph (d) of Rule
13d-3 under the Exchange Act in the case of rights to
acquire common stock);
(iii) the stockholders of the Company approve (a)
any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of common stock would be converted
into cash, securities or other property, or (b) any sale,
lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all
the assets of the Company;
(iv) there shall have been a change in a majority of
the members of the Board of Directors of the Company within
a 24-month period unless the election or nomination for
election by the Company's stockholders of each new director
was approved by the vote of two-thirds of the directors then
still in office who were in office at the beginning of the
24-month period; or
(v) there occurs a sale, exchange or transfer of all
or substantially all of the Company's generation or
distribution facilities, other than to a wholly-owned
subsidiary of the Company or an affiliate of the Company
under circumstances which would not otherwise constitute a
Change in Control.
3. Position and Responsibilities. During the period of
employment hereunder, the Employee agrees to serve the Company in
such executive capacity involving duties and responsibilities at
least equal in importance and scope to those of the Employee's
present position as the Board of Directors, the Chairman of the
Board of Directors or Chief Executive Officer or any other
executive officer of the Company to whom the Employee reports may
from time to time determine. During said period, the Employee
also agrees to serve, if elected, as an officer and director of
any subsidiary or affiliate of the Company.
4. Term and Duties.
(a) Term of Employment. The period of the Employee's
employment under this Agreement shall be deemed to have commenced
as of the effective date of this Agreement and shall continue for
a period of 60 full calendar months thereafter.
(b) Duties. During the period of employment hereunder
and except for illness or incapacity and reasonable vacation
periods, the Employee's business time, attention, skill and
efforts shall be exclusively devoted to the business and affairs
of the Company and its subsidiaries; provided, however, that
nothing in this Agreement shall preclude the Employee from
devoting time during reasonable periods required for
(i) serving as a director or member of a committee of
any company or organization involving no conflict
of interest with the Company or any of its
subsidiaries or affiliates,
(ii) delivering lectures and fulfilling speaking
engagements, and
(iii) engaging in charitable and community
activities,provided that such activities do not
materially affect or interfere with the
performance of the Employee's obligations to the
Company.
5. Compensation.
(a) For all services rendered by the Employee in any
capacity during employment under this Agreement, including
services as an executive, officer, director, or member of any
committee of the Company or any subsidiary or affiliate thereof,
the Company shall pay the Employee a fixed salary at a rate of
not less than Employees salary in effect at the time of the
Change in Control, subject to such periodic increases as the
Board of Directors, or a committee designated by said Board,
shall deem appropriate in accordance with the Company's customary
procedures and practices regarding the salaries of senior
management employees. Such salary shall be payable in accordance
with the customary payroll practices of the Company. Such
periodic increases in salary, once granted, shall not be subject
to revocation.
(b) Nothing in this Agreement shall preclude or affect
any rights or benefits that may now or hereafter be provided for
the Employee or for which the Employee may be or become eligible
under any bonus or other form of compensation or employee benefit
plan now existing or that may hereafter be adopted or awarded by
the Company. Specifically, the Employee shall:
(i) participate in the Company's Retirement Plan and
any related excess benefit or supplemental
retirement program (hereinafter referred to
collectively as the "Retirement Program");
(ii) participate in the Company's Deferred Compensation
Plan;
(iii) participate in the Company's Triple
Investment Plan;
(iv) participate in any stock option, stock
appreciation right, equity incentive or deferred
compensation plan maintained by the Company;
(v) participate in the Company's death benefit plans;
(vi) participate in the Company's disability benefit
plans;
(vii) participate in the Company's medical, dental
and health and welfare plans;
(viii) participate in the Company's Short-Term
Incentive Plan; and
(ix) participate in equivalent successor plans of the
Company for which senior management employees are
eligible; provided, however, that nothing in this
Agreement shall preclude the Company from amending
or terminating any such plan or program, on the
condition that such amendment or termination is
applicable to all of the Company's senior
management employees generally.
6. Business Expenses. The Company shall pay or reimburse
the Employee for all reasonable travel or other expenses incurred
in connection with the performance of the Employee's duties under
this Agreement in accordance with such procedures as the Company
may from time to time establish.
7. Additional Benefits.
Nothing in this Agreement shall affect the Employee's eligibility
to participate in all group health, dental, hospitalization,
life, travel or accident or other insurance plans or programs and
all other perquisites, fringe benefit or retirement plans or
additional compensation, including termination pay programs,
which the Company may hereafter, in its sole and absolute
discretion, elect to make available to its senior management
employees generally, and the Employee shall be eligible to
receive, during the period of employment under this Agreement,
all benefits and emoluments for which key employees are eligible
under every such plan, program, perquisite or arrangement to the
extent permissible under the general terms and provisions
thereof.
8. Termination of Employment. Notwithstanding any
other provision of this Agreement, the Employee's employment
under this Agreement may be terminated:
(a) by the Company, in the event of the Employee's fraud or
dishonesty which has resulted or is likely to result in material
economic damage to the Company or any of its subsidiaries, as
determined by a vote of two-thirds of the Directors of the
Company at a meeting of the Board of Directors at which the
Employee had an opportunity to be heard and such termination is
based on facts and circumstances known by a majority of the non-
employee Directors for a period of no more than 12 months by
written notice to the Employee, specifying the event relied upon
for such termination;
(b) by either the Company or the Employee, if the Employee
accepts employment or a consulting position with another company;
(c) by the Employee, if he determines in good faith that
there has been any (i) material change by the Company of the
Employee's functions, duties or responsibilities which change
would cause the Employee's position with the Company to become of
less dignity, responsibility, importance, prestige or scope from
that described in paragraph 3 above, including, without
limitation, a diminution in perquisites to which the Employee is
currently entitled, such as office size and status, secretarial
and clerical staff, (ii) assignment or reassignment by the
Company or by one of its subsidiaries of the Employee to another
place of employment more than 100 miles from the Employee's
current place of employment, (iii) liquidation, dissolution,
consolidation or merger of the Company, or transfer of all or
substantially all of its assets, other than a transaction in
which a successor corporation with a net worth at least equal to
that of the Company assumes this Agreement and all obligations
and undertakings of the Company hereunder, or (iv) reduction in
the Employee's total compensation or any component thereof, as
specified in paragraph 5 above, except as part of a salary
reduction program affecting the Company's management employees
generally, or other material breach of this Agreement by the
Company or any of its subsidiaries, by written notice to the
Company, specifying the event relied upon for such termination
and given at any time within 1 year after the occurrence of such
event; or
(d) by the Company upon the Disability or death of the
Employee. For purposes of this Agreement, the term "Disability"
is defined as the inability of the Employee to engage in his
regular occupation for 12 consecutive months and the inability
thereafter to engage in any occupation in which the Employee
could reasonably expect to engage giving due consideration to
Employee's education, training and experience. The Employee must
be under the regular medical care of a physician in connection
with treatment for such Disability.
9. Payments Upon Termination of Employment. In the event
of any termination by the Employee pursuant to paragraph 8(c)
above, or in the event the Employee's employment under this
Agreement is terminated by the Company for any reason other than
one of those specified in paragraph 8(a) or 8(b) above, the
Company shall, as liquidated damages or severance pay, or both,
pay to the Employee and provide the Employee and the dependents,
beneficiaries and estate of the Employee within 30 business days
after termination of employment with the following:
(a) A lump sum cash amount equal to 2 times the sum of (i)
Employee's base annual salary immediately preceding the Change in
Control; adjusted to reflect any increases in such base salary
following the Change in Control; plus (ii) the total amount paid
to the Employee pursuant to the Company's Short-Term Incentive
Plan or any successor plan thereto for the three years ended
before the date of the Change in Control, divided by three.
(b) A lump sum cash amount equal to the present value of
the excess of (i) the aggregate benefit that would have been paid
under the Retirement Program described in paragraph 5(b)(i) above
as in effect on the date first above written, if the Employee had
continued to be employed and to be entitled to service credit for
eligibility and benefit purposes during the 60-month period
immediately following such termination, at an annual rate of
compensation equal to that used to calculate the payments
provided by paragraph 9(a) above, calculated on the basis of the
compensation amount used in the benefit formula under said
Retirement Program, and assuming that the Employee is fully
vested in such benefit, over (ii) the aggregate benefit actually
payable under the Retirement Program and any successor retirement
program of the Company consisting of a tax-qualified pension plan
and a related excess benefit plan. In clarification of the
immediately preceding sentence, the aggregate benefit that would
have been paid under the Retirement Program shall be calculated
as of the normal or early retirement date for which the Employee
would have qualified, if the Employee were still employed on that
date, and which would produce the highest present value.
(c) A lump sum cash amount equal to the present value of
the aggregate contributions or payments, including dividends, if
any, that would have been made by the Company or any of its
subsidiaries under the Deferred Compensation Plan and Triple
Investment Plan described in paragraphs 5(b)(ii) and (iii) above
or any successor program of the Company in effect on the date on
which termination shall have occurred, if the Employee had
continued to be employed, and to participate in the Deferred
Compensation Plan and Triple Investment Plan or such successor
programs to the same extent as the Employee participated for the
last month during which the Employee was permitted to participate
during the 60-month period immediately following such
termination, at an annual rate of compensation equal to that used
to calculate the payments provided by paragraph 9(a) above.
(d) A lump sum cash amount equal to the spread on any
Company stock options or stock appreciation rights which would
have been granted to the Employee during the 24-month period
immediately following such termination assuming the Employee
continued to be employed and continued receiving annual grants of
options and/or stock appreciation rights in the same amount that
the Employee received in the calendar year in which the Employee
last received options and/or stock appreciation rights (assuming
for the purpose of this paragraph that such options or
appreciation rights are exercisable in full) and calculated on
the assumption that such options or appreciation rights were
granted to the Employee at the beginning of each calendar year
during such 24-month period at the same time and at the same
exercise price as the options or appreciation rights first
granted to any other executive of the Company during each such
year; provided, however, that if the Employee was granted an
option or appreciation right during the calendar year in which
his employment terminates and prior to such termination of
employment, no additional payments shall be made to him under
this paragraph with respect to such calendar year; further
provided, that for purposes of this paragraph, the spread shall
be calculated based on the closing price of the Company's common
stock on the last business day of such 24-month period and
further provided, that if such 24-month period does not end with
the month of December, the payment to the Employee under this
paragraph with respect to the calendar year in which such 24-
month period ends shall be multiplied by a fraction, the
numerator of which is the number of months of the 24-month period
in such year and the denominator of which is twelve. For the
purpose of this paragraph, the term "spread" means the excess, if
any, of the closing price on a national stock exchange (or if the
stock is no longer traded on a national stock exchange, any
regional or over-the-counter exchange on which it is traded) of
the Company's stock multiplied by the number of the shares of
Company common stock subject to a stock option or the number of
stock appreciation rights, over the exercise price for such
option or appreciation right.
Notwithstanding anything to the contrary in this
Section 9(d), if as of the applicable calculation date, the
Company's common stock is no longer traded on any national,
regional or over-the-counter stock exchange, the fair market
value of the Company's common stock for purposes of determining
the amount of spread shall be the amount agreed to by the
Employee and the Company. However, if the Employee and the
Company are not able to agree on a fair market value within 45
days after the date payment is due to be made to the Employee
under this Section 9(d), the fair market value of a share of the
Company's common stock shall be determined by a qualified and
independent appraiser selected by the Assistant Regional Director
of the American Arbitration Association of Phoenix, Arizona, or
his delegate. Such appraiser shall deliver its final report to
the Company and the Employee immediately upon completion. The
determination of the appraiser shall be final and binding on all
parties and shall include interest on such amount computed from
the date payment is due at such rate as determined by the
arbitrator. Any payment to the Employee under Section 9(d),
which was delayed pending such appraisal, shall be made within 5
business days after the appraiser delivers its report to the
Company and the Employee.
All fees, costs and expenses associated with such
appraisal (including those of the arbitrator) shall be paid by
the Company.
(e) To the extent not otherwise paid or payable under this
Agreement or the 1994 Omnibus Stock and Incentive Plan or any
successor plan (the "Plan"), the present value of any awards made
to the Employee under the Plan which are outstanding at the time
of the Employee's Termination (whether vested or not), assuming,
for the purpose of this paragraph, that any contingencies or
performance goals related to such awards are fully achieved at
the 100 percent level.
(f) For purposes of calculating the lump sum cash payments
provided by paragraphs 9(b), (c), (d) and (e) above, present
value shall be determined by using a discount factor equal to one
percentage point below the Prime Rate, compounded annually. The
"Prime Rate" shall be the base rate on corporate loans at large
U.S. money center commercial banks as reported in the Wall Street
Journal (or, if such rate is no longer published, such other base
rate on corporate loans by large money center commercial banks in
the United States to their most credit worthy customers as
published by any newspaper or periodical of general circulation)
as of the date on which termination shall have occurred.
(g) For a period of 60 months (commencing with the month in
which termination shall have occurred), the Employee shall
continue to be entitled to all employee benefits provided for in
paragraph 5(b)(v) through (vii) above as if the Employee were
still employed during such period under this Agreement, with
benefits based upon the compensation used to calculate the
payments provided by paragraph 9(a) above, and if and to the
extent that such benefits shall not be payable or provided under
any such plan, the Company shall pay or provide such benefits on
an individual basis. The benefits provided for in paragraph
5(b)(vii) above in accordance with this paragraph 9(g) shall be
secondary to any comparable benefits provided by another
employer.
(h) The aggregate payments made pursuant to this paragraph
9 and any other payments from the Company or any subsidiary or
affiliate of the Company which constitute "parachute payments" as
defined in section 280G of the Internal Revenue Code of 1986, as
amended (the"Code") shall not exceed three times the Employee's
"base amount", as defined in section 280G of the Code, less one
dollar. If it is established pursuant to a final determination
of a court or a final IRS proceeding that, notwithstanding the
good faith of Employee and the Company in applying the terms of
this Agreement, any part of the aggregate payments paid to the
Employee or his beneficiary under this Agreement constitutes an
"excess parachute payment" for purposes of sections 280G and 4999
of the Code, then the amount equal to the excess shall be deemed
for all purposes to be a loan from the Company to the Employee
made on the date of receipt. The Employee shall have an
obligation to repay such loan to the Company within six months of
demand, together with interest thereon at the lowest applicable
Federal rate (as defined in section 1274(d) of the Code) from the
date of the Employee's receipt until the date of such repayment.
If it is determined for any reason that an amount described in
clause (a), (b), (c) or (d) above was incorrectly calculated, the
Company shall pay to the Employee the increased amount, if any,
necessary so that, after such adjustment, the Employee shall have
received or be entitled to receive the maximum payments that he
may receive without any such payment constituting an "excess
parachute payment."
10. Source of Payments. All payments provided for in
paragraphs 5, 6, 7 and 9 above shall be paid in cash from the
general funds of the Company. The Company shall not be required
to establish a special or separate fund or other segregation of
assets to assure such payments.
11. Litigation Expenses. In the event of any litigation
or other proceeding between the Company and the Employee with
respect to the subject matter of this Agreement and the
enforcement of rights hereunder, the Company shall reimburse the
Employee for all reasonable costs and expenses relating to such
litigation or other proceeding as they are incurred, including
reasonable attorneys' fees and expenses if such litigation
results in any settlement or judgment or order in favor of the
Employee.
Notwithstanding any provision of Arizona law to the
contrary, in no event shall the Employee be required to reimburse
the Company for any of the costs and expenses relating to such
litigation or other proceeding. The obligation of the Company
under this paragraph 11 shall survive the termination for any
reason of this Agreement (whether such termination is by the
Company, by the Employee, upon the expiration of this Agreement
or otherwise).
12. Income Tax Withholding. The Company may withhold from
any payments made under this Agreement all federal, state, city
or other taxes as shall be required pursuant to any law or
governmental regulation or ruling.
13. Entire Understanding. This Agreement contains the
entire understanding between the Company and the Employee with
respect to the subject matter hereof and supersedes any prior
employment agreement between the Company and the Employee, except
that this Agreement shall not affect or operate to reduce any
benefit or compensation inuring to the Employee of a kind
elsewhere provided and not expressly provided in this Agreement.
14. Severability. If, for any reason, any one or more of
the provisions or part of a provision contained in this Agreement
shall be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provision or part of a provision of this
Agreement not held so invalid, illegal or unenforceable, and each
other provision or part of a provision shall to the full extent
consistent with law continue in full force and effect. If this
Agreement is held invalid or cannot be enforced, then to the full
extent permitted by law any prior agreement between the Company
and the Employee shall be deemed reinstated as if this Agreement
had not been executed.
15. Consolidation, Merger, or Sale of Assets. Nothing in
this Agreement shall preclude the Company from consolidating or
merging into or with, or transferring all or substantially all of
its assets to, another corporation with a net worth at least
equal to that of the Company and which assumes this Agreement and
all obligations and undertakings of the Company hereunder. Upon
such a consolidation, merger or transfer of assets and
assumption, the term, "the Company," as used herein shall mean
such other corporation and this Agreement shall continue in full
force and effect.
16. Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be given in
writing and shall be deemed to have been duly given if delivered
or mailed, postage prepaid, first class as follows:
(a)to the Company:
Tucson Electric Power Company
P.0. Box 711
Tucson, AZ 85702
Attention: Secretary
(b)to the Employee:
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P.0. Box 711
Tucson, AZ 85702
with an additional copy to (home address):
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or to such other address as either party shall have previously
specified in writing to the other.
17. No Attachment. Except as required by law, no right to
receive payments under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation or to execution,
attachment, levy, or similar process or assignment by operation
of law, or any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
18. Binding Agreement. This Agreement shall be binding
upon, and shall inure to the benefit of, the Employee and the
Company and their respective permitted successors and assigns.
19. Modification and Waiver. This Agreement may not be
modified or amended except by an instrument in writing signed by
the parties hereto. No term or condition of this Agreement shall
be deemed to have been waived, nor shall there be any estoppel
against the enforcement of any provision of this Agreement except
by written instrument signed by the party charged with such
waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each
such waiver shall operate only as to the specific term or
condition waived and shall not constitute a waiver of such term
or condition for the future or as to any act other than that
specifically waived.
20. Headings of No Effect. The paragraph headings
contained in this Agreement are included solely for convenience
of reference and shall not in any way affect the meaning or
interpretation of any of the provisions of this Agreement.
21. Governing Law. The Agreement and its validity,
interpretation, performance, and enforcement shall be governed by
the laws of the State of Arizona.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its officers thereunto duly authorized, and the
Employee has signed this Agreement, all as of the date first
above written.
TUCSON ELECTRIC POWER COMPANY
By:
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Its:
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Employee