-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SCw48GTRkop54kS3mE9x1QyuXZmds3HcxMgK4vO72bHB4SlVi+bwi9H21yyC5ST7 pR8AqQH2r4b/etFaDy9nRQ== 0000350563-99-000035.txt : 19990816 0000350563-99-000035.hdr.sgml : 19990816 ACCESSION NUMBER: 0000350563-99-000035 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TAMPA ELECTRIC CO CENTRAL INDEX KEY: 0000096271 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 590475140 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05007 FILM NUMBER: 99689287 BUSINESS ADDRESS: STREET 1: 702 N FRANKLIN ST STREET 2: TECO PLZA CITY: TAMPA STATE: FL ZIP: 33602 BUSINESS PHONE: 8132284111 MAIL ADDRESS: STREET 1: TAMPA ELECTRIC CO STREET 2: TECO PLAZA 702 N FRANKLIN ST CITY: TAMPA STATE: FL ZIP: 33602 10-Q 1 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. 2 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. 3 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. 4 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. 6 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. 7 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. 8 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 9 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 10 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 11 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. 12 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. 13 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. 14 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 17 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. 18 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. 19 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 EX-10.1 2 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 EX-10.2 3 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 EX-10.3 4 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 EX-10.4 5 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 EX-10.5 6 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 EX-10.6 7 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 EX-12 8 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 EX-27 9
UT 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. 0000096271 Tampa Electric Company 1000000 DEC-31-1999 Jun-30-1999 6-mos PER-BOOK 2,663 8 303 243 0 3,217 119 919 299 1,337 0 0 774 0 0 116 5 0 0 0 985 3,217 693 43 546 589 104 0 104 31 73 0 73 63 21 152 .00 .00
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