Amended and Restated
Officer Change in Control Agreement
This Amended and Restated Officer Change in
Control Agreement is entered into as of this 18th day of September,
2009 by and between Tucson Electric Power Company (the
“Company”), an Arizona corporation, and Michael J.
DeConcini (the “Employee”).
A. The Company and the Employee entered
into an Officer Change in Control Agreement (the “Prior
Agreement”) dated December 4, 1998, which was amended on
one prior occasion, and which expires by its own terms on
March 3, 2010.
B. The Board of Directors of the Company
has determined that it continues to be in the best interests of the
Company and its shareholders to assure continuity in the management
of the Company, UniSource Energy Corporation (“UniSource
Energy”) and the applicable Affiliate(s) (as defined in this
Agreement) in the event of a Change in Control (as defined in this
Agreement) occurs.
C. By executing this Amended and Restated
Officer Change in Control Agreement (the “Agreement”),
the Company and the Employee intend to replace and supersede the
Prior Agreement in its entirety.
D. In consideration for the
Employee’s execution of this Agreement, the Company and
UniSource Energy will offer the Employee a new change in control
agreement that will become effective immediately following the
expiration of this Agreement. The new agreement will be
substantially in the form that the Company and UniSource Energy
then offer to executives of Employee’s level.
NOW, THEREFORE, in consideration of the
Employee’s continued service to the Company and the mutual
agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Employee hereby agree as
follows:
ARTICLE I
Eligibility for Benefits
1.1 Term of Agreement; Expiration Date .
This Agreement shall be effective as of the date first indicated
above and shall remain in effect until March 3, 2010 at which
time it will automatically terminate. If a Change in Control occurs
on or before March 3, 2010, however, this Agreement will
remain in effect until the fifth anniversary of the Change in
Control, at which time it will automatically terminate.
1.2 Change in Control . For purposes of
this Agreement, “Change in Control” shall mean each
occurrence of any of the following:
(a) Any person, or more than one person
acting as a group (as determined in accordance with Treas. Reg.
§ 1.409A-3(i)(5)), acquires (or has acquired during the
12-month period ending on the most recent acquisition by such
person or persons) ownership of stock of UniSource Energy
possessing 40% or more of the total voting power of the stock of
UniSource Energy, unless such person is, or shall be, a trustee or
other fiduciary holding securities under an employee benefit plan
of UniSource Energy or a corporation owned, directly or indirectly,
by the stockholders of UniSource Energy in substantially the same
proportion as their ownership of stock of UniSource
Energy;
(b) The closing of a merger or
consolidation of UniSource Energy or Company with another entity
that is not affiliated with UniSource Energy immediately before the
Change in Control; provided, however, that, in the case of a merger
or consolidation involving UniSource Energy, if the merger or
consolidation results in the voting securities of UniSource Energy
outstanding immediately prior thereto continuing to represent,
either by remaining outstanding or by being converted into voting
securities of the surviving entity, more than 50% of the combined
voting power of the voting securities of UniSource Energy or such
surviving entity outstanding immediately after such merger or
consolidation, the merger or consolidation will be disregarded; and
provided further that, in the case of a merger or consolidation
involving the Company, if UniSource Energy continues to hold more
than 50% of the combined voting power of the voting securities of
the Company or the surviving entity outstanding immediately after
such merger or consolidation, the merger or consolidation will be
disregarded;
(c) During any period of twelve
(12) consecutive months, excluding any period prior to the
execution of this Agreement, the majority of members of UniSource
Energy’s Board is replaced by directors whose appointment or
election is not endorsed by a majority of the members of the Board
before the date of such appointment or election; or
(d) UniSource Energy’s execution of
an agreement for the sale or disposition by UniSource Energy of all
or substantially all of UniSource Energy’s assets.
Notwithstanding the foregoing, a Change in
Control will not be deemed to have occurred until: (1) any
required regulatory approval, including any final non-appealable
regulatory order, has been obtained; and (2) the transaction
that would otherwise be considered a Change in Control closes.
Further, to the extent required by Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”),
a transaction will not be considered a Change in Control for
purposes of this Section 7 unless the transaction also constitutes
a “change in control event ” as such term is used in
Treas. Reg. § 1.409A-3(i)(5).
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1.3 Qualifying Termination . The term
“Qualifying Termination” shall mean the occurrence of
both:
(a) a Change in Control on or before
March 3, 2010; and
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(i)
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the Employee incurs a Separation
from Service with the Company or its successor due to the
Company’s or successor’s termination of the
Employee’s employment, other than for the reasons delineated
in Sections 1.7(a)(i), 1.7(a)(ii) or 1.7(c) hereto, within
five (5) years following the Change in Control described in
paragraph (a) (or within six (6) months before such Change in
Control if the Employee’s Separation from Service is effected
in contemplation of the Change in Control); or
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(ii)
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the Employee incurs a Separation
from Service due to the Employee’s termination of employment
with the Company or its successor for “Good Reason” in
accordance with the provisions of Section 1.7(b) hereto,
within five (5) years following the Change in Control
described in paragraph (a) (or within six (6) months before
such Change in Control if the Employee’s Separation from
Service is effected in contemplation of the Change in
Control).
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Notwithstanding any provision to the contrary,
the Company shall not be required to provide any benefits to the
Employee pursuant to this Agreement unless a Change in Control
occurs on or before March 3, 2010.
(a) For all services rendered by the
Employee in any capacity during the term of this Agreement
following a Change of Control, including services as an executive,
officer, director, or member of any committee of the Company or any
subsidiary or affiliate thereof, the Company shall pay the Employee
a fixed salary at a rate of not less than Employee’s salary
in effect at the time of the Change in Control, subject to such
periodic increases as the Board of Directors, or a committee
designated by said Board, shall deem appropriate in accordance with
the Company’s customary procedures and practices regarding
the salaries of senior management employees. Such salary shall be
payable in accordance with the customary payroll practices of the
Company. Such periodic increases in salary, once granted, shall not
be subject to revocation.
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(b) Nothing in this Agreement shall
preclude or affect any rights or benefits that may now or hereafter
be provided for the Employee or for which the Employee may be or
become eligible under any bonus or other form of compensation or
employee benefit plan now existing or that may hereafter be adopted
or awarded by the Company. Specifically, the Employee
shall:
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(i)
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participate in the Company’s
Retirement Plan and any related excess benefit or supplemental
retirement program (hereinafter referred to collectively as the
“Retirement Program”);
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(ii)
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participate in the Company’s
Deferred Compensation Plan;
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(iii)
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participate in the Company’s
Triple Investment Plan;
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(iv)
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participate in any stock option,
stock appreciation right, equity incentive or deferred compensation
plan maintained by the Company;
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(v)
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participate in the Company’s
death benefit plans;
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(vi)
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participate in the Company’s
disability benefit plans;
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(vii)
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participate in the Company’s
medical, dental and health and welfare plans;
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(viii)
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participate in the Company’s
annual incentive plan; and
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(ix)
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participate in equivalent successor
plans thereto for which senior management employees are eligible;
provided, however, that nothing in this Agreement shall preclude
the Company from amending or terminating any such plan or program,
on the condition that such amendment or termination is applicable
to all of the Company’s senior management employees
generally.
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1.5 Business Expenses . The Company shall
pay or reimburse the Employee for all reasonable travel or other
expenses incurred in connection with the performance of the
Employee’s duties under this Agreement in accordance with
such procedures as the Company may from time to time establish. The
Employee shall be entitled to reimbursement for business expenses
in accordance with this Section 1.5 for expenses incurred
while the Employee is employed by the Company. The amount of
expenses incurred in one calendar year will not affect the expenses
eligible for reimbursement in any other calendar year. All expenses
incurred in one calendar year must be reimbursed no later than the
last day of the next calendar year. The right to reimbursement is
not subject to liquidation or exchange for any other
benefit.
1.6 Additional Benefits . Nothing in this
Agreement shall affect the Employee’s eligibility to
participate in all group health, dental, hospitalization, life,
travel or accident or other insurance plans or programs and all
other perquisites, fringe benefit or retirement plans or additional
compensation, including termination pay programs, which the Company
may hereafter, in its sole and absolute discretion, elect to make
available to its senior management employees generally, and the
Employee shall be eligible to receive, during his employment, all
benefits and emoluments for which key employees are eligible under
every such plan, program, perquisite or arrangement to the extent
permissible under the general terms and provisions
thereof.
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1.7 Termination of Employment .
Notwithstanding any other provision of this Agreement, the
Employee’s employment with the Company may be
terminated:
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(i)
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at any time for “Cause”
upon written notice to the Employee specifying the basis for the
termination. For purposes of this Agreement, the term
“Cause” shall mean the termination of the
Employee’s employment by the Company for one or more of the
following reasons:
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(1)
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The Employee’s willful
failure to perform any of the Employee’s duties which
continues after the Company has given the Employee written notice
describing the Employee’s failure and provided to the
Employee an opportunity to cure such failure within thirty
(30) days (or such longer period as may be specified by the
Board) of such written notice; or
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(2)
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The Employee’s material
violation of Company policy; or
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(3)
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Any act of fraud or dishonesty
resulting or intended to result in the Employee’s personal
enrichment at the Company’s or any Affiliate’s expense;
or
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(4)
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The Employee’s gross
misconduct in the performance of the Employee’s duties that
results in material economic harm to the Company or any Affiliate;
or
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(5)
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The Employee’s conviction of,
or plea of guilty or no contest (or its equivalent) to, a felony;
or
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(6)
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The Employee’s material
breach of the Employee’s employment agreement with the
Company, if any.
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The existence of Cause shall be determined by
the Board, in its discretion.
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(ii)
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upon the Disability or death of the
Employee. For purposes of this Agreement, the term
“Disability” is defined as the inability of the
Employee to engage in his regular occupation for twelve
(12) consecutive months and the inability thereafter to engage
in any occupation in which the Employee could reasonably expect to
engage giving due consideration to the Employee’s education,
training and experience. The Employee must be under the regular
medical care of a physician in connection with treatment for such
Disability.
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(b) by the Employee for “Good
Reason.” The Employee shall have “Good Reason” to
terminate employment with the Company if the Employee provides the
Company with notice of such termination as set forth below. For
purposes of this Agreement, the term “Good Reason”
shall mean and inclu
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