Officer Change in Control Agreement
This OFFICER
CHANGE IN CONTROL AGREEMENT (the "Agreement"), is entered into
as of the 4th day of December, 1998, by and
between Tucson Electric Power
Company (the "Company"), an Arizona
corporation, and Karen G. Kissinger, of
Tucson, Arizona (the "Employee"). Company
and Employee may be referred to
collectively hereinafter as the "Parties"
and singly as a "Party".
RECITALS
WHEREAS, the
Employee is an integral part of the Company's management who
participates in the decision making process
relative to short and long-term
planning and policy for the Company;
WHEREAS, the
Board of Directors of the Company has determined that it would
be in the best interests of the Company,
its shareholders and the Employee to
assure continuity in the management of the
Company's administration and
operations in the event of a Change in
Control by entering into Change in
Control agreements to retain the services
of the Employee and certain other key
members of the Company's management;
WHEREAS, the
Employee agrees to the terms of the Change in Control
agreement offered by the Company as set
forth herein; and
WHEREAS,
effective as of January 1, 1998, pursuant to a statutory share
exchange, the Company became a wholly owned
subsidiary of UniSource Energy
Corporation, an Arizona corporation
("UniSource").
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 of
which are hereby acknowledged, the
Company and the Employee hereby agree as
follows:
AGREEMENT
ARTICLE
1
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ELIGIBILITY FOR BENEFITS
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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 the latter
of: (a) the fifth anniversary of the date
either party gives written notice of
the termination of this Agreement; or (b)
if a Change in Control occurs during
the term of this Agreement, the fifth
anniversary of the Change of Control.
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1.2 Change in
Control. The term "Change in Control" shall mean the
occurrence of any of the following:
(a) UniSource receives a report on Schedule 13D filed with the
Securities and
Exchange Commission pursuant to Section 13(d) of the
Securities
Exchange Act of 1934, as amended (the "Exchange Act")
disclosing
that any person,
group, corporation or other entity is the beneficial
owner, directly
or indirectly, of thirty percent (30%) or more of the
outstanding
common stock of UniSource;
(b) any person (as such term is defined in Section 13(d) of the
Exchange Act),
group, corporation or other entity other than UniSource, a
wholly-owned
subsidiary of UniSource, or an entity formed by UniSource for
the purpose of
creating a holding company structure, purchases shares
pursuant to a
tender offer or exchange offer to acquire any common stock of
UniSource (or
securities convertible into common stock) for cash,
securities or
any other consideration, provided that after consummation of
the offer, the
person, group, corporation or other entity in question is
the beneficial
owner (as such term is defined in Rule 13d-3 under the
Exchange Act),
directly or indirectly, of thirty percent (30%) or more of
the outstanding
common stock of UniSource (calculated as provided in
paragraph (d) of
Rule 13d-3 under the Exchange Act in the case of rights to
acquire common
stock);
(c) the stockholders of UniSource's approval of:
(i) any consolidation
or merger of UniSource in which UniSource
is not the continuing or surviving corporation or pursuant
to which shares of UniSource common stock would be converted
into cash, securities or other property; or
(ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all the assets of UniSource;
(d) there shall have been a change in a majority of the members of
the
Board of
Directors of UniSource within a twenty-four (24) month period
unless the
election or nomination for election by UniSource's stockholders
of each new
Director was approved by the vote of two-thirds (2/3) of the
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Directors then
still in office who were in office at the beginning of the
twenty-four (24)
month period; or
(e) there occurs a sale, exchange or transfer of all or
substantially
all of
UniSource's interest in the Company.
1.3 Qualifying
Termination. The term "Qualifying Termination" shall mean
the occurrence of:
(a) a Change in Control; and
(b) either:
(i) the Company or its
successor terminates the Employee's
employment, other than for the reasons delineated in
Sections 1.7(a)(i) or 1.7(c) hereto, within five (5) years
after the Change in Control (or within six (6) months before
the Change in Control if such termination is effected in
contemplation of the Change in Control); or
(ii) within five (5)
years after the Change in Control the
Employee terminates employment with the Company or its
successor for any of the reasons delineated in Sections
1.7(b)(i), 1.7(b)(ii), 1.7(b)(iii), or 1.7(b)(iv) hereto.
The Company shall not be required to
provide any benefits to the Employee
pursuant to this Agreement unless a
Qualifying Termination occurs.
1.4
Compensation.
(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
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payroll
practices of the Company. Such periodic increases in salary,
once
granted, shall
not be subject to revocation.
(b) Nothing in this Agreement shall preclude or affect any rights
or
benefits that
may now or hereafter be provided for the Employee or for
which the
Employee may be or become eligible under any bonus or other
form
of compensation
or employee benefit plan now existing or that may hereafter
be adopted or
awarded by the Company. Specifically, the Employee shall:
(i) participate in the
Company's Retirement Plan and any related
excess benefit or supplemental retirement program
(hereinafter referred to collectively as the "Retirement
Program");
(ii) participate in the Company's Deferred Compensation Plan;
(iii) participate in the Company's Triple Investment Plan;
(iv) participate in any stock option, stock appreciation right,
equity incentive or deferred compensation plan maintained by
the Company;
(v) participate in the
Company's death benefit plans;
(vi) participate in the Company's disability benefit plans;
(vii) participate in the Company's medical, dental and health
and
welfare plans;
(viii) participate in the Company's annual incentive plan; and
(ix) 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.
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.
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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.
1.7 Termination
of Employment. Notwithstanding any other provision of this
Agreement, the Employee's employment with
the Company may be terminated:
(a) by the Company:
(i) in the event of
the Employee's fraud or dishonesty which has
resulted or is likely to result in material economic damage
to the Company or any of its subsidiaries, as determined by
a vote of two-thirds (2/3) of the Directors of the Company
at a meeting of the Board of Directors at which the Employee
had an opportunity to be heard and such termination is based
on facts and circumstances known by a majority of the
non-employee Directors for a period of no more than twelve
(12) months by written notice to the Employee, specifying
the event relied upon for such termination; or
(ii) 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:
(i) if, following a
Change of Control, there has been any
material change by the Company of the Employee's status,
title, authority, duties or responsibilities which change
would cause the Employee's position with the Company to
become of less responsibility or scope from that which the
Employee held immediately prior to the Change in Control;
(ii) upon the assignment or reassignment by the Company or by
one
of its subsidiaries of the Employee to another place of
employment more than fifty (50) miles from the Employee's
current place of employment;
(iii) upon the liquidation, dissolution, consolidation or
merger
of the Company, or transfer of all or substantially all of
its assets, other than a transaction in which a successor
corporation with a net worth at least equal to that of the
Company assumes this Agreement and all obligations and
undertakings of the Company hereunder; or
(iv) upon a reduction in the Employee's target compensation or
any component thereof, following a Change of Control, except
as part of a salary reduction program affecting the
Company's management employees generally, or other material
breach of this Agreement by the Company or any
