It's a tricky situation.
You can obviously terminate a coach for gross ethical misconduct. In fact, they did.
And then they allowed him to keep working, and therein lies the problem. If the wording of the new contract is the same as the old, and the penalties handed down by the NCAA are severe enough that he has to go, they can't just "fire him for cause." They already did that, and then re-hired him. Soooo, UT would be in the awkward position of trying to fire him for something that they already re-hired him in spite of.
It would be like if Tennessee fired him, Memphis hired him, and then a year later Memphis fired him for "lying to NCAA investigators in Summer 2010." It just wouldn't make any sense...they knew about that when they hired him, it can't possibly be the firing cause.
So that's the spot Tennessee is in, and therefore they have to put (I guess) crazy language in there about why they can still fire him this year if they feel like it.
And naturally, his view is that if there's not SOME security in there, then what's the point? So both sides are going back and forth, trying to get all the protection they can.
Just my guess.