As filed with the Securities and Exchange Commission on
May 21, 1998.
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
UNISOURCE ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
___________________
Arizona 860786732
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 West Sixth Street
Tucson, Arizona 85701
(520) 571-4000
(Address of principal executive offices)
___________________
TUCSON ELECTRIC POWER COMPANY
TRIPLE INVESTMENT PLAN FOR SALARIED EMPLOYEES
(Full title of the plan)
Dennis R. Nelson, General Counsel
UniSource Energy Corporation
220 West Sixth Street
Tucson, Arizona 85701
(Name and address of agent for service)
Telephone number, including area code, of agent for service:
(520) 571-4000
___________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to be price offering registration
to be registered registered per unit price fee
Common Stock, 1,000,000(1) $16.3125(2) $16,312,500(2) $4,813(2)
no par value shares
Interests in - - - -
the Plan
_________________
(1) This Registration Statement covers, in addition to the
number of shares of Common Stock stated above, other
rights to purchase or acquire the shares of Common Stock
covered by the Prospectus and, pursuant to Rule 416(c)
under the Securities Act of 1933, an indeterminate number
of shares and interests in the Tucson Electric Power
Company Triple Investment Plan for Salaried Employees
(the "Plan") which by reason of certain events
specified in the Plan may become subject to the Plan and
which may be offered or sold pursuant to the Plan.
(2) Pursuant to Rule 457(h), the maximum offering price, per
share and in the aggregate, and the registration fee were
calculated based upon the average of the high and low
prices of the Common Stock on May 14, 1998 as reported on
the New York Stock Exchange and published in the Western
Edition of The Wall Street Journal.
The Exhibit Index for this Registration Statement is at
page S-4.
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The documents containing the information specified in
Part I of Form S-8 (plan information and registrant
information) will be sent or given to employees as specified
by Rule 428(b)(1) of the Securities Act of 1933, as amended
(the "Securities Act"). Such documents need not be filed with
the Securities and Exchange Commission (the "Commission")
either as part of this Registration Statement or as
prospectuses or prospectus supplements pursuant to Rule 424 of
the Securities Act. These documents, which include the
statement of availability required by Item 2 of Form S-8, and
the documents incorporated by reference in this Registration
Statement pursuant to Item 3 of Form S-8 (Part II hereof),
taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by
UniSource Energy Corporation (the "Company") are incorporated
herein by reference:
(a) Annual Report on Form 10-K for the Company's fiscal
year ended December 31, 1997, filed with the
Commission on March 3, 1998, as amended March 6, 1998;
(b) Quarterly Report on Form 10-Q for the Company's fiscal
quarter ended March 31, 1998, filed with the
Commission on May 13, 1998; and
(c) The description of the Company's Common Stock
contained in the Company's Registration Statement on
Form 8-A, filed with the Commission on December 23,
1997.
All documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange
Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall
be deemed to be incorporated by reference into the prospectus
and to be a part hereof from the date of filing of such
documents. Any statement contained herein or in a document,
all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be
modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or
in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
amended, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The Common Stock is registered pursuant to Section 12
of the Exchange Act. Therefore, the description of the
securities is omitted.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the original issuance of Common Stock
registered hereby is passed on for the Company by Dennis R.
Nelson. Mr. Nelson is the General Counsel of the Company and
is compensated as an employee of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Arizona corporate law generally authorizes, on a non-
exclusive basis, indemnification of officers and directors who
have acted or failed to act, in good faith, in a manner
believed to be in or not opposed to the best interest of the
Company (with certain limitations in the case of actions by or
in the right of the Company) and mandates such indemnification
in the case of an officer or director who is successful on the
merits or otherwise in defense of claims by reason of the fact
or such status as an officer or director.
Article SIXTH of the Amended and Restated Articles of
Incorporation of the Company provides, in part, as follows:
(B) No director of the Company shall be
personally liable to the Company or its shareholders for
money damages for any action taken or any failure to take
any action as a Director; provided, however, that nothing
herein shall be deemed to eliminate or limit any liability
which may not be so eliminated or limited under the laws of
the State of Arizona, as in effect at the effective date of
this paragraph (B) of Article SIXTH or as thereafter
amended. No amendment, modification or repeal of this
paragraph (B) shall eliminate or limit the protection
afforded by this paragraph (B) to a director with respect
to any act or omission occurring before the effective date
thereof.
(C) (1) The Company shall, to the maximum extent
permitted by applicable law, as from time to time in
effect, indemnify any individual who is or was a party to
or otherwise involved in (or threatened to be made a party
to or otherwise involved in) any Proceeding (as hereinafter
defined) because such individual is or was a director or
officer of the Company, or, while a director or officer of
the Company, is or was serving at the request of the
Company as a director, officer, partner, trustee, employee
or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan or
other enterprise, against all Liability (as hereinafter
defined) incurred by such individual in connection with
such Proceeding.
As used in this paragraph (C) of Article
SIXTH, (a) the term "Expenses" includes attorneys' fees and
all other costs and expenses reasonably related to a
Proceeding, (b) the term "Liability" means the obligation
to pay a judgment, settlement, penalty or fine (including
any excise tax assessed with respect to an employee benefit
plan) and reasonable Expenses incurred with respect to a
Proceeding, and includes without limitation obligations and
Expenses that have not yet been paid but that have been or
may be incurred, and (c) the term "Proceeding" means any
threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal, including
without limitation any action, suit or proceeding by or in
the right of the Company and including, further, any appeal
in connection with any such action, suit or proceeding.
(2) The Company shall, to the maximum extent
permitted by applicable law, pay any Expenses incurred by
a director or officer of the Company in defending any such
Proceeding in advance of the final disposition thereof upon
receipt of any undertaking by or on behalf of such
individual to repay such advances if it is ultimately
determined that such individual did not meet any standard
of conduct prescribed by applicable law and upon the
satisfaction of such other conditions as may be imposed by
applicable law.
(3) The Company by resolution of the Board
of Directors, may extend the benefits of this paragraph (C)
of Article SIXTH to employees and agents of the Company
(each individual entitled to benefits under this paragraph
(C) being hereinafter sometimes called an "Indemnified
Person").
(4) All rights to indemnification and to the
advancement of expenses granted under or pursuant to this
paragraph (C) shall be deemed to arise out of a contract
between the Company and each person who is an Indemnified
Person at any time while this paragraph (C) is in effect
any may be evidenced by a separate contract between the
Company and each Indemnified Person; and such rights shall
be effective in respect of all Proceedings commenced after
the effective date of this paragraph (C), whether arising
from acts or omissions occurring before or after such date.
No amendment, modification or repeal of this Article shall
affect any rights or obligations theretofore existing.
(5) The Company may purchase and maintain
insurance on behalf of, or insure or cause to be insured,
any individual who is an Indemnified Person against any
Liability asserted against or incurred by him in any
capacity in respect of which he is an Indemnified Person,
or arising out of his status in such capacity, whether or
not the Company would have the power to indemnify him
against such liability under this Article. The Company's
indemnity of any individual who is an Indemnified Person
shall be reduced by any amounts such individual may collect
with respect to such liability (a) under any policy of
insurance purchased and maintained on his behalf by the
Company or (b) from any other entity or enterprise served
by such individual.
(6) The rights to indemnification and to the
advancement of Expenses and all other benefits provided by,
or granted pursuant to, this Article shall continue as to
a person who has ceased to serve in the capacity in respect
of which such person was an Indemnified Person and shall
inure to the benefit of the heirs, executors and
administrators of such person.
(7) The Board of Directors shall have the
power and authority to make, alter, amend and repeal such
procedural rules and regulations relating to
indemnification and the advancement of Expenses as it, in
its discretion, may deem necessary or expedient in order to
carry out the purposes of this Article, such rules and
regulations, if any, to be set forth in the Bylaws of the
Company or in a resolution of the Board of Directors.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See the attached Exhibit Index on page S-4.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus
required by Section 10(a)(3) of the Securities
Act;
(ii) To reflect in the prospectus
any facts or events arising after the effective
date of the Registration Statement (or the most
recent post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the Registration Statement; and
(iii) To include any material
information with respect to the plan of
distribution not previously disclosed in the
Registration Statement or any material change to
such information in the Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act that are incorporated by reference in the
Registration Statement;
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-
effective amendment shall be deemed to be a new regis-
tration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the provisions described in Item 6 above, or otherwise, the
registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on
Form S-8 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Tucson, State of Arizona, on
May 8, 1998.
UNISOURCE ENERGY CORPORATION
By: /s/ Charles E. Bayless
Charles E. Bayless
Its: Chairman, President and Chief
Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes
and appoints Charles E. Bayless and Dennis Nelson, or each of
them individually, his or her true and lawful attorney-in-fact
and agent with full powers of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and
to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any
of them individually, or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Act, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
SIGNATURE TITLE DATE
/s/ Charles E. Bayless Chairman, President and May 8, 1998
Charles E. Bayless Chief Executive Officer
(Principal Executive Officer)
/s/ Ira R. Adler Senior Vice President and May 8, 1998
Ira R. Adler Chief Financial Officer
(Principal Financial Officer)
/s/ Karen G. Kissinger Vice President and May 8, 1998
Karen G. Kissinger Controller
/s/ Elizabeth T. Bilby Director May 8, 1998
Elizabeth T. Bilby
/s/ Jose L.Canchola Director May 8, 1998
Jose L. Canchola
/s/ John L. Carter Director May 8, 1998
John L. Carter
/s/ John A. Jeter Director May 8, 1998
John A. Jeter
/s/ R.B. O'Rielly Director May 8, 1998
R.B. (Buck) O'Rielly
/s/ Martha R. Seger Director May 8, 1998
Martha R. Seger, Ph.D.
/s/ Donald G. Shropshire Director May 8, 1998
Donald G. Shropshire
/s/ H. Wilson Sundt Director May 8, 1998
H. Wilson Sundt
</TABLE>
<PAGE>
THE PLAN. Pursuant to the requirements of the
Securities Act of 1933, the Tucson Electric Power Company
Triple Investment Plan for Salaried Employees Committee has
duly caused this Registration Statement on Form S-8 to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Tucson, State of Arizona, on May 8,
1998.
TUCSON ELECTRIC POWER COMPANY
TRIPLE INVESTMENT PLAN FOR
SALARIED EMPLOYEES
By: Tucson Electric Power Company
Triple Investment Plan for
Salaried Employees Committee
By: /s/ Ira R. Adler
Ira R. Adler
By: /s/ Gary L. Ellerd
Gary L. Ellerd
By: /s/ George W. Miraben
George W. Miraben
By:
James S. Pignatelli
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1 Tucson Electric Power Company Triple Investment Plan
for Salaried Employees (composite plan document
incorporating plan amendments as specified therein).
4.2 Trust Agreement.
5.1 Opinion of Company Counsel (opinion re legality).
5.2 Opinion of O'Melveny & Myers LLP (ERISA opinion).
15.1 Price Waterhouse LLP letter re unaudited interim
financial information.
15.2 Deloitte & Touche LLP letter re unaudited interim
financial information.
23.1 Consent of Deloitte & Touche LLP (consent of
independent auditors).
23.2 Consent of Counsel (included in Exhibits 5.1
and 5.2).
24. Power of Attorney (included in this
Registration Statement under "Signatures").
<PAGE>
____________________________________
TUCSON ELECTRIC POWER COMPANY
TRIPLE INVESTMENT PLAN FOR SALARIED EMPLOYEES
(Amended and Restated as of January 1, 1987)
____________________________________
The following is a composite Plan document which includes
the Plan as Amended and Restated as of January 1, 1987,
and reflects the following Plan amendments:
1. Amendment 1995-I, adopted July 17, 1995 and
effective as of July 1, 1995;
2. Amendment 1996-II, adopted April 4, 1997 and
effective as of January 1, 1996;
3. Amendment 1997-I, adopted December 31, 1997 and
effective as of January 1, 1998;
4. Amendment 1998-I, adopted May 13, 1998 and
effective as of January 1, 1998;
5. Amendment 1998-II, adopted May 13, 1998 and
effective as of January 1, 1998; and
6. Amendment 1998-III, adopted May 13, 1998 and
effective as of June 1, 1998.
<PAGE>
Tucson Electric Power Company
Triple Investment Plan for Salaried Employees
_________________________
Table of Contents
Title Page
ARTICLE I DESIGNATION OF PLAN AND DEFINITIONS . . . . . . 3
Section 1.1 - General . . . . . . . . . . . . . . . . . . 3
Section 1.2 - Account . . . . . . . . . . . . . . . . . . 3
Section 1.3 - Beneficiary . . . . . . . . . . . . . . . . 4
Section 1.4 - Board . . . . . . . . . . . . . . . . . . . 5
Section 1.5 - Break in Employment . . . . . . . . . . . . 5
Section 1.6 - Code. . . . . . . . . . . . . . . . . . . . 6
Section 1.7 - Committee . . . . . . . . . . . . . . . . . 6
Section 1.8 - Company . . . . . . . . . . . . . . . . . . 6
Section 1.9 - Company Matching Contributions. . . . . . . 7
Section 1.10 - Company Matching Contributions Account . . 7
Section 1.11 - Compensation . . . . . . . . . . . . . . . 7
Section 1.12 - CPC. . . . . . . . . . . . . . . . . . . . 8
Section 1.13 - CPC Accounts . . . . . . . . . . . . . . . 9
Section 1.14 - CPC Agreement. . . . . . . . . . . . . . . 9
Section 1.15 - CPC Company Contributions Account. . . . . 9
Section 1.16 - CPC Deferred Compensation Contributions
Account. . . . . . . . . . . . . . . . . . . 9
Section 1.17 - CPC Effective Date . . . . . . . . . . . . 10
Section 1.18 - CPC Rollover Contributions Account . . . . 11
Section 1.19 - CPC Thrift Plan. . . . . . . . . . . . . . 11
Section 1.20 - CPC Transferred Employee . . . . . . . . . 11
Section 1.21 - Defined Benefit Plan Fraction. . . . . . . 12
Section 1.22 - Defined Contribution Plan Fraction . . . . 12
Section 1.23 - Effective Date . . . . . . . . . . . . . . 13
Section 1.24 - Eligible Employee. . . . . . . . . . . . . 13
Section 1.25 - Employee . . . . . . . . . . . . . . . . . 14
Section 1.26 - Entry Date . . . . . . . . . . . . . . . . 14
Section 1.27 - ERISA. . . . . . . . . . . . . . . . . . . 14
Section 1.28 - Fiduciary. . . . . . . . . . . . . . . . . 15
Section 1.29 - Funds. . . . . . . . . . . . . . . . . . . 15
Section 1.30 - Highly Compensated Employee. . . . . . . . 16
Section 1.31 - Military Leave . . . . . . . . . . . . . . 19
Section 1.32 - Month. . . . . . . . . . . . . . . . . . . 20
Section 1.33 - Part-Time Employee . . . . . . . . . . . . 20
Section 1.34 - Participant. . . . . . . . . . . . . . . . 20
Section 1.35 - Plan . . . . . . . . . . . . . . . . . . . 20
Section 1.36 - Plan Year. . . . . . . . . . . . . . . . . 20
Section 1.37 - Quarter. . . . . . . . . . . . . . . . . . 21
Section 1.38 - Regular Employee . . . . . . . . . . . . . 21
Section 1.39 - Related Company. . . . . . . . . . . . . . 21
Section 1.39A - Rollover Account. . . . . . . . . . . . . 22
Section 1.40 - Salary Deferral Contributions. . . . . . . 22
Section 1.41 - Salary Deferral Contributions Account. . . 23
Section 1.41A - SRA . . . . . . . . . . . . . . . . . . . 23
Section 1.42 - Subfund. . . . . . . . . . . . . . . . . . 23
Section 1.43 - Trust Agreement. . . . . . . . . . . . . . 23
Section 1.44 - Trust Fund . . . . . . . . . . . . . . . . 24
Section 1.45 - Trustee. . . . . . . . . . . . . . . . . . 24
Section 1.46 - UniSource. . . . . . . . . . . . . . . . . 24
Section 1.47 - UniSource Stock. . . . . . . . . . . . . . 24
ARTICLE II ELIGIBILITY . . . . . . . . . . . . . . . . . . 25
Section 2.1 - Requirements for Participation. . . . . . . 25
Section 2.2 - Notice of Participation . . . . . . . . . . 25
Section 2.3 - Enrollment Form . . . . . . . . . . . . . . 26
Section 2.4 - Participation by CPC Transferred
Employees . . . . . . . . . . . . . . . . . 28
Section 2.5 - Employee Transfers. . . . . . . . . . . . . 28
ARTICLE III COMPANY CONTRIBUTIONS AND ROLLOVER ACCOUNTS . . 30
Section 3.1 - Company Contributions . . . . . . . . . . . 30
Section 3.2 - Payment . . . . . . . . . . . . . . . . . . 31
Section 3.3 - Limitation on Company Contributions . . . . 31
Section 3.4 - Section 402(g) Limit on Salary Deferral
Contributions . . . . . . . . . . . . . . . 32
Section 3.5 - Section 401(k) Limitations on
Compensation Deferral Contributions . . . . 33
Section 3.6 - Section 401(m) Limitations on After-Tax
Employee Contributions and Company
Matching Contributions. . . . . . . . . . . 39
Section 3.7 - CPC Accounts. . . . . . . . . . . . . . . . 45
Section 3.8 - Rollover Contributions. . . . . . . . . . . 47
ARTICLE IV VALUATION OF FUNDS AND ALLOCATION TO
ACCOUNTS. . . . . . . . . . . . . . . . . . . . 49
Section 4.1 - Establishment of Accounts . . . . . . . . . 49
Section 4.2 - Determination of Values . . . . . . . . . . 49
Section 4.3 - UniSource Stock Fund. . . . . . . . . . . . 50
Section 4.4 - Section 16 Limitations. . . . . . . . . . . 52
Section 4.5 - ERISA Section 404(c). . . . . . . . . . . . 52
Section 4.6 - Fund M Provisions . . . . . . . . . . . . . 54
ARTICLE V VESTING, IN-PLAN WITHDRAWALS AND
DISTRIBUTIONS . . . . . . . . . . . . . . . . . 54
Section 5.1 - Vesting . . . . . . . . . . . . . . . . . . 54
Section 5.2 - Withdrawals From the Plan While Employed. . 55
Section 5.3 - Distribution of Benefits. . . . . . . . . . 58
Section 5.4 - Valuation of Accounts on Withdrawals
or Distribution . . . . . . . . . . . . . . 64
Section 5.5 - Inability to Locate Participant. . . . . . 65
Section 5.6 - Payment of Small Benefits . . . . . . . . . 66
Section 5.7 - Loans to Participants . . . . . . . . . . . 66
Section 5.8 - Restrictions on UniSource Stock . . . . . . 71
ARTICLE VI ADMINISTRATION. . . . . . . . . . . . . . . . . 72
Section 6.1 - The Committee . . . . . . . . . . . . . . . 72
Section 6.2 - Committee Action. . . . . . . . . . . . . . 73
Section 6.3 - Rights and Duties . . . . . . . . . . . . . 74
Section 6.4 - Investment Responsibility . . . . . . . . . 78
Section 6.5 - Delegation of Non-Investment
Fiduciary Responsibility. . . . . . . . . . 78
Section 6.6 - Duty of Care. . . . . . . . . . . . . . . . 79
Section 6.7 - Compensation, Indemnity and Liability . . . 79
ARTICLE VII AMENDMENT AND TERMINATION . . . . . . . . . . . 81
Section 7.1 - Amendments. . . . . . . . . . . . . . . . . 81
Section 7.2 - Discontinuance of Plan. . . . . . . . . . . 82
Section 7.3 - Failure to Contribute . . . . . . . . . . . 83
Section 7.4 - Merger or Consolidation . . . . . . . . . . 83
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . 84
Section 8.1 - Contributions Not Recoverable . . . . . . . 84
Section 8.2 - Limitation on Participants' Rights. . . . . 84
Section 8.3 - Receipt or Release. . . . . . . . . . . . . 84
Section 8.4 - Alienation. . . . . . . . . . . . . . . . . 85
Section 8.5 - Governing Law . . . . . . . . . . . . . . . 86
Section 8.6 - Headings, Etc., No Part of Agreement. . . . 86
Section 8.7 - Successors and Assigns. . . . . . . . . . . 86
ARTICLE IX TOP-HEAVY PROVISIONS. . . . . . . . . . . . . . 87
Section 9.1 - Effective Date. . . . . . . . . . . . . . . 87
Section 9.2 - Definitions . . . . . . . . . . . . . . . . 87
Section 9.3 - Top Heavy Definition. . . . . . . . . . . . 90
Section 9.4 - Minimum Benefit Contribution,
Compensation Limitations, Section 415
Limitations, and Special Distribution
Rules . . . . . . . . . . . . . . . . . . . 91
ARTICLE X LIMITATION ON ANNUAL ADDITIONS. . . . . . . . . 95
Section 10.1 - Limitation . . . . . . . . . . . . . . . . 95
Section 10.2 - Definitions. . . . . . . . . . . . . . . . 95
Section 10.3 - Annual Addition Limitations. . . . . . . . 98
TUCSON ELECTRIC POWER COMPANY
TRIPLE INVESTMENT PLAN
FOR SALARIED EMPLOYEES
(Amended and Restated as of January 1, 1987)
____________________
WHEREAS, the Tucson Electric Power Company, an Arizona
corporation, maintains the Tucson Electric Power Company Triple
Investment Plan for Salaried Employees (the "Plan") which is
intended to serve a dual purpose as a profit-sharing plan within
the meaning of Section 401(k) of the Code and as an accident and
health plan, whereby sums received on account of disability are
excluded from income under Sections 105(c) and (e) of the Code;
WHEREAS, the Plan was established, effective as of
January 1, 1985;
WHEREAS, the Plan was previously amended and restated
effective as of January 1, 1987, to comply with the Tax Reform Act
of 1986, and in certain other respects; and
WHEREAS, it is desirable to again amend and restate the
Plan, effective as of January 1, 1987, to incorporate amendments to
the Plan and to reflect further changes required by the Tax Reform
Act of 1986 and other legislation.
NOW, THEREFORE, the Plan is hereby amended and restated
effective as of January 1, 1987, unless otherwise noted, with
respect to Employees who retire or otherwise terminate employment
on or after January 1, 1987. The rights and benefits of any
Employee who terminated employment prior to January 1, 1987 shall
be determined under the terms of the Plan in effect at the time of
such termination.
<PAGE>
ARTICLE I
DESIGNATION OF PLAN AND DEFINITIONS
Section 1.1 - General
This Plan shall be known as the Tucson Electric Power
Company Triple Investment Plan for Salaried Employees. The
Company intends that this Plan be a defined contribution profit-
sharing plan that qualifies under Section 401(k) of the Code and,
accordingly, that the Salary Deferral Contributions be excluded
from the gross income of Participants who are Employees of the
Company. Whenever any of the following terms are used in this Plan
with the first letter or letters capitalized, they shall have the
meanings specified below, unless the context clearly indicates to
the contrary.
Section 1.2 - Account
"Account" or "Accounts" shall mean a Participant's Salary
Deferral Contributions Account, and/or his Company Matching
Contributions Account. Effective December 15, 1992, "Account" or
"Accounts" shall also include a CPC Transferred Employee's CPC
Accounts. Effective January 1, 1998, "Account" or "Accounts" shall
also include a Participant's Rollover Account.
Section 1.3 - Beneficiary
(a) "Beneficiary" or "Beneficiaries" shall mean the
person or persons last designated by a Participant to receive the
benefits specified hereunder in the event of the Participant's
death. A Participant shall have the right to change or revoke any
such designation from time to time by properly filing a new
designation or notice of revocation with the Committee, and no
notice to any Beneficiary or consent by any Beneficiary shall be
required to effect any such change or revocation except as provided
in Section 1.3(b). If a Participant shall fail to designate a
Beneficiary before his demise, or if no designated Beneficiary
survives the Participant, any benefits that would be payable to a
Beneficiary shall be paid to the following classes of successive
preference Beneficiaries: the Participant's (i) surviving spouse,
(ii) surviving children, (iii) surviving parents, (iv) surviving
brothers and sisters or (v) executors or administrators.
(b) Notwithstanding the above, upon the death of a
married Participant, no payment to a Beneficiary other than the
then surviving spouse shall be valid unless there is on file with
the Committee a consent to such designation executed by the
surviving spouse, which consent is in a form meeting the
requirements of Section 417 of the Code and satisfactory to the
Committee.
Section 1.4 - Board
"Board" or "Board of Directors" shall mean the Board of
Directors of Tucson Electric Power Company.
Section 1.5 - Break in Employment
(a) "Break in Employment" of an Employee shall mean his
resignation, discharge, death, retirement, layoff, or total
disability (meaning a physical or mental condition which, in the
judgment of the Committee based upon competent medical evidence
satisfactory to the Committee, totally and presumably permanently
prevents the Participant from engaging in any substantial, gainful
employment), but not his transfer from the Company to a Related
Company.
(b) A leave of absence for personal reasons or because
of illness or injury or disability when authorized by the Company
or a Related Company in accordance with established policies,
vacation period, or Military Leave shall not constitute a Break in
Employment; provided that
(i) continuation upon a temporary lay-off for lack
of work for a period in excess of one year shall be considered
a discharge effective as of the expiration of the one year
period; and
(ii) failure to return to work upon expiration of
any approved leave of absence, sick leave or vacation or
promptly after recall from a temporary layoff for lack of
work, shall be considered a resignation effective as of the
expiration of such leave of absence, sick leave, vacation or
layoff.
Section 1.6 - Code
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
Section 1.7 - Committee
"Committee" shall mean the Committee appointed by the
Board pursuant to the provisions of this Plan.
Section 1.8 - Company
"Company" shall, as the context requires, mean Tucson
Electric Power Company or any other company which is a signatory
hereto or any company which subsequently adopts the Plan as a whole
or as to one or more divisions, and any successor company which
continues the Plan.
Section 1.9 - Company Matching Contributions
"Company Matching Contributions" shall mean the
contributions made by the Company under Section 3.1(b) based on
Salary Deferral Contributions made on behalf of each Participant.
Section 1.10 - Company Matching Contributions Account
"Company Matching Contributions Account" of a Participant
shall mean the account established for each Participant in
accordance with Section 4.1 which is comprised of Company Matching
Contributions (and earnings thereon) less any withdrawals
hereunder.
Section 1.11 - Compensation
"Compensation" shall mean all cash compensation paid to
an Employee in the form of base pay, bonuses, overtime,
commissions, vacation pay and sick pay, and shall include salary
reduction contributions under a plan described in Section 401(k) of
the Code or a cafeteria plan described in Section 125 of the Code,
but shall not include any other form of compensation, including,
but not by way of limitation, severance pay or any payments made
pursuant to any retirement, deferred compensation, insurance or
medical plan or any other fringe benefits. Notwithstanding the
foregoing, the maximum amount of an Employee's Compensation which
shall be taken into account under the Plan for any Plan Year shall
be (1) $200,000 for Plan Years beginning on or after January 1,
1989, and (2) $150,000 for Plan Years beginning on or after
January 1, 1994, such amount adjusted at the same time and in the
same manner as under Sections 401(a)(17) and 415(d) of the Code.
For any Plan Year of fewer than 12 months, this limit shall be
reduced to the amount obtained by multiplying the limit by a
fraction having a numerator equal to the number of full months in
the Plan Year and a denominator equal to 12. For purposes of the
dollar limitation referred to above, the Compensation of any
Participant who is either a 5% owner (as defined in Section
416(i)(1) of the Code), or one of the 10 most highly paid Highly
Compensated Employees during the Plan Year ("First Participant")
shall be aggregated with the Compensation of any Participant who
has not attained age 19 and is a lineal descendant of the First
Participant and any Participant who is the spouse of the First
Participant. In any case in which such aggregation would produce
Compensation in excess of the dollar limitation, the amount of the
First Participant's Compensation that is considered under the Plan
shall be reduced until the dollar limitation is met.
Section 1.12 - CPC
"CPC" shall mean the Century Power Corporation, an
Arizona corporation.
Section 1.13 - CPC Accounts
"CPC Accounts" shall mean a CPC Transferred Employee's
CPC Deferred Compensation Contributions Account, CPC Company
Contributions Account, and CPC Rollover Contributions Account.
Section 1.14 - CPC Agreement
"CPC Agreement" shall mean the Agreement Relating to
Employee Benefit Plans, dated as of December 1, 1992, by and
between CPC and the Company.
Section 1.15 - CPC Company Contributions Account
"CPC Company Contributions Account" of a CPC Transferred
Employee shall mean the account established in accordance with
Section 4.1. Such account shall be comprised of all amounts
credited to a CPC Transferred Employee's "Company Contribution
Account" under the CPC Thrift Plan to the extent that such amounts
are transferred to the Trust Fund in accordance with Section 3.7.
Such account shall be adjusted for investment earnings, withdrawals
and distributions in accordance with the terms of this Plan.
Section 1.16 - CPC Deferred Compensation Contributions Account
"CPC Deferred Compensation Contributions Account" of a
CPC Transferred Employee shall mean the account established in
accordance with Section 4.1. Such account shall be comprised of
all amounts credited to a CPC Transferred Employee's "Deferred
Compensation Contribution Account" under the CPC Thrift Plan to the
extent that such amounts are transferred to the Trust Fund in
accordance with Section 3.7. With respect to a CPC Transferred
Employee who elects to have the investment earnings credited to his
or her "Participant Contribution Account" under the CPC Thrift Plan
transferred to this Plan, the CPC Transferred Employee's CPC
Deferred Compensation Contributions Account shall also be comprised
of the investment earnings credited to the CPC Transferred
Employee's "Participant Contribution Account" under the CPC Thrift
Plan to the extent that such amounts are transferred to the Trust
Fund in accordance with Section 3.7. Such account shall be
adjusted for investment earnings, withdrawals and distributions in
accordance with the terms of this Plan.
Section 1.17 - CPC Effective Date
"CPC Effective Date" shall mean the date that all of the
interests of CPC in the Springerville Generating Station are
transferred to the Company.
Section 1.18 - CPC Rollover Contributions Account
"CPC Rollover Contributions Account" of a CPC Transferred
Employee shall mean the account established in accordance with
Section 4.1. Such account shall be comprised of all amounts
credited to a CPC Transferred Employee's "Rollover Contribution
Account" under the CPC Thrift Plan to the extent that such amounts
are transferred to the Trust Fund in accordance with Section 3.7.
Such account shall be adjusted for investment earnings, withdrawals
and distributions in accordance with the terms of this Plan.
Section 1.19 - CPC Thrift Plan
"CPC Thrift Plan" shall mean the Century Power
Corporation Thrift Plan.
Section 1.20 - CPC Transferred Employee
"CPC Transferred Employee" shall mean an individual who
becomes an Employee as a result of the acquisition by the Company
of the Springerville Generating Station from CPC on or about
December 1, 1992.
Section 1.21 - Defined Benefit Plan Fraction
"Defined Benefit Plan Fraction" means a fraction, the
numerator of which is the projected annual benefit (determined as
of the close of the relevant Plan Year) of a Participant under all
Defined Benefit Plans (as defined in Section 10.2) maintained by
the Company or a Related Company, and the denominator of which is
the lesser of (i) the product of 1.25 multiplied by the dollar
limitation in effect under Section 415(b)(1)(A) of the Code for the
Plan Year, or (ii) the product of 1.4 multiplied by the amount
which may be taken into account under Section 415(b)(1)(B) of the
Code with respect to the Participant for the Plan Year.
Section 1.22 - Defined Contribution Plan Fraction
"Defined Contribution Plan Fraction" means a fraction,
the numerator of which is the sum of the Annual Additions (as
defined in Section 10.2) to a Participant's accounts under all
Defined Contribution Plans (as defined in Section 10.2) maintained
by the Company or a Related Company, and the denominator of which
is the lesser of (i) or (ii) for such Plan Year and for each prior
Plan Year of service with the Company or a Related Company, where
(i) is the product of 1.25 multiplied by the dollar limitation in
effect under Section 415(c)(1)(A) of the Code for the Plan Year
(determined without regard to Section 415(c)(6) of the Code), and
(ii) is the product of 1.4 multiplied by the amount which may be
taken into account under Section 415(c)(1)(B) of the Code (or
Section 415(c)(7) of the Code, if applicable) with respect to the
Participant under the Plan for the Plan Year. Solely for purposes
of this definition, contributions made directly by an Employee to
a Defined Benefit Plan which maintains a qualified cost-of-living
arrangement as such term is defined in Section 415(k)(2) shall be
treated as Annual Additions. Notwithstanding the foregoing, the
numerator of the Defined Contribution Plan Fraction shall be
adjusted pursuant to Treasury Regulations 1.415-1(d)(1), Questions
T-6 and T-7 of Internal Revenue Service Notice 83-10, and Questions
Q-3 and Q-14 of Internal Revenue Service Notice 87-21.
Section 1.23 - Effective Date
"Effective Date" of the Plan shall be January 1, 1985.
Section 1.24 - Eligible Employee
"Eligible Employee" shall mean every salaried Employee of
the Company or a Related Company, Regular Employee or Part-Time
Employee who (i) is not covered by a collective bargaining
agreement between the Company and any collective bargaining
representative (as defined in Section 7701(a)(46) of the Code) if
retirement benefits were the subject of good faith bargaining
between such representative and the Company, unless the Employee is
a member of a group of Employees to whom this Plan has been
extended by a collective bargaining agreement between the Company
and its collective bargaining representative, (ii) is in the status
of an "employee" as that term is defined in Section 3121(d) of the
Code, (iii) is not a "leased employee" as described in
Section 414(n) of the Code, and (iv) is not required to be treated
as employed by the Company or a Related Company pursuant to Section
414(o) of the Code.
Section 1.25 - Employee
"Employee" shall mean every employee of the Company or a
Related Company, including (i) any "leased employee" as described
in Section 414(n) of the Code, and (ii) any person required to be
treated as employed by the Company or a Related Company pursuant to
Section 414(o) of the Code.
Section 1.26 - Entry Date
"Entry Date" shall mean the first day of the payroll
period following the date the Eligible Employee submits an
enrollment form which meets the requirements of Section 2.3 unless
the Committee determines it is administratively feasible to use an
earlier date.
Section 1.27 - ERISA
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
Section 1.28 - Fiduciary
"Fiduciary" shall mean all persons defined in Section
3(21) of ERISA associated in any manner with control, management,
operation and administration of the Plan and such term shall be
construed as including the term "Named Fiduciary" with respect to
those Fiduciaries named in the Plan or who are identified as
Fiduciaries pursuant to the procedures specified in the Plan.
Section 1.29 - Funds
(a) "Fund A" shall mean the Fidelity Equity-Income Fund.
(b) "Fund B" shall mean the Fidelity Magellan Fund.
(c) "Fund C" shall mean the Fidelity Growth Company Fund
(formerly the Fidelity Mercury Fund).
(d) "Fund D" shall mean the Managed Income Portfolio
(formerly the GIC Open-End Portfolio).
(e) "Fund E" shall mean the Retirement Money Market
Portfolio.
(f) "Fund F" shall mean the Fidelity Intermediate Bond
Fund.
(g) "Fund G" shall mean the Fidelity Asset Manager Fund.
(h) "Fund H" shall mean the Spartan U.S. Equity Index
Fund, formerly the Fidelity U.S. Equity Index Portfolio.
(i) "Fund I" shall mean the Fidelity Low-Priced Stock
Fund.
(j) "Fund J" shall mean the Janus Flexible Income Fund.
(k) "Fund K" shall mean the Janus Worldwide Fund.
(l) "Fund L" shall mean the UniSource Stock Fund.
(m) "Fund M" shall mean an individually managed account.
Section 1.30 - Highly Compensated Employee
"Highly Compensated Employee" shall mean
(a) Any Employee who performs services for the Company
or any Related Company during the "determination year" and who,
during the "look-back year" (1) was a 5% owner of the Company or
any Related Company; (2) received compensation from the Company or
any Related company in excess of $75,000 (as adjusted pursuant to
Section 415(d) of the Code); (3) received compensation from the
Company or any Related Company in excess of $50,000 (as adjusted
pursuant to Section 415(d) of the Code) and was a member of the
"top-paid group" for such year; or (4) was an officer of the
Company or any Related Company and received compensation during
such year that is greater than 50% of the dollar limitation in
effect under Section 415(b)(1)(A) of the Code;
(b) Any Employee who performs services for the Company
or any Related Company during the determination year and who, with
respect to the determination year, is either described in (a)(1)
above or is both one of the 100 Employees who received the most
compensation from the Company or any Related Company during the
determination year and is described in (a)(2), (a)(3) or (a)(4); or
(c) Any Employee who separated from service (or was
deemed to have separated) prior to the determination year, performs
no services for the Company or any Related Company during the
determination year, and met the description in (a) or (b) above for
either the separation year or any determination year ending on or
after the Employee's 55th birthday.
(d) If no officer of the Company or any Related Company
has compensation in excess of 50% of the dollar limitation in
effect under Section 415(b)(1)(A) of the Code during a
determination year or a look-back year, the highest paid officer
for such year shall be treated as a Highly Compensated Employee.
(e) If an Employee is, during a determination year or
look-back year, a "family member" of either a 5% owner who is an
Employee or of a Highly Compensated Employee in the group
consisting of the 10 most highly compensated Employees ranked on
the basis of compensation paid by the Company or any Related
Company during the determination year or the look-back year, then
the family member and 5% owner or top-ten Highly Compensated
Employee shall be treated as a single Employee, and their
compensation and contributions or benefits under this Plan shall be
aggregated. Except as otherwise provided under Section 401(a)(17)
of the Code, "family member" includes the spouse, lineal ascendants
and descendants of the Employee or former Employee and the spouses
of such lineal ascendants and descendants.
(f) The "determination year" shall be the Plan Year for
which compliance is being tested, and the "look-back year" shall be
the 12-month period immediately preceding the determination year.
(g) The top-paid group for a determination year or a
look-back year shall consist of the top 20% of Employees ranked on
the basis of compensation received during the year excluding
Employees described in Section 414(q)(8) of the Code and Treasury
Regulations thereunder. The number of Employees treated as
officers shall be limited to 50 (or, if less, the greater of 3
Employees or 10% of the Employees). For purposes of this
definition of "Highly Compensated Employee," "compensation" means
compensation within the meaning of Section 415(c)(3) of the Code,
but including elective or salary reduction contributions to a
cafeteria plan, cash or deferred arrangement or tax-sheltered
annuity.
(h) If the Company maintains at all times during the
determination year significant business activities (and employs
Employees) in at least two significantly separate geographic areas,
and satisfies such other conditions as the Secretary of the
Treasury may prescribe, the Company may elect for any such year to
determine whether an Employee is a Highly Compensated Employee for
such year by substituting "$50,000" for "$75,000" in subsection
(a)(2) above and subsection (a)(3) shall not apply.
Section 1.31 - Military Leave
Any Employee who leaves the Company directly to perform
service in the Armed Forces of the United States or in the United
States Public Health Service, under conditions entitling him to
reemployment rights as provided in the laws of the United States,
shall, solely for the purposes of the Plan and irrespective of
whether he is compensated by the Company during such period, be
presumed an Employee on Military Leave. If such Employee
voluntarily resigns from the Company during such period, or if he
fails to make application for reemployment within the period
specified by such laws for the preservation of his reemployment
rights, such Employee shall be regarded as having had a Break in
Employment by resignation on the day such Military Leave expired.
Section 1.32 - Month
"Month" shall mean any calendar month.
Section 1.33 - Part-Time Employee
"Part-Time Employee" shall mean any Employee hired by the
Company or a Related Company to work (i) less than 5 days per week,
(ii) less than 8 hours per day or (iii) other staggered or
irregular hours depending on the work requirements, other than an
Employee hired for a specific job of limited duration.
Section 1.34 - Participant
"Participant" shall mean any person included in the Plan
as provided in Article II.
Section 1.35 - Plan
"Plan" shall mean the Tucson Electric Power Company
Triple Investment Plan for Salaried Employees.
Section 1.36 - Plan Year
"Plan Year" shall mean the calendar year, including years
prior to the adoption of the Plan.
Section 1.37 - Quarter
"Quarter" shall mean each three (3) consecutive month
period ending March 31, June 30, September 30 or December 31 of
each year.
Section 1.38 - Regular Employee
"Regular Employee" shall mean any full-time Employee
employed by the Company or a Related Company for the routine
conduct of Company business who has passed through the probationary
period.
Section 1.39 - Related Company
"Related Company" shall mean (i) each corporation which
is a member of a controlled group of corporations (within the
meaning of Section 1563(a) of the Code, determined without regard
to Section 1563(a)(4) and (e)(3)(C) thereof) of which the Company
is a component member, (ii) each entity (whether or not
incorporated) which is under common control with the Company, as
such common control is defined in Section 414(c) of the Code and
Regulations issued thereunder, (iii) effective with respect to Plan
Years beginning in and after 1982, any organization which is a
member of an affiliated service group (within the meaning of
Section 414(m) of the Code) of which the Company or a Related
Company is a member, and (iv) effective with respect to Plan Years
beginning in and after 1984, in the case of an employee of a
"leasing organization" who constitutes a "leased employee" (as such
terms are defined in Section 414(n) of the Code) with respect to
the Company or Related Company, any leasing organization. For the
purposes of Section 3.4 of this Plan the phrase "more than 50
percent" shall be substituted for the phrase "at least 80 percent"
each place it appears in Section 1563(a)(1) of the Code. The term
"Related Company" shall also include each predecessor employer to
the text required by Section 414(a) of the Code.
Section 1.39A - Rollover Account
"Rollover Account shall mean the Account maintained for
a Participant that is credited with the amount, if any, received by
the Plan in accordance with Section 3.8 as a rollover contribution,
as defined in Section 402(c)(5) of the Code, together with the
allocations thereto as required by the Plan.
Section 1.40 - Salary Deferral Contributions
"Salary Deferral Contributions" shall mean the
contributions of the Company under this Plan made by reason of a
Participant electing to forego Compensation otherwise payable, in
accordance with Section 3.1(a) of this Plan.
Section 1.41 - Salary Deferral Contributions Account
"Salary Deferral Contributions Account" of a Participant
shall mean the account established in accordance with Section 4.1
that is comprised of Salary Deferral Contributions (and earnings
thereon), less any withdrawals hereunder.
Section 1.41A - SRA
"SRA" shall mean the Tucson Electric Power Company
Supplemental Retirement Account for Classified Employees, as
amended.
Section 1.42 - Subfund
"Subfund" shall mean one of the individual subfunds
designated in Section 1.29.
Section 1.43 - Trust Agreement
"Trust Agreement" shall mean the "Tucson Electric Power
Company Triple Investment Plan for Salaried Employees Trust" as it
may be amended from time to time, providing for the investment and
administration of the Trust Fund. By this reference, the Trust
Agreement is incorporated herein.
Section 1.44 - Trust Fund
"Trust Fund" shall mean the fund established under the
Trust Agreement by contributions made by the Company pursuant to
the Plan including gains and losses thereon, and from which any
distributions under the Plan are to be made. It shall be composed
of separate subfunds designated in Section 1.29.
Section 1.45 - Trustee
"Trustee" shall mean the Trustee under the Trust
Agreement.
Section 1.46 - UniSource
"UniSource" shall mean UniSource Energy Corporation, an
Arizona corporation. UniSource is the parent corporation of the
Company.
Section 1.47 - UniSource Stock
"UniSource Stock" shall mean the common stock of
UniSource.
<PAGE>
ARTICLE II
ELIGIBILITY
Section 2.1 - Requirements for Participation
(a) All Employees who were Participants under the Plan
as in effect on December 31, 1986 shall continue as Participants on
January 1, 1987. All other present and future Eligible Employees
may become Participants on the Entry Date as such term is defined
herein.
(b) Despite subsection (a), no Eligible Employee shall
become a Participant on the scheduled Entry Date unless an election
(as described in Section 2.3) has been made by such date. If the
enrollment election is not made on a timely basis, participation of
an Eligible Employee shall be postponed until the first Entry Date
by which such an election has been made.
Section 2.2 - Notice of Participation
On or before the Entry Date on which an Eligible Employee
becomes a Participant, the Committee shall give him written notice
thereof.
Section 2.3 - Enrollment Form
(a) The Participant's enrollment form shall contain the
following items as well as such additional matter as the Committee
shall deem necessary:
(1) The Participant's name, date of birth, name of
spouse, and consent that the Participant (and the
Participant's successors in interest and all persons claiming
under him) be bound by the terms of the Plan and Trust
Agreement as they now exist or may be amended from time to
time.
(2) The Beneficiary or Beneficiaries whom the
Participant desires to receive the Participant's benefits in
the event of his death. If a Beneficiary other than the
Participant's spouse is selected, the Committee shall require
the spouse's consent in writing to such designation and the
consent shall acknowledge the effect of the designation and be
witnessed by a notary public. The Committee may dispense with
the spouse's consent if there is no spouse, the spouse cannot
be located, or under other circumstances that comply with Code
Section 417.
(3) The percentage of the Participant's
Compensation which the Participant desires that the Company
contribute to his Salary Deferral Contributions Account. This
percentage may be any half or whole percentage up to and not
exceeding fifteen percent (15%) of the Participant's
Compensation, but shall be subject to the limitations
described in Article III of this Plan.
(b) A Participant may, once each payroll period, change
the election described in subsection (a)(3) and/or reduce the
contributions rate to 0% for his or her Salary Deferral
Contributions Account. Such change election shall become effective
as soon as administratively practicable after it is received by the
Company.
(c) Upon initial enrollment, contributions to each
Participant's Salary Deferral Contributions Account and Company
Matching Contributions Account, together with any earnings thereon,
shall be invested in Fund E. Subject to any restriction imposed by
the Trustee relating to an exchange of assets among any of the
Subfunds, a Participant may at any time change the Subfund into
which all or any portion of the contributions to the Participant's
Salary Deferral Contributions Account and Company Matching
Contributions Account is to be invested by directly notifying the
Trustee.
(d) Notwithstanding anything else contained herein to
the contrary, subject to and in accordance with such rules and
procedures as may be established by the Committee, a Participant
may make the elections described in this Section 2.3 by telephonic
means.
Section 2.4 - Participation by CPC Transferred Employees
With respect to a CPC Transferred Employee who has not
yet completed the participation requirements of Section 2.1(b), his
or her CPC Accounts shall represent his or her sole interest in the
Plan.
Section 2.5 - Employee Transfers
(a) A Participant who ceases to be an Eligible Employee,
but continues to be employed by the Company (an "Inactive
Participant"), is not eligible to make Salary Deferral
Contributions from Compensation earned after the date he ceases to
be an Eligible Employee (unless and until he again meets the Plan's
eligibility requirements), nor is he eligible to share in any
Company Matching Contributions with respect to such Compensation.
An Inactive Participant's Accounts shall continue to be held under
the Plan until he becomes entitled to a distribution under Article
V. An Inactive Participant shall continue to have the right to
direct the investment of his Accounts under the provisions of
Section 2.3(c) and Article IV and to make withdrawals under the
provisions of Article V.
(b) If an Inactive Participant becomes eligible to
participate in the SRA, the Accounts and any Plan loan of such
Inactive Participant shall be transferred to the SRA as soon as
administratively practicable.
(c) A Company employee who was a participant in the SRA
and who becomes a Participant is not eligible to make Salary
Deferral Contributions from Compensation earned prior to the date
he becomes a Participant, nor is he eligible to share in any
Company Matching Contributions with respect to such Compensation.
(d) If a Company employee who was a participant in the
SRA becomes a Participant, the SRA accounts and any SRA loan of
such Participant shall be transferred from the SRA to the Plan as
soon as administratively practicable.
<PAGE>
ARTICLE III
COMPANY CONTRIBUTIONS AND ROLLOVER ACCOUNTS
Section 3.1 - Company Contributions
(a) Salary Deferral Contribution. Upon admission to the
Plan, each Participant must agree to have the Company contribute to
the Trust, as a mandatory contribution, a percentage up to and not
in excess of fifteen percent 15% of his Compensation for each
payroll period, rounded to the nearest cent. A Participant's
Salary Deferral Contribution shall be subject to the limitations
described in Article III of this Plan. Under such agreement, the
Participant automatically agrees that the Compensation otherwise
payable to him shall be reduced by an equivalent percentage, such
reductions to commence November 1, 1985.
(b) Company Matching Contribution. In addition to
Salary Deferral Contributions, the Company may contribute Matching
Contributions. For the 1990 and subsequent Plan Years, the Company
shall contribute each payroll period an amount equal to the lesser
of (i) each Participant's Salary Deferral Contributions for that
payroll period and all prior payroll periods of the Plan Year less
Company Matching Contributions for all prior payroll periods of the
Plan Year or (ii) 4-1/2% of his Compensation for that payroll
period. A Participant's Company Matching Contributions shall be
subject to the limitations of Article III of this Plan.
Section 3.2 - Payment
Salary Deferral Contributions for any Month shall be
contributed to the Trust within one month after the end of such
Month. Company Matching Contributions for a Plan Year shall be
made on or before the due date (including extensions) for the
federal income tax return for the taxable year coinciding with such
Plan Year. Salary Deferral Contributions and Company Matching
Contributions shall be invested in the Subfund selected by the
Participant, pursuant to Sections 2.3(a)(4) and 2.3(c) above.
Section 3.3 - Limitation on Company Contributions
In no event shall Company contributions made pursuant to
Section 3.1, together with any contributions made by the Company to
other deferred compensation plans, qualified under Sections 401 and
501 of the Code, maintained by the Company for the benefit of its
Employees, exceed either (i) the Company's current or accumulated
net profits or (ii) the maximum amount, including credit carryover,
deductible by the Company in determining its taxable income under
the applicable provisions of the Code. Reduction of contributions,
where required, shall be accomplished by first reducing Company
Matching Contributions and then by reducing Salary Deferral
Contributions, as appropriate, and returning any excess Salary
Deferral Contributions (in cash) to the Participants.
Section 3.4 - Section 402(g) Limit on Salary Deferral Contributions
(a) Salary Deferral contributions made on behalf of any
Participant under this Plan and all other plans (which are
described in Section 3.4(c)) maintained by the Company or a Related
Company shall not exceed the limitation under Code Section
402(g)(1) for the taxable year of the Participant, as adjusted
annually under Section 402(g)(5) of the Code, and shall be
effective as of January 1 of each calendar year.
(b) In the event that the dollar limitation provided for
in Section 3.4(a) is exceeded, the Participant is deemed to have
requested a distribution of the excess amount by the first March 1
following the close of the Participant's taxable year, and the
Committee shall distribute such excess amount, and any income
allocable to such amount, to the Participant by April 15th. In
determining the excess amount distributable with respect to a
Participant's taxable year, excess Salary Deferral Contributions
previously distributed or redesignated as after-tax employee
contributions for the Plan Year beginning with or within such
taxable year shall reduce the amount otherwise distributable under
this subsection (b).
(c) In the event that a Participant is also a
participant in (1) another qualified cash or deferred arrangement
as defined in Section 401(k) of the Code, (2) a simplified employee
pension, as defined in Section 408(k) of the Code, or (3) a salary
reduction arrangement, within the meaning of Section 3121(a)(5)(D)
of the Code, and the elective deferrals, as defined in Section
402(g)(3) of the Code, made under such other arrangement(s) and
this Plan cumulatively exceed the dollar limit under Section 3.4(a)
for such Participant's taxable year, the Participant may, not later
than March 1 following the close of his taxable year, notify the
Committee in writing of such excess and request that the Salary
Deferral Contributions made on his behalf under this Plan be
reduced by an amount specified by the Participant. The Committee
may then determine to distribute such excess in the same manner as
provided in Section 3.4(b).
Section 3.5 - Section 401(k) Limitations on Compensation Deferral
Contributions
(a) The Committee will estimate, as soon as practical
before the close of the Plan Year and at such other times as the
Committee in its discretion determines, the extent, if any, to
which Salary Deferral Contribution treatment under Section 401(k)
of the Code may not be available to any Participant or class of
Participants. In accordance with any such estimate, the Committee
may modify the limits in Section 2.3(a)(3), or set initial or
interim limits, for Salary Deferral Contributions relating to any
Participant or class of Participants. These rules may include
provisions authorizing the suspension or reduction of Salary
Deferral Contributions above a specified dollar amount or
percentage of Compensation.
(b) For each Plan Year, an actual deferral percentage
will be determined for each Participant equal to the ratio of the
total amount of the Participant's Salary Deferral Contributions
allocated under Section 2.3(a)(3) for the Plan Year divided by the
Participant's Compensation in the Plan Year. For purposes of this
Section 3.5, "Compensation" shall meet the requirements of Section
414(s) of the Code and Treasury Regulations. For purposes of this
Section 3.5, the Company, in its sole discretion, may treat all or
any part of its Company Matching Contributions as Salary Deferral
Contributions to the extent permitted by Treasury Regulations. If
the preceding sentence is applied, Company Matching Contributions
(together with any gains or losses attributable to such amounts)
must be non-forfeitable and subject to the provisions of the Plan
pertaining to distributions of amounts from Salary Deferral
Contribution Accounts, and must be accounted for separately to the
extent required by Treasury Regulations. In the case of family
members treated as a single Highly Compensated Employee under
subsection (e) of the definition of "Highly Compensated Employee"
in Section 1.30, in accordance with the family aggregation rules of
Section 414(q)(6) of the Code, the actual deferral percentage shall
be determined by combining the Salary Deferral Contributions and
Compensation of all eligible family members. Except to the extent
taken into account in the preceding sentence, the Salary Deferral
Contributions and Compensation of such family members shall be
disregarded for purposes of determining the actual deferral
percentages for the group of non-Highly Compensated Employees under
this Section 3.5. An Employee's Compensation taken into account
for this purpose shall be limited to Compensation received during
the Plan Year while the Employee is a Participant. Except as
otherwise provided in this Section 3.5(b), with respect to
Participants who have made no Salary Deferral Contributions under
this Plan, such actual deferral percentage will be zero.
(c) The average of the actual deferral percentages for
Highly Compensated Employees ("High Average") when compared with
the average of the actual deferral percentages for non-Highly
Compensated Employees ("Low Average") must meet one of the
following requirements:
(1) The High Average is no greater than 1.25 times the
Low Average; or
(2) The High Average is no greater than two times the
Low Average, and the High Average is no greater than the Low
Average plus two percentage points.
(d) If, at the end of a Plan Year, a Participant or
class of Participants has excess Salary Deferral Contributions,
then the Committee may elect, at its discretion, to pursue any of
the following courses of action or any combination thereof:
(1) Within 2-1/2 months after the end of the Plan Year,
excess Salary Deferral Contributions for a Plan Year may be
redesignated as after-tax employee contributions and accounted
for separately pursuant to Treasury Regulations. Excess
Salary Deferral Contributions, however, may not be
redesignated as after-tax employee contributions with respect
to a Highly Compensated Employee to any extent that such
redesignated after-tax employee contributions would cause the
limits of Section 3.6 to be exceeded. Adjustments to withhold
any federal, state, or local taxes due on such amounts may be
made by the Company against Compensation yet to be paid to the
Participant during that taxable year.
(2) Excess Salary Deferral Contributions, and any
earnings attributable thereto through the end of the Plan Year
may be distributed to the Participant within the 2-1/2 month
period following the close of the Plan Year to which the
excess Salary Deferral Contributions relate to the extent
feasible, but in all events no later than 12 months after the
close of such Plan Year.
(3) The Company, in its discretion, may make a
contribution to the Plan, which will be allocated as a fixed
dollar amount among the Accounts of non-Highly Compensated
Employees who have met the requirements of Section 2.1.
Any such excess Salary Deferral Contributions recharacterized as
after-tax employee contributions or distributed from the Plan with
respect to a Participant for a Plan Year shall be reduced by any
amount previously distributed to such Participant under Section
3.4(b) for the Participant's taxable year ending with or within
such Plan Year.
(e) The amount of the excess Salary Deferral
Contributions will be determined by the Committee by reducing the
actual deferral percentage of the Highly Compensated Employee(s)
with the highest actual deferral percentage to the extent required
to enable the Plan to meet the limits in (c) above or to cause the
actual deferral percentage of such Highly Compensated Employee(s)
to equal the actual deferral percentage of the Highly Compensated
Employee(s) with the next-highest actual deferral percentage. The
process in the preceding sentence shall be repeated until the Plan
satisfies the limits in (c) above. In the case of family members
subject to the family aggregation rules of Section 414(q)(6) of the
Code, excess Salary Deferral Contributions will be allocated among
family members in proportion to the Salary Deferral Contributions
of each family member that have been combined under Section 3.5(b)
above. The earnings attributable to excess Salary Deferral
Contributions will be determined in accordance with Treasury
Regulations. The Committee will not be liable to any Participant
(or his Beneficiary, if applicable) for any losses caused by in-
accurately estimating or calculating the amount of any
Participant's excess Salary Deferral Contributions and earnings
attributable to the Salary Deferral Contributions.
(f) If the Committee determines that an amount to be
deferred pursuant to the election provided in Section 2.3(a)(3)
would cause Company contributions under this and any other tax-
qualified retirement plan maintained by the Company or a Related
Company to exceed the applicable deduction limitations contained in
Section 404 of the Code, or to exceed the maximum Annual Addition
determined in accordance with Section 10.1, the Committee may treat
such amount in accordance with the rules in Section 3.5(d)(3)
hereof.
(g) For purposes of performing the tests described in
this Section:
(1) if, for purposes of meeting the requirements of
Sections 401(a)(4) and 410(b) of the Code (other than Section
410(b)(2)(A)(ii) of the Code), this Plan is aggregated with
any other plan(s) of the Company containing a cash or deferred
arrangement, then all elective contributions subject to
Section 401(k) of the Code that are made under this Plan and
such other plan(s) shall be treated as having been made under
one plan; and
(2) if any Highly Compensated Employee under this
Plan participates in any other plan(s) of the Company
containing a cash or deferred arrangement, then all elective
contributions subject to Section 401(k) of the Code that are
made by such Highly Compensated Employee under this Plan and
such other plan(s) shall be treated as having been made under
one plan.
Section 3.6 - Section 401(m) Limitations on After-Tax Employee
Contributions and Company Matching Contributions
(a) The Committee will estimate, as soon as practical,
before the close of the Plan Year and at such other times as the
Committee in its discretion determines, the extent, if any, to
which after-tax employee contributions and/or Company Matching
Contributions may not be available to any Participant or class of
Participants under Code Section 401(m). In accordance with any
such estimate, the Committee may modify the limits and/or
percentages in Section 3.1(b) or set initial or interim limits or
percentages, for after-tax employee contributions and/or Company
Matching Contributions relating to any Participant or class of
Participants. After determining the amount of excess Salary
Deferral Contributions, if any, under subsections 3.5(a) and (b),
the Committee shall determine the aggregate contribution percentage
under (b) below.
(b) For each Plan Year, a contribution percentage will
be determined for each Participant equal to the ratio of the total
amount of the Participant's after-tax employee contributions, if
any, and Company Matching Contributions allocated under
Section 3.1(b) for the Plan Year and any Salary Deferral
Contributions of the Participant redesignated as after-tax employee
contributions under Section 3.5(d) in the Plan Year in which such
excess Salary Deferral Contributions would be included in the gross
income of the Participant divided by the Participant's Compensation
in the Plan Year. For purposes of this Section 3.6, "Compensation"
shall meet the requirements of Section 414(s) of the Code and
Treasury Regulations. For purposes of this Section 3.6, the
Company, in its sole discretion, may treat all or any part of its
Salary Deferral Contributions as Company Matching Contributions to
the extent permitted by Treasury Regulations. Except as otherwise
permitted by the Code or Treasury Regulations, any such Salary
Deferral Contributions that are treated as Company Matching
Contributions shall not be treated as Salary Deferral Contributions
for purposes of Section 3.5(b). If Salary Deferral Contributions
are treated as Company Matching Contributions, the Plan must
satisfy Section 3.5(b) both by counting such amounts as Salary
Deferral Contributions and by excluding such amounts as Salary
Deferral Contributions. Furthermore, any Company Matching
Contributions treated as Salary Deferral Contributions under
Section 3.5(b) shall not be used to satisfy the requirements of
this Section 3.6(b), except as otherwise permitted by the Code or
Treasury Regulations. In the case of family members treated as a
single Highly Compensated Employee under subsection (e) of the
definition of "Highly Compensated Employee" in Section 1.30, in
accordance with the family aggregation rules of Section 414(q)(6)
of the Code, the contribution percentage shall be determined by
combining the after-tax employee contributions, Company Matching
Contributions and Compensation of all eligible family members.
Except to the extent taken into account in the preceding sentence,
the after-tax employee contributions, Company Matching
Contributions, Compensation and all amounts treated as Company
Matching Contributions of such family members shall be disregarded
for purposes of determining the average of the contribution
percentages for the group of non-Highly Compensated Employees under
this Section 3.6. An Employee's Compensation taken into account
for this purpose shall be limited to Compensation received during
the Plan Year while the Employee is a Participant. Except as
otherwise provided in this Section 3.6(b), with respect to
Participants who have no after-tax employee contributions and for
whom there were no Company Matching Contributions under this Plan,
such contribution percentage will be zero.
(c) The average of the contribution percentages for
Highly Compensated Employees ("High Average") when compared with
the average of the contribution percentages for non-Highly
Compensated Employees ("Low Average") must meet one of the
following requirements:
(1) The High Average is no greater than 1.25 times the
Low Average; or
(2) The High Average is no greater than two times the
Low Average, and the High Average is no greater than the Low
Average plus two percentage points.
(d) If, at the end of a Plan Year, a Participant or a
class of Participants has excess contributions, then the Committee
may elect, at its discretion, to pursue any of the following
courses of action or any combination thereof:
(1) Excess Company Matching Contributions (and any
earnings attributable thereto through the end of the Plan
Year) attributable to excess Salary Deferral Contributions
under Sections 3.4 or 3.5 or attributable to excess after-tax
employee contributions, may be forfeited.
(2) Excess Company Matching Contributions (and any
earnings attributable thereto through the end of the Plan
Year) that are not vested may be forfeited.
(3) Excess after-tax employee contributions and excess
Company Matching Contributions (and any earnings attributable
to such excess amounts through the end of the Plan Year) will
be distributed to the Participant within the 2-1/2 month
period following the close of the Plan Year to the extent
feasible, and in all events no later than 12 months after the
close of Plan Year. The Company may distribute unmatched
after-tax employee contributions before distributing any
matched after-tax employee contributions or may distribute (or
forfeit pursuant to clause (2) above) Company Matching
Contributions prior to distributing any after-tax employee
contributions.
(4) Notwithstanding the foregoing, the conditions in
this paragraph (4) must be met if there are Company Matching
Contributions allocated to a Participant which are
attributable to excess Salary Deferral Contributions under
Sections 3.4 or 3.5 or excess after-tax employee
contributions. In such a case, such Company Matching
Contributions shall not be allocated to the Accounts of any
Participant who had excess Company Matching Contributions or
excess after-tax employee contributions in such Plan Year. In
addition, Company Matching Contributions remaining in the Plan
allocated to the Participant after satisfying Section 3.6
cannot exceed the amount which may be allocated under Section
3.1(b) when taking into account only those Salary Deferral
Contributions and after-tax employee contributions remaining
in the Plan after satisfying Sections 3.4, 3.5 and 3.6. Any
such excess Company Matching Contributions (and earnings
attributable thereto) must be forfeited or distributed
pursuant to paragraphs (1), (2) or (3) above.
(e) The amount of excess after-tax employee
contributions and/or Company Matching Contributions shall be
determined by the Committee by reducing the contribution percentage
of the Highly Compensated Employee(s) with the highest contribution
percentage to the extent required to enable the Plan to meet the
limits in (c) above or to cause the contribution percentage of such
Employee(s) to equal the contribution percentage of the Highly
Compensated Employee(s) with the next-highest contribution
percentage. The process in the preceding sentence shall be
repeated until the Plan satisfies the limits in (c) above. In the
case of family members subject to the family aggregation rules of
Section 414(q)(6) of the Code, excess contributions will be
allocated among family members in proportion to the after-tax
employee contributions and Company Matching Contributions of each
family member that have been combined under Section 3.6(b) above.
The earnings attributable to excess contributions will be
determined in accordance with Treasury Regulations. The Committee
will not be liable to any Participant (or to his Beneficiary, if
applicable) for any losses caused by inaccurately estimating or
calculating the amount of any Participant's excess contributions
and earnings attributable to the contributions.
(f) The tests of Sections 3.5(c) and 3.6(c) shall be met
in accordance with the prohibition against the multiple use of the
alternative limitation under Code Section 401(m)(9).
(g) For purposes of performing the tests described in
this Section:
(1) if, for purposes of meeting the requirements of
Section 410(b) of the Code (other than Section
410(b)(2)(A)(ii) of the Code), this Plan is aggregated with
any other plan(s) of the Company which provide for employer
matching and/or employee after-tax contributions, then all
contributions subject to Section 401(m) of the Code that are
made under this Plan and such other plan(s) shall be treated
as having been made under one plan; and
(2) if any Highly Compensated Employee under this
Plan participates in any other plan(s) of the Company which
provide for employer matching and/or employee after-tax
contributions, then all contributions subject to Section
401(m) of the Code that are made by such Highly Compensated
Employee under this Plan and such other plan(s) shall be
treated as having been made under one plan.
Section 3.7 - CPC Accounts
(a) CPC will, in accordance with Section 2.04 of the CPC
Agreement, make two transfers from the trust maintained for the CPC
Thrift Plan to the Trust Fund. Upon each such transfer, the
Committee shall credit a CPC Transferred Employee's CPC Accounts in
accordance with reasonable allocation procedures established by the
Committee.
(b) A CPC Transferred Employee shall have the right and
obligation to designate in which of the Funds each of his or her
CPC Accounts will be invested. Such designations shall be made in
conformance with procedures established by the Committee. The CPC
Transferred Employee may designate that each of his or her CPC
Accounts be invested in more than one Fund, provided that such
designations are in increments of 20%. In the event that a CPC
Transferred Employee fails to designate in which of the Funds his
or her CPC Accounts will be invested, the CPC Accounts of such CPC
Transferred Employee shall be invested in Fund E. The Committee
may establish any other rules and regulations regarding the
investment of a CPC Transferred Employee's CPC Accounts as it deems
appropriate in its sole discretion.
(c)(1) The Committee may permit a CPC Transferred
Employee, who received a loan under the CPC Thrift Plan, to
transfer such loan to this Plan provided that such loan is
adequately secured by the balance of the CPC Transferred Employee's
Accounts and in the case of any CPC Transferred Employee who is an
active Employee, automatic payroll deductions shall be required as
additional security.
(c)(2) A loan described in subsection (c)(1) shall be
payable in full to the Trustee, not later than the earliest of (A)
the fixed maturity date provided in the promissory note executed
for such loan, (B) the date of the CPC Transferred Employee's
termination of Employment, or (C) the date the Plan is terminated.
(c)(3) Any investment gain or loss attributable to a loan
described in subsection (c)(1) shall not be included in the
calculation or allocation of the increase or decrease in fair
market value of the general assets of the Plan pursuant to Section
4.2. Instead, the entire gain or loss (including any gain or loss
attributable to interest payments or default) shall be allocated to
the CPC Transferred Employee's Accounts.
(c)(4) All loan payments shall be transmitted by the
Company to the Trustee as soon as practicable but not later than
the end of the month during which such amounts were received or
withheld. Each loan may be prepaid in full at any time. Any
prepayment shall be paid directly to the Trustee in accordance with
procedures adopted by the Committee.
(c)(5) The Committee shall have the power to modify the
above rules or establish any additional rules with respect to loans
described in this subsection (c). Such rules may be included in a
separate document or documents and shall be considered a part of
this Plan; provided, each rule and each loan shall be made only in
accordance with the regulations and rulings of the Internal Revenue
Service and Department of Labor and other applicable state or
federal law. The Committee shall act in its sole discretion to
ascertain whether the requirements of such regulations and rulings
and this section have been met.
Section 3.8 - Rollover Contributions
(a) An Eligible Employee, regardless of whether he has
satisfied the participation requirements of Section 2.1, who has
received an "Eligible Rollover Distribution," as defined in Code
Section 402(c)(4), from a plan which meets the requirements of
Section 401(a) and 401(k) of the Code may, in accordance with
procedures approved by the Committee, transfer the distribution
received from the other plan to the Trust.
(b) The Committee shall develop such procedures, and may
require such information from an Employee desiring to make such a
transfer, as it deems necessary or desirable to determine that the
proposed transfer will meet the requirements of this Section. Upon
approval by the Committee, the amount transferred shall be
deposited in the Trust and shall be credited to an account which
shall be referred to as the "Rollover Account." Such account shall
be 100% vested in the Employee and shall share in income
allocations as provided in the Plan, but shall not share in Company
contribution allocations. Upon termination of employment, the
total amount of the Employee's Rollover Account shall be
distributed in accordance with Article V.
(c) Upon such transfer by an Eligible Employee who has
not yet completed the participation requirements of Section 2.1,
his Rollover Account shall represent his sole interest in the Plan
until he becomes a Participant.
<PAGE>
ARTICLE IV
VALUATION OF FUNDS AND ALLOCATION TO ACCOUNTS
Section 4.1 - Establishment of Accounts
The Committee shall open for each Participant a separate
Salary Deferral Contributions Account and Company Matching
Contributions Account. The Participant's Salary Deferral
Contributions Account and Company Matching Contributions Account
shall be credited with Salary Deferral Contributions and Company
Matching Contributions, respectively, pursuant to Section 3.1.
Effective December 15, 1992, the Committee shall open for each CPC
Transferred Employee a CPC Deferred Compensation Contributions
Account, CPC Company Contributions Account, and CPC Rollover
Contributions Account, which Accounts shall be credited with the
amounts described in Section 3.7. In addition, such Accounts will
be appropriately credited with such Account's share of the earnings
or losses of the Subfund into which it is contributed.
Section 4.2 - Determination of Values
As of the end of each Quarter, the Trustee shall
determine the fair market value of each asset in the Trust Fund in
compliance with the principles of Section 3(26) of ERISA and
regulations issued pursuant thereto, based upon information
reasonably available to it including data from, but not limited to,
newspapers and financial publications of general circulation,
statistical and valuation services, records of securities
exchanges, appraisals by qualified persons, transactions and bona
fide offers in assets of the type in question and other information
customarily used in the valuation of property for purposes of the
Code. With respect to securities for which there is a generally
recognized market, the published selling prices on or nearest to
such valuation date shall establish the fair market value of such
security. Fair market value so determined shall be conclusive for
all purposes of the Plan and Trust.
Section 4.3 - UniSource Stock Fund
(a) One Investment Fund shall be a UniSource Stock Fund,
which is a pool of assets maintained by the Trustee, invested
primarily in UniSource Stock.
(b) Up to 100% of the Trust Fund's assets may be
invested in UniSource Stock; the amount of the Trust Fund's assets
that may be invested in UniSource Stock will be the amount selected
by the Participants to be so invested.
(c) Amounts invested in the UniSource Stock Fund shall
be invested in UniSource Stock (except for cash or cash equivalents
pending distribution or investment and a short-term investment
component which may be retained in the Committee's discretion to
provide liquidity for such fund). Each participant's Account shall
be credited with a number of units (which represent proportionate
interests in the UniSource Stock Fund) that can be purchased with
the amount that such Participant has designated to be invested in
the UniSource Stock Fund. Cash dividends received on the UniSource
Stock shall be used to purchase additional shares of UniSource
Stock. Stock dividends and stock splits on the UniSource Stock
shall be reflected by an adjustment to the number of shares of
UniSource Stock held in the UniSource Stock Fund.
(d) Full and fractional shares of UniSource Stock
allocated to a Participant's Accounts will be voted by the Trustee
according to the Participant's instructions. The Trustee will not
vote shares of stock allocated to Participant's Accounts for which
instructions are not received from Participants. Shareholder
rights with respect to UniSource Stock, other than voting rights,
which can be exercised by Participants may be passed through to
Participants and exercised in a similar manner to voting rights or
will be exercised in such other manner as is legally required.
However, where the circumstances (such as the lack of time or the
lack of liquid funds to satisfy a requirement to pay for additional
shares of stock) make it impractical to pass such rights through to
Participants and no other specific legal requirement exists, the
rights will be exercised (or sold) by the Trustee in a manner that
the Trustee deems prudent under the circumstances and otherwise
consistent with the fiduciary standards of ERISA.
Section 4.4 - Section 16 Limitations
The Committee may (but need not) adopt such rules and/or
take such actions or implement such measures and/or limitations as
it deems desirable in order to comply with 17 C.F.R. 240.16b-3,
promulgated under Section 16 of the Securities Exchange Act of 1934
("SEC Section 16"). Neither the Company, the Board, the Committee,
the Trustee nor the Plan shall have any liability to any
Participant in the event that any Participant has any liability
under SEC Section 16 due to any rule so adopted, the failure to
adopt any rule, any Plan provision (or lack thereof), or any
transaction under the Plan.
Section 4.5 - ERISA Section 404(c)
(a) This Plan is intended to constitute a plan described
in Section 404(c) of ERISA, and the regulations thereunder. As a
result, with respect to elections described in this Plan and any
other exercise of control by a Participant or his or her
Beneficiary over assets in the Participant's Accounts, such
Participant or Beneficiary shall be solely responsible for such
actions and neither the Trustee, the Committee, the Company, the
Board nor any other person or entity which is otherwise a fiduciary
of the Plan shall be liable for any loss or liability which results
from such Participant's or Beneficiary's exercise of control.
(b) The Committee shall provide to each Participant or
his or her Beneficiary the information described in Section
2550.404c-1(b)(2)(i)(B)(1) of the Department of Labor Regulations.
Upon request by a Participant or his or her Beneficiary, the
Committee shall provide the information described in Section
2550.404c-1(b)(2)(i)(B)(2) of the Department of Labor Regulations.
(c) The Committee shall take such actions and establish
such procedures as it deems necessary to ensure the confidentiality
of information relating to the purchase, sale, and holding of
UniSource Stock, and the exercise of voting, tender and similar
rights with respect to such stock by a Participant or his or her
Beneficiary. Notwithstanding the foregoing, such information may
be disclosed to the extent necessary to comply with applicable
state and federal laws.
(d) In the event of a tender or exchange offer with
respect to the Company or UniSource, or in the event of a contested
election with respect to the Board or the Board of Directors of
UniSource, the Company shall, at its own expense, appoint an
independent Fiduciary to carry out the Committee's administrative
functions with respect to the UniSource Stock Fund. Such
independent Fiduciary shall not be an "affiliate" of the Company as
such term is defined in Section 2530.404b-1(e)(3) of the Department
of Labor Regulations.
(e) The Committee may take such other actions or
implement such other procedures as it deems necessary or desirable
in order that the Plan comply with Section 404(c) ERISA.
Section 4.6 - Fund M Provisions
Notwithstanding any other provisions of this Plan,
individual Participants shall direct the investment of funds held
in their respective Fund M accounts and neither the Company, the
Board, the Committee, the Trustee, nor any other person or entity
which is otherwise a fiduciary of the Plan shall be liable for any
loss which results from such Participants' exercise of control over
such investments. The Committee shall adopt such rules or
procedures as it deems advisable for the administration of Fund M
accounts and elections with respect thereto.
ARTICLE V
VESTING, IN-PLAN WITHDRAWALS AND DISTRIBUTIONS
Section 5.1 - Vesting
A Participant shall at all times be 100% vested in his or
her Accounts.
Section 5.2 - Withdrawals From the Plan While Employed
(a) A Participant may, upon written request to the
Committee, at least ten (10) days prior to the end of the Month for
which the request is to be effective, withdraw all or a portion of
the amounts credited to his Accounts subject to the following
rules:
(b) A Participant may, once each Plan Year beginning
with the Plan Year in which a Participant attains age 59-1/2,
withdraw from the Participant's Salary Deferral Contributions
Account, Company Matching Contributions Account or CPC Accounts an
amount equal to either the entire amount or any portion of any such
Account or Accounts.
(c) A Participant may withdraw all or part of the Salary
Deferral Contributions in his Salary Deferral Contributions Account
or CPC Deferred Compensation Contributions Account (excluding
income allocable thereto credited to his Salary Deferral
Contributions Account or CPC Deferred Compensation Contributions
Account after December 31, 1988) after the Participant has obtained
all distributions, other than hardship distributions, and all
nontaxable loans currently available under all plans maintained by
the Company and upon certification of (i) an immediate and heavy
financial need, (ii) the amount of such need and (iii) the current
unavailability of any distributions (other than hardship
distributions) or nontaxable loans under any plan maintained by the
Company. The withdrawal may not be in excess of such immediate and
heavy financial need. Certification shall be pursuant to such
procedures as shall be established by the Committee in accordance
with guidance promulgated by the Internal Revenue Service.
Situations of immediate and heavy financial need shall be limited
to (1) medical expenses described in Code Section 213(d) incurred
by the Participant, the Participant's spouse or dependents as
defined in Code Section 152), (2) the purchase (excluding mortgage
payments) of a principal residence of the Participant, (3) payment
of tuition for the next semester or quarter of post-secondary
education for the Participant, Participant's spouse, children or
dependents, (4) the need to prevent the eviction of the Participant
from the Participant's principal residence or foreclosure on the
mortgage of the Participant's principal residence, and (5) other
deemed immediate and heavy financial needs identified by the
Internal Revenue Service from time to time. No more than one
withdrawal may be made in any Plan Year.
If a Participant makes a withdrawal from his Salary
Deferral Contributions Account or CPC Deferred Compensation
Contributions Account on account of an immediate and heavy
financial need, the Participant's Salary Deferral Contributions,
and all other contributions by the Participant to all other plans
maintained by the Company, shall be automatically suspended until
re-enrollment after a period of at least 12 months from the date of
such withdrawal. In addition, for any taxable year immediately
following the taxable year of such a withdrawal, the amount of
Salary Deferral Contributions made on the Participant's behalf for
such next taxable year shall not exceed the limit described in
Section 3.4(a), as adjusted for such next taxable year, less the
amount of the Participant's Salary Deferral Contributions for the
taxable year of such withdrawal.
(d) A Participant may at any time, upon written request
to the Committee, withdraw all or part of his or her CPC Rollover
Contributions Account.
(e) Amounts withdrawn hereunder shall be paid to the
Participant within 90 days of the beginning of the Month for which
the withdrawal is effective.
(f) Application for withdrawals under this subsection
shall be directed to the Committee and shall describe the hardship,
as applicable, and the amount of funds that the Participant desires
to withdraw. The Committee shall, in its discretion, determine
what amount of the Participant's requested withdrawal may be
withdrawn.
(g) A Participant may at any time, upon written request
to the Committee, withdraw all or a part of his or her Rollover
Account.
Section 5.3 - Distribution of Benefits
(a) A Participant's Accounts shall become distributable
to him by reason of a Break in Employment. Such distribution shall
not occur until after the close of the Quarter in which the last
Company Matching Contribution was made on behalf of such
Participant. Notwithstanding the foregoing, if the nonforfeitable
balance of such Participant's Accounts exceeds $3,500, such
distribution shall be made only if the Participant consents to a
distribution of the nonforfeitable balance in his Accounts in
writing. An explanation of the Participant's right to defer
distribution of the nonforfeitable balance of his Accounts shall be
provided to the Participant no less than 30 days and no more than
90 days before the date such distribution is to be made (consistent
with such regulations as the Secretary of the Treasury may
prescribe). If the Participant does not so consent, the
distribution of the amounts payable shall be delayed until after
the end of the Plan Year in which occurs the earlier of the death
of the Participant or his attainment of age 65. If the
nonforfeitable balance of a Participant's Accounts distributable
under this subsection is a distribution to which Sections
401(a)(11) and 417 of the Code do not apply, such distribution may
commence less than 30 days after the notice described in this
subsection is given, provided that: (1) the Committee clearly
informs the Participant that the Participant has the right to a
period of at least 30 days after receiving such notice to consider
the decision of whether or not to elect a distribution (and, if
applicable, a particular distribution option), and (2) the
Participant, after receiving such notice, affirmatively elects an
immediate distribution.
(b) Notwithstanding the second sentence of subsection
(a) above, a Participant who incurs a Break in Employment on or
after January 1, 1991 or the Beneficiary of a deceased Participant
may elect to have the value of the Participant's Accounts (as
determined in accordance with Section 5.4) distributed either (i)
as soon as practicable following the date of the Participant's
Break in Employment, or (ii) in the Plan Year following such date.
Absent such an election, and subject to the other provisions of
subsection (a) above, a Participant's Accounts shall be distributed
at the time described in the second sentence of subsection (a)
above.
(c) Unless a Participant elects otherwise, in no event
shall the payment of benefits commence later than the 60th day
after the later of the end of the Plan Year in which: (i) the
Participant attains age 65, (ii) the Participant incurs a Break in
Employment or (iii) occurs the 10th anniversary of the date the
Participant commenced participation in the Plan. If the benefit
payment amount cannot be ascertained or the whereabouts of the
Participant are unknown, a payment retroactive to such date may be
made no later than sixty (60) days after (i) the Participant has
been located or (ii) the amount of the benefit has been
ascertained. The amount distributable to a Participant upon his
Break in Employment for a reason other than death, or the
Beneficiary or Beneficiaries of a Participant who dies, shall be
equal to the balance in his Accounts. Benefits payable hereunder
to a Participant or to a Beneficiary or Beneficiaries shall be paid
in a lump sum.
(d) Subject to the other provisions of this
Section 5.3(d), distribution of the Participant's benefits will be
in cash. The Committee may distribute, or may give Participants
the ability to elect to receive, any amounts credited to the
UniSource Stock Fund in the form of shares of UniSource Stock;
provided that fractional share interests shall be settled in cash.
It is expected that all shares of UniSource Stock distributed by
the Trustee will be readily tradeable on an established market.
The value of any amount distributed in the form of cash with
respect to any amounts credited to the UniSource Stock Fund shall
be the net proceeds at the sale of the UniSource Stock pending
distribution, plus cash for any fractional share which is not
liquidated. Distributions in respect of amounts credited to a
Participant's Fund M account shall be in kind distributions of the
investments elected by the Participant with respect to such
account.
(e) Notwithstanding anything to the contrary contained
herein, the distribution options under the Plan shall comply with
Section 401(a)(9) of the Code and regulations promulgated
thereunder. Accordingly, unless otherwise permitted by law, the
entire interest of each Participant shall commence to be
distributed, by April 1 of the calendar year following the calendar
year in which the Participant reaches age 70-1/2. Distribution
shall be made over the life of such Participant (or over the lives
of the Participant and his Beneficiary) or over a period not
extending beyond the life expectancy of the Participant (or over a
period not extending beyond the life expectancy of the Participant
and his Beneficiary). Except as provided by law, a Participant who
reached age 70-1/2 before January 1, 1988 and who was not a five
percent owner of the Company at any time during the Plan Year in
which the Participant attains age 66-1/2 or thereafter is not
required to receive distribution until he separates from service.
If a distribution has begun in accordance with the preceding
sentences and the Participant dies before his entire interest has
been distributed to him, the remaining portion of his interest
shall be distributed at least as rapidly as under the method of
distribution being used under the preceding sentences as of the
date of his death. If a Participant dies before the distribution
of his interest has begun, his entire interest shall be distributed
within five years after the date of his death unless the
requirements of one of the two following exceptions are satisfied:
(i) the Participant's interest will be distributed to a Beneficiary
over the life of such Beneficiary or over a period not extending
beyond the life expectancy of such Beneficiary and the
distributions begin not later than one year following the date of
the Participant's death (or such later date as permitted by law),
or (ii) the Participant's interest will be distributed to or for
the benefit of his surviving spouse over the life expectancy of
such surviving spouse or over a period not extending beyond the
life expectancy of such surviving spouse and the distributions
begin no later than the date on which the Participant would have
attained age 70-1/2 (if the surviving spouse dies before such
distributions begin, this second exception shall be applied as if
the surviving spouse were the Participant). For purposes of this
paragraph and to the extent permitted by law, any amount paid to a
Participant's child shall be treated as if it had been paid to the
Participant's surviving spouse if such amount will become payable
to the surviving spouse upon such child reaching majority (or other
designated event permitted by law).
(f) Direct Rollovers
(i) This subsection (f) shall apply to distributions
under the Plan made on or after January 1, 1993. Notwithstanding
any provision of the Plan to the contrary that would otherwise
limit a Distributee's (as defined below) election under this
subsection (f), a Distributee may elect, at the time and in the
manner prescribed by the Committee, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct Rollover.
(ii) For purposes of this subsection (f), an "Eligible
Rollover Distribution" is any distribution of all or any portion of
the balance to the credit of the Distributee, except that an
Eligible Rollover Distribution does not include:
(A) any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the
Distributee's designated Beneficiary, or for a specified
period of ten years or more;
(B) any distribution to the extent such distri-
bution is required under Section 401(a)(9) of the Code;
(C) the portion of any distribution that is not
includable in gross income (determined without regard to
the exclusion for net unrealized appreciation with
respect to employer securities); and
(D) any other type of distribution that the
Internal Revenue Service announces (pursuant to
regulation, notice or otherwise) is not an "eligible
rollover distribution" under Section 402(c) of the Code.
(iii) For purposes of this subsection (f), an "Eligible
Retirement Plan" is an individual retirement account described in
Section 408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity plan described
in Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the Distributee's Eligible
Rollover Distribution. However, in the case of an Eligible Roll-
over Distribution to the surviving spouse, an Eligible Retirement
Plan is an individual retirement account or individual retirement
annuity.
(iv) For purposes of this subsection (f), a "Distributee"
includes a Participant or former Participant. In addition, the
Participant's or former Participant's surviving spouse and the
Participant's or former Participant's spouse or former spouse who
is the alternate payee under a qualified domestic relations order,
as defined in Section 414(p) of the Code, are Distributees with
regard to the interest of the spouse or former spouse.
(v) For purposes of this subsection (f), a "Direct
Rollover" is a payment by the Plan to the Eligible Retirement Plan
specified by the Distributee.
Section 5.4 - Valuation of Accounts on Withdrawals
or Distribution
For purposes of withdrawals in accordance with Section
5.2 or distributions in accordance with Section 5.3, the Accounts
shall be valued as of the most recent date preceding such
withdrawal or distribution as the Trustee can determine.
Section 5.5 - Inability to Locate Participant
In the case of any distribution of an Account under this
Plan, if the Committee is unable to make such payment within three
(3) years after payment is due a Participant or Beneficiary because
it cannot locate such Participant or Beneficiary, the Committee
shall direct that such amount shall be forfeited and shall be
reallocated (as of the end of the Quarter coincident with or next
succeeding the expiration of the aforesaid time limit) to the
remaining Participants' Accounts pro rata to the amount of the
balances of such Accounts, and the assets of the Plan shall be
relieved of the liability for such payment. If, after such
forfeiture, the Participant or Beneficiary later claims such
benefit, such Account shall be reinstated from forfeitures under
this Section occurring during the Quarter in which such
reinstatement occurs; provided that if such forfeitures are not
sufficient to provide such reinstatement, an additional Company
contribution shall be made for the Plan Year in which reinstatement
occurs to cover such reinstatement. Establishment of an Account
through such reinstatement shall not be deemed an "annual addition"
under Section 415 of the Code or Article X of this Plan.
Section 5.6 - Payment of Small Benefits
Notwithstanding any other provision of this Plan, if the
balance in the Participant's Accounts exceeds $3,500, distribution
shall be made upon a Break in Employment only if the Participant so
requests or consents in writing. If a Participant does not so
request or consent (unless Treasury Regulations otherwise provide
and the Committee adopts different rules), distribution of the
amounts payable shall be delayed until the Participant attains age
65.
Section 5.7 - Loans to Participants
(a) This Section 5.7 shall be effective July 1, 1995,
and shall apply to all loans under the Plan other than a loan
described in Section 3.7. Each Participant shall have the right,
subject to prior approval by the Committee, to borrow from his
Accounts. Application for a loan must be submitted by a
Participant to the Committee on such form(s) as the Committee may
require. Approval shall be granted or denied as specified in
subsection (b), on the terms specified in subsection (c). For
purposes of this Section 5.7, but only to the extent required by
Department of Labor Regulations Section 2550.408b-1, the term
'Participant' shall only include (1) Employees, and (2) with
respect to an individual who is a party in interest as defined in
Section 3(14) of ERISA and has an interest in the Plan that is not
contingent, any former Employee, Beneficiary or alternate payee
under a qualified domestic relations order, as defined in Section
414(p) of the Code.
(b) The Committee shall grant any loan which meets each
of the requirements of paragraphs (1), (2), (3) and (4) below:
(1) The amount of the loan, when added to the
outstanding balance of all other loans to the Participant from
the Plan or any other qualified plan of the Company or any
affiliate of the Company, shall not exceed the lesser of:
(A) $50,000, reduced by the excess, if any, of a
Participant's highest outstanding balance of all loans
from the Plan or any other qualified plan maintained by
the Company or any affiliate of the Company during the
preceding 12 months over the outstanding balance of such
loans on the loan date; or
(B) 50% of the value of the vested balance of the
Participant's Accounts established as of the date upon
which the loan is made.
(2) No more than one loan may be outstanding to a
Participant under the Plan at any time. If a Participant has
an outstanding loan under the SRA and an outstanding Plan
loan, and such Participant's SRA loan is to be transferred to
this Plan pursuant to Section 2.5 on or before December 31,
1998, the limit contained in the foregoing sentence shall not
preclude the Company from transferring such Participant's loan
from the SRA to the Plan.
(3) The loan shall be for at least $1,000.
(4) If so determined by the Committee, the Participant
shall have paid a reasonable application fee in an amount
determined by the Committee.
(c) Each loan granted shall, by its terms, satisfy each
of the following additional requirements:
(1) Each loan term must be for at least 6 months and no
more than 5 years, except that loans which are being used to
purchase the principal residence of a Participant may have a
term of up to 15 years for repayment. If the Participant is
on a leave of absence without pay and is unable to make
repayments, then the Participant may, upon written application
to and approval by the Committee, defer repayments for up to
12 months and add the number of months so deferred to the term
of the loan, in which case a new repayment schedule based on
the extended term shall replace the initial repayment schedule
on a prospective basis. Only one such deferral may be granted
for any loan.
(2) Each loan must require substantially level
amortization over the term of the loan, with payments not less
frequently than monthly. Loans shall be in default if all
loan payments are not made for any 3 month period, unless the
Participant is granted up to 12 months to defer repayments
pursuant to subsection (c)(1). Notwithstanding the above, if
the Participant fails for whatever reason to repay the full
amount of the loan, including interest by the time set forth
in the promissory note executed by the Participant in
connection with the loan, the Committee may (i) immediately
reduce the value of the Participant's vested Accounts by the
amount of the unpaid principal and interest and/or (ii) at
such time as a distribution is to be made with respect to the
Participant's Accounts, reduce such distribution by the amount
of the remaining unpaid principal and interest.
(3) Each loan must be adequately secured, with the
security to consist of the balance of the Participant's
Accounts.
(A) In the case of any Participant who is an active
Employee, automatic payroll deductions shall be required
as additional security.
(B) The amount of the loan shall reduce the amount
of the Participant's Accounts invested in Funds; a
Participant shall designate which of the Fund(s) shall be
reduced. However, the investment gain or loss
attributable to the loan shall not be included in the
calculation or allocation of the increase or decrease in
fair market value of the Funds of the Plan pursuant to
Article IV. Instead, the entire gain or loss
attributable to the loan (including any gain or loss
attributable to interest payments or default) shall be
allocated to the Accounts of the Participant.
(4) Each loan shall bear a reasonable fixed rate of
interest, which rate shall be established by the Committee
from time to time and shall in no event be less than 2 percent
over the Prime Rate as published in the Wall Street Journal on
the first business day of the calendar month in which the loan
is made.
(d) All loan payments shall be transmitted by the
Company to the Trustee as soon as practicable but not later than
the end of the month following the month during which such amounts
were received or withheld. Loans may be prepaid in full only after
at least 6 months have elapsed since the loan was made. Loans may
not be prepaid in part. Any prepayment shall be paid directly to
the Trustee in accordance with procedures adopted by the Committee.
(e) Each loan shall be evidenced by a promissory note
executed by the Participant and payable in full to the Trustee, not
later than the earliest of (1) a fixed maturity date meeting the
requirements of subsection (c)(1) above, (2) the Participant's
death, (3) the termination of the Plan, or (4) except for parties
in interest, as defined in Section 3(14) of ERISA, the
Participant's Break in Employment. Such promissory note shall
evidence such terms as are required by this Section 5.7.
(f) The Committee shall have the power to modify the
above rules or establish any additional rules with respect to loans
extended pursuant to this Section 5.7. Such rules may be included
in a separate document or documents and shall be considered a part
of this Plan; provided, each such rule and each loan shall be made
only in accordance with applicable federal or state law and the
regulations and rulings of the Internal Revenue Service and
Department of Labor. The Committee shall act in its sole
discretion to ascertain whether the requirements of such laws,
regulations and rulings and this Section 5.7 have been met.
Section 5.8 - Restrictions on UniSource Stock
Shares of UniSource Stock held or distributed by the
Trustee may include such legend restrictions on transferability as
the Company or UniSource may reasonably require in order to assure
compliance with applicable federal and state securities laws.
Except as otherwise provided in this Section 5.8, no shares of
UniSource Stock distributed by the Trustee may be subject to a put,
call or other option, or buy-sell or similar arrangement.
<PAGE>
ARTICLE VI
ADMINISTRATION
Section 6.1 - The Committee
The Company shall create a Committee (herein referred to
as the "Committee"), which Committee shall consist of three or more
members, who shall be appointed by, and shall serve at the pleasure
of, the Board of Directors. A person so selected shall become a
member of the Committee by filing a written notice of acceptance
with the Board of Directors. A member of the Committee may resign
by delivering a written notice of resignation to the Board of
Directors. The Board of Directors may remove any member by
delivering a certified copy of its resolution of removal to such
member. A resignation or removal shall be effective on the date
specified. The Trustee shall be promptly notified in writing of
the original membership and of any change in the membership of the
Committee, and of the Secretary and/or Assistant Secretary of the
Committee authorized to give directions to the Trustee on behalf of
the Committee, by the Secretary or the Assistant Secretary of the
Company and shall be supplied with specimen signatures of each
Committee member. Such notifications shall be accompanied by
certified copies of the resolution of the Board of Directors
relating thereto. Vacancies in the membership of the Committee
shall be filled promptly by the Board of Directors.
Section 6.2 - Committee Action
(a) The Committee shall choose a Secretary and/or an
Assistant Secretary (either of whom is hereafter referred to as
"Secretary") who shall keep minutes of the Committee's proceedings
and all records and documents pertaining to the Committee's
administration of the Plan. Any action of the Committee shall be
taken pursuant to a majority vote, or to the written consent of a
majority, of its members and such action shall constitute the
action of the Committee and be binding the same as if all members
had joined therein. A quorum of the Committee shall consist of a
majority of the members. The Secretary may execute any certificate
or other written direction on behalf of the Committee. All
directions by the Committee to the Trustee shall be in writing
signed by the Secretary. The Trustee or third persons dealing with
the Committee may conclusively rely upon any certificate or other
written direction signed by the Secretary which purports to have
been duly authorized by the Committee.
(b) A member of the Committee shall not vote or act upon
any matter which relates solely to such person as a Participant.
If a matter arises affecting one of the members of the Committee as
a Participant and the other members of the Committee are unable to
agree as to the disposition of such matter, the Board of Directors
shall appoint a substitute member of the Committee in the place and
stead of the affected member, for the sole and only purpose of
passing upon and deciding the particular matter.
Section 6.3 - Rights and Duties
(a) The Committee, on behalf of the Participants and
their Beneficiaries, shall be charged with the general
administration of the Plan and shall be the administrator as
defined in Section 3(16)(A) of ERISA and Fiduciary with respect to
control and management of the Plan, except that all authority and
responsibility with respect to the investment, management, and
control of trust assets shall be vested in the Participant pursuant
to Section 6.4. The Committee shall enforce the Plan on a
nondiscriminatory basis in accordance with its terms. The
Committee shall have all powers and duties to accomplish these
purposes including, but not by way of limitation, the following:
(1) To construe and interpret the terms and
provisions of the Plan (such construction or interpretation to
be final and binding on all parties), and determine all
questions relating to the eligibility of Employees to
participate in the Plan;
(2) To determine, compute and certify to the
Trustee the amount and kind of benefits payable to
Participants and their Beneficiaries;
(3) To authorize all disbursements by the Trustee
from the Trust, including the pre-authorization of
disbursements pursuant to Article V initiated by telephonic or
other instructions from a Participant directly to the Trustee
pursuant to rules adopted by the Committee;
(4) To maintain all the necessary records for the
administration of the Plan other than those maintained by the
Trustee;
(5) To provide for disclosure of all information
and filing or provision of all reports and statements to
Participants, Beneficiaries or governmental bodies as shall be
required by ERISA or the Code, and to submit to the Board of
Directors, at least annually, such information as is necessary
to fully inform the Board of Directors of the discharge by the
Committee or its delegates of responsibilities under the Plan;
(6) To make and publish such rules for the
regulation of the Plan as are not inconsistent with the terms
hereof; and
(7) To establish claims procedures consistent with
regulations of the Secretary of Labor for presentation of
claims by Participants and Beneficiaries for Plan benefits,
consideration of such claims, review of claim denials and
issuance of decisions on review. Such claims procedures at a
minimum shall consist of the following:
(i) The Committee shall notify Employees and,
where appropriate, Beneficiaries of their right to claim
benefits under the claims procedures, shall make forms
available for filing of such claims, and shall provide
the name of the person or persons with whom such claims
should be filed.
(ii) The Committee shall establish procedures
for action upon claims initially made and the
communication of a decision to the claimant promptly and,
in any event, not later than 90 days after the date the
claim is received by the Committee, unless special
circumstances require an extension of time for processing
the claim. If an extension is required, notice of the
extension shall be furnished the claimant prior to the
end of the initial 90-day period, and the notice of
extension shall indicate the reasons for the extension
and the expected decision date. The extension shall not
exceed 90 days. The claim may be deemed by the claimant
to have been denied for purposes of further review
described below in the event a decision is not furnished
to the claimant within the period described in the
preceding three sentences. Every claim for benefits
which is denied shall be denied by written notice setting
forth in a manner calculated to be understood by the
claimant (1) the specific reason or reasons for the
denial, (2) specific reference to any provisions of this
Plan on which denial is based, (3) a description of any
additional material or information necessary for the
claimant to perfect the claim with an explanation of why
such material or information is necessary, and (4) an
explanation of the procedure for further review of the
denial of the claim under the Plan.
(iii)The Committee shall establish a procedure
for review of claim denials, such review to be undertaken
by the Committee. The review given after denial of any
claim shall be a full and fair review with the claimant
or the claimant's duly authorized representative having
60 days after receipt of denial of the claim to request
such review, the right to review all pertinent documents
and the right to submit issues and comments in writing.
(iv) The Committee shall establish a procedure
for issuance of a decision by the Committee not later
than 60 days after receipt of a request for review from
a claimant unless special circumstances require a longer
period of time, in which case a decision shall be
rendered as soon as possible but not later than 120 days
after the Committee's receipt of the claimant's request
for review. The decision on review shall be in writing
and shall include specific reasons for the decisions
written in a manner calculated to be understood by the
claimant with specific reference to any provisions of
this Plan on which the decision is based.
Section 6.4 - Investment Responsibility
The Trustee shall act solely on the direction of the
Participant with respect to the investment, management and control
of the Trust assets and the Participant shall be the Fiduciary with
respect to such investment, management and control.
Section 6.5 - Delegation of Non-Investment
Fiduciary Responsibility
The Committee may, with respect to the Plan, delegate any
of its administrative responsibilities, including its
responsibility as administrator and the responsibilities of
officers of the Committee, to any other person. Such delegation
shall be accomplished by a written instrument executed by the
Secretary of the Committee specifying responsibilities delegated
and the fiduciary responsibilities allocated to such delegate. The
allocation of such responsibilities shall be effective upon the
date specified in the delegation, subject to written acceptance by
the delegate. Any such delegation shall be communicated to
Participants under the Plan or to beneficiaries where required by
ERISA in the same manner used for transmission to such persons of
the summary plan description described in Section 102(a)(1) of
ERISA with respect to the Plan. Any delegation of responsibilities
under this Section 6.5 shall provide for reports, no less often
than annually, by such delegate to the Committee of such
information necessary to fully inform the Committee of the status
and operation of the Plan and of the delegate's discharge of
responsibilities delegated.
Section 6.6 - Duty of Care
In the exercise of its powers and duties as administrator
and Fiduciary with respect to the control and management of the
Plan, the Committee shall exercise such powers and duties solely in
the interest of the Participants and Beneficiaries of the Plan for
the exclusive purpose of providing benefits to Participants and
their Beneficiaries and shall use the care, prudence, and diligence
under the circumstances then prevailing that a prudent man acting
in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.
Section 6.7 - Compensation, Indemnity and Liability
(a) The members of the Committee shall serve without
compensation for their services hereunder. The Committee and any
delegates appointed pursuant to Section 6.5 shall be bonded in an
amount not less than 10% of the amount of Trust assets, provided,
however, that in no case shall the bond be less than $1,000 nor
more than $500,000 unless required by the Secretary of Labor or by
federal law or regulation. The expense of any such bond and all
expenses of the Committee or such delegates may be paid at the
Committee's discretion either by the Company or from earnings on
assets of the Trust. The Company may furnish the Committee or such
delegates with all clerical or other assistance necessary in the
performance of their duties. The Committee is authorized to employ
such legal counsel and advisers as it may deem advisable to assist
in the performance of its duties hereunder.
(b) To the extent permitted by applicable state law the
Company shall indemnify and save harmless the Board of Directors,
the Committee and each member thereof, and any delegate appointed
pursuant to Section 6.5 who is a director, officer, or employee of
the Company, against any and all expenses, liabilities and claims,
including legal fees to defend against such liabilities and claims,
arising out of their discharge in good faith of responsibilities
under or incident to the Plan, excepting only expenses and
liabilities arising out of willful misconduct. This indemnity
shall not preclude such further indemnities as may be available
under insurance purchased by the Company or provided by the Company
under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, as such indemnities are permitted under
state law. Payments with respect to any indemnity under this
Section 6.7 shall be made only from assets of the Company and shall
not be made directly or indirectly from Trust assets.
<PAGE>
ARTICLE VII
AMENDMENT AND TERMINATION
Section 7.1 - Amendments
The Company shall have the right to amend or modify the
Plan by resolution of the Board of Directors and to amend or cancel
any amendments. The Board of Directors may delegate to an officer
of the Company the authority to execute any amendment to the Plan
which is necessary to maintain the qualification and tax exempt
status of the Plan under the Code, and any other amendments to the
Plan which (1) do not have the effect of increasing the liability
of the Company in a manner which would cause a significant
detriment to the Company and (2) do not significantly increase the
benefits payable to such officer, except in his capacity as a
member of a broad class of employees for whom benefits are being
increased. Any amendment shall be stated in an instrument in
writing, executed in the same manner as the Plan. Except as may be
required to permit the Plan and Trust to meet the requirements for
qualification and tax exemption under the Code, or the
corresponding provisions of other or subsequent revenue laws or of
ERISA, no amendment may be made which may:
(a) Cause any of the assets of the Trust, at any time
prior to the satisfaction of all liabilities with respect to
Participants and their Beneficiaries, to be used for or
diverted to purposes other than for the exclusive benefit of
Participants or their Beneficiaries;
(b) Decrease the accrued benefit of any Participant or
Beneficiary within the meaning of Section 411(d)(6) of the
Code;
(c) Create or effect any discrimination in favor of
Participants who are Highly Compensated Employees; and
(d) Increase the duties or liabilities of the Trustee
without its written consent.
Section 7.2 - Discontinuance of Plan
It is the Company's expectation that this Plan and the
payment of contributions hereunder will be continued indefinitely,
and the Trust related to this Plan is irrevocable, but continuance
of the Plan by the Company is not assumed as a contractual
obligation, and the Company reserves the right at any time to
reduce, temporarily suspend, or discontinue contributions
hereunder.
The Company may terminate this Plan at any time upon
written notice to the Trustee. Notwithstanding the termination of
the Plan, the Accounts under the Plan shall be valued and
distributed to Participants at the time and in the manner as if
termination had not occurred.
Section 7.3 - Failure to Contribute
Any failure by the Company to contribute to the Trust in
any year when no contribution is required under this Plan shall not
of itself be a discontinuance of contributions under this Plan.
Section 7.4 - Merger or Consolidation
This Plan shall not be merged or consolidated with, nor
shall its assets or liabilities be transferred to, any other plan
unless each Participant in this Plan would (if the plan terminated)
receive a benefit immediately after the merger, consolidation or
transfer which is equal to or greater than the benefit he would
have been entitled to receive immediately before the merger,
consolidation, or transfer if this Plan had terminated.
<PAGE>
ARTICLE VIII
MISCELLANEOUS
Section 8.1 - Contributions Not Recoverable
It shall be impossible for any part of the contributions
made under this Plan to be used for, or diverted to, purposes other
than the exclusive benefit of Participants or their Beneficiaries.
Section 8.2 - Limitation on Participants' Rights
Participation in this Plan shall not give any Employee
the right to be retained as an Employee of the Company or any right
or interest under the Plan and Trust other than as herein provided.
The Company reserves the right to dismiss any Employee without any
liability for any claim either against the Trustee, the Trust
except to the extent provided in the Trust, or against the Company.
All benefits payable under the Plan shall be provided solely from
the assets of the Trust.
Section 8.3 - Receipt or Release
Any payment to any Participant or Beneficiary in
accordance with the provisions of the Plan and Trust shall, to the
extent thereof, be in full satisfaction of all claims against the
Trustee, the Committee and the Company, and the Trustee may require
such Participant or Beneficiary, as a condition precedent to such
payment, to execute a receipt and release to such effect.
Section 8.4 - Alienation
(a) None of the benefits, payments, proceeds or claims
of any Participant or Beneficiary shall be subject to any claim of
any creditor and, in particular, the same shall not be subject to
attachment or garnishment or other legal process by any creditor,
nor shall any such Participant or Beneficiary have any right to
alienate, anticipate, commute, pledge, encumber or assign any of
the benefits or payments or proceeds which such Participant or
Beneficiary may expect to receive, contingently or otherwise, under
this Plan.
(b) Notwithstanding the foregoing, the right to a
benefit payable with respect to a Participant pursuant to a
"qualified domestic relations order" (within the meaning of Section
414(p) of the Code) may be created, assigned or recognized. The
Committee shall establish reasonable procedures to determine the
qualified status of domestic relations orders and to administer
distributions under such qualified orders. In the event a
qualified domestic relations order exists with respect to a benefit
payable under the Plan, the benefits otherwise payable to a
Participant or Beneficiary shall be payable to the alternate payee
specified in the qualified domestic relations order. Benefits may
be paid in accordance with a qualified domestic relations order
without regard to whether or not a Participant has attained the
"earliest retirement age" as defined in Section 414(p) of the Code.
Section 8.5 - Governing Law
This Plan and its related Trust shall be construed,
administered, and governed in all respects under applicable federal
law, and to the extent that federal law is inapplicable, under the
laws of the State of Arizona; provided, however, that if any
provision is susceptible to more than one interpretation, such
interpretation shall be given thereto as is consistent with this
Plan being an employees' plan within the meaning of Section 401 of
the Code. If any provision of this instrument shall be held by a
court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions hereof shall continue to be fully effective.
Section 8.6 - Headings, Etc., No Part of Agreement
Headings and subheadings in this Plan are inserted for
convenience of reference only and are not to be considered in the
construction of the provisions hereof.
Section 8.7 - Successors and Assigns
This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns.
<PAGE>
ARTICLE IX
TOP-HEAVY PROVISIONS
Section 9.1 - Effective Date
This Article shall be interpreted in accordance with
Section 416 of the Code and the regulations thereunder. Regardless
of how the terms defined in this Article are otherwise defined in
the Plan, the definitions in this Article shall govern for the
purposes of this Article.
Section 9.2 - Definitions
(a) The "Benefit Amount" for any Employee means (1) in
the case of any defined benefit plan, the present value (the
present value shall be computed using a 5% interest assumption and
the mortality assumptions contained in the Plan for benefit
equivalent purposes) of his normal retirement benefit, determined
on the Valuation Date as if the Employee terminated on such
Valuation Date, plus the aggregate amount of distributions made to
such Employee within the five-year period ending on the
Determination Date (except to the extent already included on the
Valuation Date) and (2) in the case of any defined contribution
plan, the sum of the amount credited, on the Determination Date, to
each of the accounts maintained on behalf of such Employee under
such plan plus the aggregate amount of distributions made to such
Employee within the five-year period ending on the Determination
Date. The Benefit Amount shall include any accrued benefits
attributable to nondeductible Employee Contributions.
(b) "Company" means any company (including
unincorporated organizations) participating in the Plan or plans
included in the "aggregation group" as defined in this Article.
(c) "Determination Date" means the last day of the
preceding Plan Year or, in the case of the first Plan Year of the
Plan, the last day of the Plan Year.
(d) "Employee" means employees, former employees,
beneficiaries, and former beneficiaries who have a Benefit Amount
greater than zero on the Determination Date.
(e) "Key Employee" means any Employee who, during the
Plan Year containing the Determination Date or during the four
preceding Plan Years, is:
(i) one of the ten (10) Employees of a Company
having annual compensation from such Company of more than
the limitation in effect under Section 415(c)(1)(A) of
the Code and owning (or considered as owning within the
meaning of Section 318 of the Code) the largest interests
in such Company (if two (2) Employees have the same
interest in a Company, the Employee having the greater
annual compensation from the Company shall be treated as
having a larger interest);
(ii) a 5% owner of a Company;
(iii)a 1% owner of a Company who has an annual
compensation above $150,000; or
(iv) an officer of a Company having an annual
compensation greater than 150% of the amount in effect
under Section 415(c)(1)(A) of the Code for any such Plan
Year (however, no more than the lesser of (1) fifty (50)
employees or (2) the greater of three (3) Employees or
ten percent (10%) of the Company's Employees shall be
treated as officers).
This definition shall be interpreted in accordance with
Section 416(i) of the Code and the regulations thereunder and such
rules are hereby incorporated by reference.
(f) "Valuation Date" means the first day (or such other
date which is used for computing plan costs for minimum funding
purposes) of the twelve-month period ending on the Determination
Date.
(g) A "Year of Service" shall be calculated using the
Plan rules that normally apply for determining vesting
service.
Section 9.3 - Top Heavy Definition
This Plan shall be top-heavy for any Plan Year if, as of
the Determination Date, the sum of the Benefit Amounts of all
employees who are Key Employees exceeds 60% of the sum of the
Benefit Amounts for all Employees. For purposes of this
calculation only, the following rules shall apply:
(a) The Benefit Amounts of all employees who are not Key
Employees and who were Key Employees during any prior Plan
Year shall be disregarded.
(b) The Benefit amounts of all Employees who have not
received any compensation from any Company (other than
benefits under the Plan) at any time during the five-year
period ending on the Determination Date shall be disregarded.
(c) This calculation shall be made by aggregating any
plans qualified under Section 401(a) of the Code in which a
Key Employee participates or which enables this Plan to meet
the requirements of Section 401(a)(4) of the Code; all plans
so aggregated constitute the "aggregation group." The Company
may also aggregate any such plan to the extent that such plan,
when aggregated with this aggregation group, continues to meet
the requirements of Section 401(a)(4) and Section 410 of the
Code.
(d) This calculation shall be made in accordance with
Section 416 of the Code and the regulations thereunder and
such rules are hereby incorporated by reference. For purposes
of this calculation, rollover contributions shall only be
taken into account to the extent prescribed in Section
416(g)(4)(A) of the Code.
Section 9.4 - Minimum Benefit Contribution, Compensation
Limitations, Section 415 Limitations, and Special
Distribution Rules
If the Plan is top-heavy for any Plan Year, the following
provisions shall apply to such Plan Year:
(a) (i) Except to the extent not required by Section 416
of the Code or any other provision of law, notwithstanding any
other provision of this Plan, if this Plan and all other plans
which are part of the aggregation group are defined
contribution plans, each Participant (and any other employee
required by Section 416 of the Code) other than Key Employees
shall receive an allocation of employer contributions and
forfeitures from a plan which is part of the aggregation group
at least equal to 3% (or, if lesser, the largest percentage
allocated to any Key Employee for the Plan Year) of such
Participant's compensation for such Plan Year (the "defined
contribution minimum"). For the purposes of the subsection,
a non-key Employee shall be entitled to a contribution if he
is employed on the last day of the Plan Year whether or not
(1) he has 1000 Hours of Service, (2) regardless of his level
of compensation, and (3) without regard to whether he has made
any mandatory contributions required under the Plan.
(ii) Except to the extent not required by Section
416 of the code or any other provision of law, notwithstanding
any other provisions of this Plan, if this Plan or any other
plan which is part of the aggregation group is a defined
benefit plan each Participant who is a participant in any such
defined benefit plan (who is not a Key Employee) who accrues
a full Year of Service during such Plan Year (and any other
employee so required by Section 416 of the Code) shall be
entitled to an annual normal retirement benefit from a defined
benefit plan which is part of the aggregation group which
shall not be less than the product of (1) the employee's
average compensation for the five consecutive years when the
employee had the highest aggregate compensation and (2) the
lesser of two percent (2%) per Year of Service or twenty
percent (20%) (the "defined benefit minimum"). For purposes
of calculating the defined benefit minimum, (1) compensation
shall not include compensation in Plan Years after the last
Plan Year in which the Plan is top-heavy and (2) a Participant
shall not receive a Year of Service in any Plan Year before
January 1, 1984, or in any Plan Year in which the Plan is not
top-heavy. This defined benefit minimum shall be expressed as
a life annuity (with no ancillary benefits) commencing at
normal retirement age. Benefits paid in any other form or
time shall be the actuarial equivalent (as provided in the
Plan for retirement benefit equivalence purposes) of such life
annuity. Except to the extent not required by Section 416 of
the Code or any other provision of law, each Participant
(other than Key Employees) who is not a participant in any
such defined benefit plan shall receive the defined
contribution minimum (as defined in paragraph (a)(i) above).
(b) The maximum amount of a Participant's compensation
which shall be taken into account under the Plan for such Plan
Year shall be $200,000. Such amount shall be adjusted in
accordance with Section 416(d)(2) of the Code.
(c) Unless the Plan qualifies under an exception as
described in Section 416(h)(2) of the Code, "1.0" shall be
substituted for "1.25" in the definitions of "defined benefit
plan fraction" and "defined contribution plan fraction"
contained in Section 415 of the Code as utilized in this Plan.
(d) For purposes of Section 9.2(e) and this Section 9.4,
"compensation" shall mean all earnings included in the
Employee's Form W-2 for the calendar year that ends within the
Plan Year.
<PAGE>
ARTICLE X
LIMITATION ON ANNUAL ADDITIONS
Section 10.1 - Limitation
Notwithstanding anything else contained herein, the
Annual Additions, to all the Accounts of a Participant shall not
exceed the lesser of (a) $30,000 (or, if greater, 1/4 of the
defined benefit dollar limitation in effect under Section 415(b)(1)
of the Code for the limitation year), or (b) 25% of the
Participant's Section 415 Compensation from the Company and all
Related Companies during the Plan Year, in accordance with the
provisions of this Article X.
Section 10.2 - Definitions
As used in this Article X, the following terms shall have
the meanings specified below.
"Annual Additions" shall mean the sum credited to a
Participant's Accounts for any Plan Year of (a) Company
contributions, (b) voluntary contributions, (c) forfeitures,
(d) amounts credited after March 31, 1984 to an individual medical
account, as defined in Section 415(l)(2) of the Code which is part
of a Defined Benefit Plan maintained by the Company, and
(e) amounts derived from contributions paid or accrued after
December 31, 1985, in taxable years ending after such date, which
are attributable to post-retirement medical benefits allocated to
the separate account required with respect to a Key Employee (as
defined in Section 9.2(e)) under a welfare benefit plan (as defined
in Section 419(e) of the Code) maintained by the Company.
"Defined Benefit Plan" means a plan described in Section
414(j) of the Code.
"Defined Contribution Plan" means a plan described in
Section 414(i) of the Code.
"Defined Benefit Plan Fraction" shall have the meaning
described in Section 1.21.
"Defined Contribution Plan Fraction" shall have the
meaning described in Section 1.22.
"Section 415 Compensation" shall mean a Participant's
earned income, wages, salaries, and fees for professional services,
and other amounts received for personal services actually rendered
in the course of employment with an employer maintaining a plan
(including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses), and excluding
the following:
(i) Employer contributions to a plan of deferred
compensation which are not included in the Employee's gross
income for the taxable year in which contributed or employer
contributions under a simplified employee pension plan to the
extent such contributions are deductible by the Employee, or
any distributions from a plan of deferred compensation;
(ii) Amounts realized from the exercise of a non-
qualified stock option, or when restricted stock (or property)
held by the employee either becomes freely transferable or is
no longer subject to a substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option;
and
(iv) Other amounts which received special tax benefits,
or contributions made by the employer (whether or not under a
salary reduction agreement) towards the purchase of an annuity
described in section 403(b) of the Code (whether or not the
amounts are actually excludable from the gross income of the
Employee).
Compensation for any limitation year is the compensation actually
paid or includable in gross income during such year.
Section 10.3 - Annual Addition Limitations
(i) The compensation limitation of Section 10.1(b) shall
not apply to any contribution for medical benefits (within the
meaning of Section 419A(f)(2) of the Code) after separation from
service which is treated as an Annual Addition. In the event that
Annual Additions to all the accounts of a Participant would exceed
the limitations of Section 10.1, they shall be reduced in the
following priority: (A) return of voluntary contributions to the
Participant; (B) reduction of Company contributions.
(ii) If any Company or any Related Company contributes
amounts, on behalf of Participants covered by the Plan, to other
Defined Contribution Plans, the limitation on Annual Additions
provided in Section 10.1 shall be applied to Annual Additions in
the aggregate to the Plan and such other plans. Reduction of
Annual Additions, where required, shall be accomplished by first
refunding any voluntary contributions to Participants, then by
reducing contributions under such other plans pursuant to the
directions of the fiduciary for administration of such other plans
or under priorities, if any, established by the terms of such other
plans, and then, if necessary, by reducing contributions under the
Plan.
(iii) In any case where a Participant under the Plan is
also a participant under a Defined Benefit Plan or a Defined
Benefit Plan and other Defined Contribution Plans maintained by the
Company or a Related Company, the sum of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction shall not
exceed 1.0. Reduction of contributions to or benefits from all
plans, where required, shall be accomplished by first reducing
benefits under such other Defined Benefit Plan or plans, then by
allocating any excess in the manner set out above with respect to
the Plan, and finally by reducing contributions or allocating any
excess contributions with respect to other Defined Contribution
Plans, if any; provided, however, that adjustments necessary under
this or the next preceding paragraph may be made in a different
manner and priority pursuant to the agreement of the Committee and
the administrators of all other plans covering such Participant,
provided such adjustments are consistent with procedures and
priorities prescribed by Treasury Regulations under Section 415 of
the Code.
(iv) In the event the limitations of Section 10.1 of the
Plan are exceeded and the conditions specified in Treasury
Regulations Section 1.415-6(b)(6) are met, the Committee may elect
to apply the procedures set forth in Treasury Regulations Section
1.415-6(b)(6).
<PAGE>
Trust Agreement
Between
Tucson Electric Power Company
And
Fidelity Management Trust Company
__________________________________
TUCSON ELECTRIC POWER COMPANY TRIPLE
INVESTMENT PLAN FOR SALARIED EMPLOYEES
TRUST
____________________________________
The original Trust document was dated as of November 1, 1985
This Composite Trust Document incorporates the following
Amendments to the original Trust document:
a. Amendment 1986-1 (executed October 29, 1986,
effective November 1, 1986);
b. Amendment 1990-1 (executed February 27, 1990,
effective January 1, 1990);
c. Amendment 1990-II (executed December 10, 1990,
effective January 1, 1991);
d. Amendment 1993-I (executed April 1, 1993,
effective March 1, 1993);
e. Amendment 1993-II (executed January 25, 1994,
effective July 1, 1993);
f. Amendment 1994-I (executed April 27, 1994,
effective April 25, 1994);
g. Amendment 1995-I (executed November 6, 1995,
effective November 1, 1995);
h. Amendment 1996-I (executed October 14, 1996,
effective October 1, 1996); and
i. Amendment 1997-1 (executed January 23, 1998,
effective January 1, 1998).
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Trust . . . . . . . . . . . . . . . . . . 2
Section 2. Exclusive Benefit and Reversion of Sponsor
Contributions . . . . . . . . . . . . . . 3
Section 3. Disbursements . . . . . . . . . . . . . . 4
Section 4. Investment of Trust . . . . . . . . . . . 4
Section 5. Recordkeeping to Be Performed . . . . . . 11
Section 6. Compensation and Expenses . . . . . . . . 13
Section 7. Directions. . . . . . . . . . . . . . . . 14
Section 8. Resignation or Removal of Trustee . . . . 15
Section 9. Successor Trustee . . . . . . . . . . . . 16
Section 10. Termination . . . . . . . . . . . . . . . 17
Section 11. Resignation, Removal, and Termination
Notices . . . . . . . . . . . . . . . . . 17
Section 12. Duration. . . . . . . . . . . . . . . . . 17
Section 13. Amendment or Modification . . . . . . . . 18
Section 14. General . . . . . . . . . . . . . . . . . 18
Section 15. Governing Law . . . . . . . . . . . . . . 19
Schedules
A. Recordkeeping Services
B. Fee Schedule
C. Investment Options
D. Administrator's Authorization Letter
E. Named Fiduciary's Authorization Letter
F. Opinion of Counsel
G. Telephone Exchange Procedures
H. Operational Guidelines for Non-Fidelity Mutual Funds
<PAGE>
TRUST AGREEMENT, dated as of the 1st day of November, 1985,
between Tucson Electric Power Company, an Arizona corporation,
having an office at 220 West 6th Street, Tucson, Arizona 85702
(the "Sponsor"), and FIDELITY MANAGEMENT TRUST COMPANY, a
Massachusetts trust company, having an office at 82 Devonshire
Street, Boston, Massachusetts 02109 (the "Trustee").
WITNESSETH:
WHEREAS, the Sponsor is the sponsor of the Tucson Electric
Power Company Triple Investment Plan for Salaried Employees (the
"Plan"); and
WHEREAS, the Sponsor wishes to establish a trust to hold and
invest contributions under the Plan for the exclusive benefit of
participants in the Plan and their beneficiaries; and
WHEREAS, the Committee established under Article VI of the
Plan (the "Named Fiduciary") is the named fiduciary of the Plan
(within the meaning of section 402(a) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")); and
WHEREAS, the Trustee is willing to hold and invest the
aforesaid contributions in trust as a nondiscretionary trustee
subject to the direction of the Named Fiduciary;
WHEREAS, the Sponsor wishes to have the Trustee perform
certain ministerial recordkeeping functions under the Plan; and
WHEREAS, the Committee established under Article VI of the
Plan (the "Administrator") is the administrator of the Plan
(within the meaning of section 3(16)(A) of ERISA); and
WHEREAS, the Trustee is willing to perform recordkeeping
services for the Plan if the services are purely ministerial in
nature and are provided within a framework of policies,
interpretations, rules, practices, and procedures conveyed to the
Trustee by the Administrator.
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual covenants and agreements set forth below, the
Sponsor and the Trustee agree as follows:
Section 1. Trust. The Sponsor hereby establishes the Tucson
Electric Power Company Triple Investment Plan for Salaried
Employees Trust (the "Trust"), with the Trustee. The Trust shall
consist of an initial contribution of money or other property
acceptable to the Trustee in its sole discretion, made by the
Sponsor or transferred from a previous trustee under the Plan,
such additional sums of money as shall from time to time be
delivered to the Trustee under the Plan, all investments made
therewith and proceeds thereof, and all earnings and profits
thereon, less the payments that are made by the Trustee as
provided herein, without distinction between principal and
income. The Trustee hereby accepts the Trust on the terms and
conditions set forth in this Agreement.
Section 2. Exclusive Benefit and Reversion of Sponsor
Contributions.
(a) Except as provided in paragraphs (b), (c), and (d) of
this Section, no part of the Trust may be used for, or diverted
to, purposes other than the exclusive benefit of the participants
in the Plan or their beneficiaries prior to the satisfaction of
all liabilities with respect to the participants and their
beneficiaries.
(b) In the case of contributions made by the Sponsor prior
to the receipt of an initial favorable determination letter from
the Internal Revenue Service with respect to the Plan, the
Sponsor may direct the Trustee to return to the Sponsor those
contributions and all earnings thereon within one year after the
Internal Revenue Service refuses in writing to issue such a
letter.
(c) In the case of any portion of a contribution made by the
Sponsor by a mistake of fact, the Sponsor may direct the Trustee
to return to the Sponsor that portion of the contribution within
one year after the payment of that portion of the contribution.
(d) In the case of any portion of a contribution made by the
Sponsor and disallowed by the Internal Revenue Service as a
deduction under section 404 of the Internal Revenue Code of 1954,
as amended, the Sponsor may direct the Trustee to return to the
Sponsor that portion of the contribution within one year after
the Internal Revenue Service disallows the deduction in writing.
(e) Earnings attributable to the contributions returnable
under paragraph (c) or (d) shall not be returned to the Sponsor,
and any losses attributable to those contributions shall reduce
the amount returned.
Section 3. Disbursements.
(a) The Trustee shall make disbursements in the amounts and
in the manner that the Administrator directs from time to time in
writing. The Trustee shall have no responsibility to ascertain
any direction's compliance with the terms of the Plan or of any
applicable law or the direction's effect for tax purposes or
otherwise; nor shall the Trustee have any responsibility to see
to the application of any disbursement.
(b) The Trustee shall not be required to make any
disbursement in excess of the net realizable value of the assets
of the Trust at the time of the disbursement. The Trustee shall
not be required to make any disbursement in cash unless the
Administrator has provided a written direction as to the assets
to be converted to cash for the purpose of making the
disbursement.
Section 4. Investment of Trust.
(a) The Trustee shall have no responsibility for the
selection or management of investments of the Trust and shall not
render investment advice to any person in connection with any
assets of the Trust.
(b) The Named Fiduciary shall direct the Trustee as to what
investment options Plan participants may invest in, subject to
the following limitations. The Named Fiduciary may determine to
offer as investment options only (i) securities issued by
investment companies advised by Fidelity Management & Research
Company and certain securities issued by registered investment
companies not advised by Fidelity Management & Research Company
(collectively, "Mutual Funds"), (ii) guaranteed investment
contracts chosen by the Trustee (iii) collective investment funds
maintained by the Trustee for qualified plans and invested in
such contracts, in which case the Trustee shall be considered a
fiduciary with investment discretion only with respect to the
Plan assets in such collective investment funds and (iv) notes
evidencing loans to Plan participants in accordance with the
terms of the Plan.
(c) The Sponsor hereby (i) agrees to the Plan's
participation in the Fidelity Group Trust for Employee Benefit
Plans (the 'Group Trust'), a group trust maintained by the
Trustee for qualified plans, to serve as an investment option
described in Section 4(b)(iii) above, and (ii) acknowledges that
it has received from the Trustee a copy of the terms of the Group
Trust, the terms of the Declaration of Separate Fund for the GIC
Open-End Portfolio of the Group Trust, and the terms of the
Offering Circular for the GIC Open-End Portfolio.
(d) Participant Direction. All transactions involving
securities issued by registered investment companies not advised
by Fidelity Management & Research Company ("Non-Fidelity Mutual
Funds") shall be done in accordance with the Operational
Guidelines for Non-Fidelity Mutual Funds attached hereto as
Schedule "H". Each Plan participant shall direct the Trustee in
which investment option(s) to invest the assets in the
participant's individual accounts. Such directions may be made
by Plan participants by use of the telephone exchange system
maintained for such purposes by the Trustee or its agent, in
accordance with written Telephone Exchange Guidelines attached
hereto as Schedule "G". Any directions made by a Participant
using the telephone exchange system shall be treated as a
direction made in writing by the Named Fiduciary for purposes of
Section 7 hereafter. In the event that the Trustee fails to
receive a proper direction, the assets shall be invested in the
securities of the Mutual Fund set forth for such purpose on
Schedule "C", until the Trustee receives a proper direction.
(e) Mutual Funds. The Sponsor hereby acknowledges
that it has received from the Trustee a copy of the prospectus
for each Mutual Fund selected by the Named Fiduciary as a Plan
investment option. Trust investments in Mutual Funds shall be
subject to the following limitations:
(i) Execution of Purchases and Sales. Purchases
and sales of Mutual Funds (other than for Exchanges) shall be
made on the date on which the Trustee receives from the Sponsor
in good order all information and documentation necessary to
accurately effect such purchases and sales (or in the case of a
purchase, the subsequent date on which the Trustee has received a
wire transfer of funds necessary to make such purchase).
Exchanges of Mutual Funds shall be made in accordance with the
Telephone Exchange Guidelines attached hereto as Schedule "G".
(ii) Voting. At the time of mailing of notice of
each annual or special stockholders' meeting of any Mutual Fund,
the Trustee shall send a copy of the notice and all proxy
solicitation materials to each Plan participant who has shares of
the Mutual Fund credited to the participant's accounts, together
with a voting direction form for return to the Trustee or its
designee. The participant shall have the right to direct the
Trustee as to the manner in which the Trustee is to vote the
shares credited to the participant's accounts (both vested and
unvested). The Trustee shall vote the shares as directed by the
participant. The Trustee shall not vote shares for which it has
received no directions from the participant. With respect to all
rights other than the right to vote, the Trustee shall follow the
directions of the participant and if no such directions are
received, the directions of the Named Fiduciary. The Trustee
shall have no duty to solicit directions from participants.
(f) (i) The Trustee shall not be liable for any loss, or by
reason of any breach, which arises from any participant's
exercise or non-exercise of rights under this Section 4 over the
assets in the participant's accounts.
(ii) The Trustee shall not be liable for any loss, or
by reason of any breach, which arises from the Named Fiduciary's
exercise or non-exercise of rights under this Section 4, unless
it was clear on their face that the actions to be taken under the
Named Fiduciary's directions were prohibited by the fiduciary
duty rules of section 404(a) of ERISA or were contrary to the
terms of the Plan or this Agreement.
(g) The Trustee shall have the following powers and
authority:
(i) Subject to paragraphs (b), (c), and (d) of this
Section 4, to sell, exchange, convey, transfer, or otherwise
dispose of any property held in the Trust, by private contract or
at public auction. No person dealing with the Trustee shall be
bound to see to the application of the purchase money or other
property delivered to the Trustee or to inquire into the
validity, expediency, or propriety of any such sale or other
disposition.
(ii) Subject to paragraphs (b) and (c), to invest in
guaranteed investment contracts and collective investment funds
maintained by the Trustee for qualified plans and invested in
guaranteed investment contracts and short-term investments,
including interest bearing accounts with the Trustee or money
market mutual funds advised by affiliates of the Trustee, in
which case the provisions of each collective investment fund in
which the Trust is invested shall be adopted by, and become a
part of, the Plan as long as the fund remains exempt from
taxation under sections 401(a) and 501(c) of the Internal Revenue
Code.
(iii) To cause any securities or other property held as
part of the Trust to be registered in the Trustee's own name, in
the name of one or more of its nominees, or in the Trustee's
account with the Depository Trust Company of New York and to hold
any investments in bearer form, but the books and records of the
Trustee shall at all times show that all such investments are
part of the Trust.
(iv) To keep that portion of the Trust in cash or cash
balances as the Named Fiduciary or Administrator may, from time
to time, deem to be in the best interest of the Trust.
(v) To make, execute, acknowledge, and deliver any and
all documents of transfer or conveyance and to carry out the
powers herein granted.
(vi) To settle, compromise, or submit to arbitration
any claims, debts, or damages due to or arising from the Trust;
to commence or defend suits or legal or administrative
proceedings; to represent the Trust in all suits and legal and
administrative hearings; and to pay all reasonable expenses
arising from any such action, from the Trust if not paid by the
Sponsor.
(vii) To employ legal, accounting, clerical, and other
assistance as may be required in carrying out the provisions of
this Agreement and to pay their reasonable expenses and
compensation from the Trust if not paid by the Sponsor.
(viii) To do all other acts although not specifically
mentioned herein, as the Trustee may deem necessary to carry out
any of the foregoing powers and the purposes of the Trust.
(h) General Purpose Notes. The Administrator shall act as
the Trustee's agent for the participant loan notes and as such
shall (i) collect and remit all principal and interest payments
to the Trustee and (ii) keep the proceeds of such loans separate
from the other assets of the Administrator and clearly identify
such assets as Plan assets. To originate a participant loan, the
Plan participant shall direct the Trustee as to the term and the
amount of the loan to be made from the participant's individual
account. Such directions shall be made by Plan participants by
use of the telephone exchange system maintained for such purpose
by the Trustee or its agent. The Trustee shall determine, based
on the current value of the participant's account on the date of
the request and any guidelines provided by the Sponsor, the
amount available for the loan. Based on the monthly interest
rate supplied by the Sponsor in accordance with the terms of the
Plan, the Trustee shall advise the participant of such interest
rate, as well as the installment payment amounts. The Trustee
shall distribute the loan note with the proceed check to the
participant. The Trustee shall also distribute truth-in-lending
disclosure to the participant. To facilitate recordkeeping, the
Trustee may destroy the original of any promissory note made in
connection with a loan to a participant under the Plan, provided
that the Trustee first creates a duplicate by a photographic or
optical scanning or other process yielding a reasonable facsimile
of the promissory note and the Plan participant's signature
thereon, which duplicate may be reduced or enlarged in size from
the actual size of the original promissory note.
(i) Notes for the Purchase of a Primary Residence. The
Administrator shall act as the Trustee's agent for the purpose of
holding all trust investments in participant loan notes and
related documentation and as such shall (i) hold physical custody
of and keep safe the notes and other loan documents, (ii) collect
and remit all principal and interest payments to the Trustee,
(iii) keep the proceeds of such loans separate from the other
assets of the Administrator and clearly identify such assets as
Plan assets and (iv) cancel and surrender the notes and other
loan documentation when a loan has been paid in full. To
originate a participant loan, the Plan participant shall notify
the Trustee of the request by use of the Telephone Exchange
System. The Trustee shall determine, based on the current value
of the Plan participant's account, the amount available for the
loan. The Plan participant shall then direct the Trustee
regarding the amount to be borrowed and the term or period for
repayment. Based on the most recent interest rate supplied by
the Sponsor in accordance with the terms of the Plan, the Trustee
shall advise the Plan participant of such interest rate, as well
as the installment payment amounts. The Trustee shall forward
the loan document to the Plan participant for execution and
submission for approval to the Administrator. The Administrator
shall have the responsibility for approving the loan, via remote
access, and instructing the Trustee of such approval. The
Trustee shall send the loan proceeds to the Administrator or to
the Plan participant in accordance with the directions from the
Administrator. In all cases, such approval by the Administrator
shall be made within 30 days of the Plan participant's initial
request (the origination date).
Section 5. Recordkeeping to Be Performed.
(a) The Trustee shall perform only the recordkeeping
services set forth on Schedule "A" attached hereto and made a
part hereof, as amended from time to time, and only within a
framework of policies, interpretations, rules, practices, and
procedures that the Administrator shall provide to the Trustee.
(b) The Trustee shall keep accurate accounts of all
investments, receipts, disbursements, and other transactions
hereunder. Within thirty (30) days following each valuation date
or within sixty (60) days after the resignation or removal of the
Trustee as provided in Section 9, or the termination of this
Agreement as provided in Section 10, the Trustee shall file with
the Administrator a written account setting forth all
investments, receipts, disbursements, and other transactions
effected by the Trustee between the valuation date and the prior
valuation date or between the date of such resignation, removal,
or termination and the prior valuation date, and setting forth
the value of the Trust as of the valuation date or date of such
resignation, removal, or termination. Except as otherwise
required under ERISA, upon the expiration of six (6) months from
the date of filing such account with the Administrator, the
Trustee shall have no liability or further accountability to
anyone with respect to the propriety of its acts or transactions
shown in such account, except with respect to such acts or
transactions as to which the Sponsor shall within such six (6)
month period file with the Trustee written objections.
(c) All records generated by the Trustee in accordance with
paragraphs (a) and (b) shall be open to inspection and audit,
during the Trustee's regular business hours prior to the
termination of this Agreement, by the Administrator or any person
designated by the Administrator. Upon the resignation or removal
of the Trustee or the termination of this Agreement, the Trustee
shall provide to the Administrator, at no expense to the Sponsor,
in the format regularly provided to the Administrator, a
statement of each participant's accounts as of the resignation,
removal, or termination, and the Trustee shall provide to the
Administrator or the Plan's new recordkeeper such further records
as are reasonable, at the Sponsor's expense.
(d) The Trustee's provision of the recordkeeping services
set forth in this Section 5 shall be conditioned on the Sponsor
delivering to the Trustee a copy of any amendment to the Plan as
soon as administratively feasible following the amendment's
adoption, with an opinion of counsel substantially in the form of
Schedule "F", and on the Administrator providing the Trustee on a
timely basis with all the information the Administrator deems
necessary for the Trustee to perform the recordkeeping services
and such other information as the Trustee may reasonably request.
(e) The Administrator shall be responsible for the
preparation and filing of all returns, reports, and information
required of the Trust or Plan by law. The Trustee shall provide
the Administrator with such information as the Administrator may
reasonably request to make these filings.
Section 6. Compensation and Expenses. Within thirty (30) days
of receipt of the Trustee's quarterly bill, which shall be
computed in accordance with Schedule "B" attached hereto and made
a part hereof, as amended from time to time, the Sponsor shall
send to the Trustee a payment in such amount. All expenses of
the Trustee relating directly to the acquisition and disposition
of investments constituting part of the Trust, and all taxes of
any kind whatsoever that may be levied or assessed under existing
or future laws upon or in respect of the Trust or the income
thereof, shall be a charge against and paid from the appropriate
Plan participants' accounts.
Section 7. Directions.
(a) The Trustee shall be fully protected in relying on the
fact that the named fiduciary and the administrator under the
Plan are the individuals or persons named as such above or such
other individuals or persons as the Sponsor may notify the
Trustee in writing.
(b) Whenever the Administrator provides a direction to the
Trustee, the Trustee shall not be liable for any loss, or by
reason of any breach, arising from the direction if the direction
is contained in a writing (or is oral and immediately confirmed
in a writing) signed by any individual whose name and signature
have been submitted (and not withdrawn) in writing to the Trustee
by the Administrator (see Schedule "D"), provided the Trustee
reasonably believes the signature of the individual to be
genuine. The Trustee shall have no responsibility to ascertain
any direction's (i) accuracy, (ii) compliance with the terms of
the Plan or any applicable law, or (iii) effect for tax purposes
or otherwise.
(c) Whenever the Named Fiduciary or Sponsor provides a
direction to the Trustee, the Trustee shall not be liable for any
loss, or by reason of any breach, arising from the direction (i)
if the direction is contained in a writing (or is oral and
immediately confirmed in a writing) signed by any individual
whose name and signature have been submitted (and not withdrawn)
in writing to the Trustee by the Named Fiduciary (see Schedule
"E") and (ii) if the Trustee reasonably believes the signature of
the individual to be genuine, unless it is clear on the
direction's face that the actions to be taken under the direction
would be prohibited by the fiduciary duty rules of section 404(a)
of ERISA or would be contrary to the terms of the Plan or this
Agreement.
(d) In any other case, the Trustee shall not be liable for
any loss, or by reason of any breach, arising from any act or
omission of another fiduciary under the Plan except as provided
in section 405(a) of ERISA.
(e) The Sponsor shall indemnify the Trustee against, and
hold the Trustee harmless from, any and all loss, damage,
penalty, liability, cost, and expense, including without
limitation, reasonable attorneys' fees and disbursements, that
may be incurred by, imposed upon, or asserted against the Trustee
by reason of any claim, regulatory proceeding, or litigation
arising from any act done or omitted to be done by any individual
or person with respect to the Plan or Trust, excepting only any
and all loss, etc., arising solely from the Trustee's negligence
or bad faith.
(f) The provisions of this Section 7 shall survive the
termination of this Agreement.
Section 8. Resignation or Removal of Trustee.
(a) The Trustee may resign at any time upon sixty (60) days'
notice in writing to the Sponsor, unless a shorter period of
notice is agreed upon by the Sponsor.
(b) The Sponsor may remove the Trustee at any time upon
sixty (60) days' notice in writing to the Trustee, unless a
shorter period of notice is agreed upon by the Trustee.
Section 9. Successor Trustee.
(a) If the office of Trustee becomes vacant for any reason,
the Sponsor may in writing appoint a successor trustee under this
Agreement. The successor trustee shall have all of the rights,
powers, privileges, obligations, duties, liabilities, and
immunities granted to the Trustee under this Agreement. The
successor trustee and predecessor trustee shall not be liable for
the acts or omissions of the other with respect to the Trust.
(b) When the successor trustee accepts its appointment under
this Agreement, title to and possession of the Trust assets shall
immediately vest in the successor trustee without any further
action on the part of the predecessor trustee. The predecessor
trustee shall execute all instruments and do all acts that
reasonably may be necessary or reasonably may be requested in
writing by the Sponsor or the successor trustee to vest title to
all Trust assets in the successor trustee or to deliver all Trust
assets to the successor trustee.
(c) Any successor of the Trustee or successor trustee,
through sale or transfer of the business or trust department of
the Trustee or successor trustee, or through reorganization,
consolidation, or merger, or any similar transaction, shall, upon
consummation of the transaction, become the successor trustee
under this Agreement.
Section 10. Termination. This Agreement may be terminated at
any time by the Sponsor upon sixty (60) days' notice in writing
to the Trustee. On the date of the termination of this
Agreement, the Trustee shall forthwith transfer and deliver to
such individual or entity as the Sponsor shall designate, all
cash and assets then constituting the Trust. If, by the
termination date, the Sponsor has not notified the Trustee in
writing as to whom the assets and cash are to be transferred and
delivered, the Trustee may bring an appropriate action or
proceeding for leave to deposit the assets and cash in a court of
competent jurisdiction. The Trustee shall be reimbursed by the
Sponsor for all costs and expenses of the action or proceeding
including, without limitation, reasonable attorneys' fees and
disbursements.
Section 11. Resignation, Removal, and Termination Notices. All
notices of resignation, removal, or termination under this
Agreement must be in writing and mailed to the party to which the
notice is being given by certified or registered mail, return
receipt requested, to the Sponsor c/o Doug Douglas, Tucson
Electric Power Company, 220 West 6th Street, Tucson, Arizona
85702, and to the Trustee c/o Liat Rorer, Fidelity, 82 Devonshire
Street, Boston, Massachusetts 02109, or to such other addresses
as the parties have notified each other of in the foregoing
manner.
Section 12. Duration. This Trust shall continue in effect
without limit as to time, subject, however, to the provisions of
this Agreement relating to amendment, modification, and
termination thereof.
Section 13. Amendment or Modification. Subject to the
provisions of Section 2, this Agreement may be amended or
modified at any time and from time to time only by an instrument
executed by both the Sponsor and the Trustee. The Trustee shall
not unreasonably withhold its consent to any amendment or
modification required to obtain or maintain the Trust's qualified
status under section 401(a) of the Internal Revenue Code of 1954,
as amended. Notwithstanding the foregoing, to reflect increased
operating costs the Trustee may once each calendar year amend
Schedule "B" without the Sponsor's consent upon seventy-five (75)
days' written notice to the Sponsor.
Section 14. General.
(a) Fidelity Service Co. as Agent for Trustee. The Sponsor
specifically acknowledges and authorizes that Fidelity Service
Co. may act as agent for the Trustee in the performance of
nonfiduciary, ministerial functions under this Agreement;
Fidelity Service Co.'s expenses and compensation shall be paid by
the Trustee and not by the Sponsor or from the Trust.
(b) Entire Agreement. This Agreement contains all of the
terms agreed upon between the parties with respect to the subject
matter hereof.
(c) Waiver. No waiver by either party of any failure or
refusal to comply with an obligation hereunder shall be deemed a
waiver of any other or subsequent failure or refusal to so
comply.
(d) Successors and Assigns. The stipulations in this
Agreement shall inure to the benefit of, and shall bind, the
successors and assigns of the respective parties.
(e) Partial Invalidity. If any term or provision of this
Agreement or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement, or the application of such term
or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be
valid and enforceable to the fullest extent permitted by law.
(f) Section Headings. The headings of the various sections
and subsections of this Agreement have been inserted only for the
purposes of convenience and are not part of this Agreement and
shall not be deemed in any manner to modify, explain, expand or
restrict any of the provisions of this Agreement.
Section 15. Governing Law.
(a) This Agreement is being made in the Commonwealth of
Massachusetts, and the Trust shall be administered as a
Massachusetts trust. The validity, construction, effect, and
administration of this Agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of
Massachusetts, except to the extent those laws are superseded
under section 514 of ERISA.
(b) The Trustee is not a party to the Plan, and in the event
of any conflict between the provisions of the Plan and the
provisions of this Agreement, the provisions of this Agreement
shall control.
<PAGE>
SCHEDULE "A"
RECORDKEEPING SERVICES
Administration
* Establishment and maintenance of participant account and
election percentages.
* Maintenance of eleven plan investment options:
- Fidelity Equity-Income Fund
- Fidelity Magellan Fund
- Fidelity Growth Company Fund
- Fidelity Retirement Money Market Portfolio
- Fidelity Managed Income Portfolio
- Fidelity Asset Manager
- Fidelity Intermediate Bond Fund
- Fidelity Low-Priced Stock Fund
- Spartan U.S. Equity Index Fund
- Janus Worldwide Fund
- Janus Flexible Income Fund
* Maintenance of five money classifications:
- Company Matching Contributions
- Salary Deferral Contributions
- CPC Deferred Compensation Contributions Account
- CPC Company Contributions Account
- CPC Rollover Contributions Account
* Processing of mutual fund trades.
The Trustee will provide only the recordkeeping services set
forth on this Schedule "A" and no others.
Processing
* Bi-Weekly processing of contribution data.
* Quarterly processing of transfers and changes of future
allocations.
* Monthly processing of withdrawals.
* Daily processing of terminations via telephone according to
specific guidelines provided by the Sponsor; prepare and
mail to the participant a confirmation of telephonic
instructions within five (5) business days of the
instruction.
Other
* Monthly trial balance.
* Quarterly administrative reports.
* Quarterly participant statements.
* 1099Rs
Other
* Loans.
THE COMMITTEE FIDELITY MANAGEMENT TRUST CO.
By /s/ Frederic N. Finney 1/25/94 By /s/ John P. Reilly Jr. 2/9/94
Date Date
<PAGE>
SCHEDULE "B"
FEE SCHEDULE
Recordkeeping Fees
__ Per Participant Annual Fee $3.25 billed quarterly
for participants invested
in mutual funds only.
$4.25 billed quarterly for
participants invested in GIC Group
Trust.
Subject to a $5,000.00 minimum.
__ Loan Fees: Establishment fee of $35.00
per loan account; annual fee
of $15.00 per loan account.
__ Account Establishment Fees $2.00 per participant.
__ Other Fees: extraordinary expenses resulting from (i) large
numbers of simultaneous manual transactions, (ii) collection
of unpaid loans, or (iii) from errors not caused by the
Trustee.
__ This fee will be imposed for each calendar quarter, or any
part thereof, that it remains necessary to keep a
participant's account(s) as part of the Plan's records,
e.g., vested deferred, forfeiture, top-heavy and terminated
participants who must remain on file through calendar
year-end for 1099R reporting.
Trustee Fees
__ Assets other than those invested (directly or through
collective investment funds maintained by the Trustee) in
guaranteed investment contracts: 0.0125% per calendar
quarter of the assets in the Trust as of the calendar
quarter's last valuation date.
__ Assets invested in closed-end GIC, collective investment
funds maintained by the Trustee; at an annual rate of 0.6%
of the average daily book value and accrued interest. The
Sponsor agrees that the Trustee may compensate itself for
these fees from the funds' assets.
__ Assets invested in GIC Open-End Portfolio of the Fidelity
Group Trust for Employee Benefit Plans: 0.55% of the
average daily net assets per annum, payable monthly. The
Sponsor agrees that the Trustee may compensate itself for
these fees from the funds' assets.
<PAGE>
__ Non-Fidelity Mutual Funds: .25% annual administration fee
on all other Non-Fidelity Mutual Fund assets (to be paid by
the Non-Fidelity Mutual Fund vendor.)
TUCSON ELECTRIC POWER COMPANY FIDELITY MANAGEMENT TRUST CO.
By /s/ Steven M. Banzhaf 2/27/90 By /s/ James M. McKinney 5/15/90
Date Date
<PAGE>
SCHEDULE "C"
INVESTMENT OPTIONS
In accordance with Section 4(b), the Named Fiduciary hereby
directs the Trustee that participants' individual accounts may be
invested in the following investment options:
Fidelity Equity-Income Fund
Fidelity Magellan Fund
Fidelity Growth Company Fund
Fidelity Retirement Money Market Portfolio
Fidelity Management Income Portfolio
Fidelity Asset Manager
Fidelity Intermediate Bond Fund
Fidelity Low-Priced Stock Fund
Spartan U.S. Equity Index Fund
Janus Worldwide Fund
Janus Flexible Income Fund
The investment company advised by Fidelity Management &
Research Company referred to in Section 4(d) shall be Retirement
Money Market Portfolio.
THE COMMITTEE
By /s/ Steven M. Banzhaf 12/10/90
Date
<PAGE>
SCHEDULES "D" AND "E"
[TUCSON ELECTRIC POWER COMPANY LETTERHEAD]
October 17, 1996
Ms. Sarah L. Mullins
Fidelity Investments
300 Puritan Way, MM3H
Marlborough, MA 01752-3078
RE: Tucson Electric Power Company Triple Investment Plan
for Salaried Employees
Dear Ms. Mullins,
This letter is sent to you in accordance with the Trust
Agreement (Section 7(b) and 7(c)), dated November 1, 1985. We
hereby designate Ira R. Adler, George W. Miraben, Gary L. Ellerd
and James S. Pignatelli, as the individuals who may provide
directions upon which Fidelity Management Trust Company shall be
fully protected in relying. Only one such individual need
provide any direction. The signature of each designated
individual is set forth below and certified to be such.
You may rely upon each designation and certification set
forth in this letter until we deliver to you written notice of
the termination of authority of a designated individual.
Sincerely Yours,
TUCSON ELECTRIC POWER COMPANY
By /s/ Tina Hermanson
Tina Hermanson
/s/ Ira R. Adler
Ira R. Adler
/s/ Gary L. Ellerd
Gary L. Ellerd
/s/ George W. Miraben
George W. Miraben
/s/ James S. Pignatelli
James S. Pignatelli
<PAGE>
SCHEDULE "F"
<PAGE>
SCHEDULE "G"
TELEPHONE EXCHANGE PROCEDURES
The following telephone exchange procedures are currently
employed by Fidelity Institutional Retirement Services Company
(FIRSCO).
Telephone exchange hours are 8:30 a.m. (ET) to 8:00 p.m. (ET) on
each business day. A "business day" is any day on which the New
York Stock Exchange is open.
FIRSCO reserves the right to change these telephone exchange
guidelines at its discretion.
MUTUAL FUNDS
EXCHANGES BETWEEN MUTUAL FUNDS
Participants may call on any business day to exchange
between the mutual funds. If the request is received before
4:00 p.m. (ET), it will receive that day's trade date.
Calls received after 4:00 p.m. (ET) will be processed on a
next day basis.
MANAGED INCOME PORTFOLIO
I. EXCHANGES BETWEEN MUTUAL FUNDS AND MANAGED INCOME PORTFOLIO
Participants who wish to exchange between a mutual fund and
the Managed Income Portfolio may call on any business day.
If the request is received before 4:00 p.m. (ET), it will
receive that day's trade date. Calls received after 4:00
p.m. (EST) will be processed on a next day basis.
II. EXCHANGE RESTRICTIONS
Participants will not be permitted to make direct transfers
from the Managed Income Portfolio into a competing fund.
Participants who wish to exchange from the Managed Income
Portfolio into a competing fund must first exchange into a
non-competing fund for a period of 90 days.
TUCSON ELECTRIC POWER FIDELITY MANAGEMENT TRUST
COMPANY COMPANY
By: /s/ Gerald A. O'Brien 10/18/95 By: /s/ 11/16/95
Gerald A. O'Brien Date Vice President Date
<PAGE>
SCHEDULE "H"
OPERATIONAL GUIDELINES FOR NON-FIDELITY MUTUAL FUNDS
PRICING
By 7:00 p.m. Eastern Time ("ET") each Business Day, the Non-
Fidelity Mutual Fund Vendor (Fund Vendor) will input the
following information ("Price Information") into the Fidelity
Participant Recordkeeping System ("FPRS") via the remote access
price screen that Fidelity Investments Institutional Operations
Company, Inc. ("FIIOC"), an affiliate of the Trustee, has
provided to the Fund Vendor: (1) the net asset value for each
Fund at the Close of Trading, (2) the change in each Fund's net
asset value from the Close of Trading on the prior Business Day,
and (3) in the case of an income fund or funds, the daily accrual
for interest rate factor ("mil rate"). FIIOC must receive Price
Information each Business Day (a "Business Day" is any day the
New York Stock Exchange is open). If on any Business Day the
Fund Vendor does not provide such Price Information to FIIOC,
FIIOC shall pend all associated transaction activity in the
Fidelity Participant Recordkeeping System ("FPRS") until the
relevant Price Information is made available by Fund Vendor.
TRADE ACTIVITY AND WIRE TRANSFERS
By 7:00 a.m. ET each Business Day following Trade Date ("Trade
Date plus One"), FIIOC will provide, via facsimile, to the Fund
Vendor a consolidated report of net purchase or net redemption
activity that occurred in each of the Funds up to 4:00 p.m. ET on
the prior Business Day. The report will reflect the dollar
amount of assets and shares to be invested or withdrawn for each
Fund. FIIOC will transmit this report to the Fund Vendor each
Business Day, regardless of processing activity. In the event
that data contained in the 7:00 a.m. ET facsimile transmission
represents estimated trade activity, FIIOC shall provide a final
facsimile to the Fund Vendor by no later than 9:00 a.m. ET. Any
resulting adjustments shall be processed by the Fund Vendor at
the net asset value for the prior Business Day.
The Fund Vendor shall send via regular mail to FIIOC transaction
confirms for all daily activity in each of the Funds. The Fund
Vendor shall also send via regular mail to FIIOC, by no later
than the fifth Business Day following calendar month close, a
monthly statement for each Fund. FIIOC agrees to notify the Fund
Vendor of any balance discrepancies within twenty (20) Business
Days of receipt of the monthly statement.
For purposes of wire transfers, FIIOC shall transmit a daily wire
for aggregate purchase activity and the Fund Vendor shall
transmit a daily wire for aggregate redemption activity, in each
case including all activity across all Funds occurring on the
same day.
PROSPECTUS DELIVERY
FIIOC shall be responsible for the timely delivery of Fund
prospectuses and periodic Fund reports ("Required Materials") to
Plan participants, and shall retain the services of a third-party
vendor to handle such mailings. The Fund Vendor shall be
responsible for all materials and production costs, and hereby
agrees to provide the Required Materials to the third-party
vendor selected by FIIOC. The Fund Vendor shall bear the costs
of mailing annual Fund reports to Plan participants. FIIOC shall
bear the costs of mailing prospectuses to Plan participants.
PROXIES
The Fund Vendor shall be responsible for all costs associated
with the production of proxy materials. FIIOC shall retain the
services of a third-party vendor to handle proxy solicitation
mailings and vote tabulation. Expenses associated with such
services shall be billed directly to the Fund Vendor by the
third-party vendor.
PARTICIPANT COMMUNICATIONS
The Fund Vendor shall provide internally-prepared fund
descriptive information approved by the Funds' legal counsel for
use by FIIOC in its written participant communication materials.
FIIOC shall utilize historical performance data obtained from
third-party vendors (currently Morningstar, Inc., FACTSET
Research Systems and Lipper Analytical Services) in telephone
conversations with plan participants and in quarterly participant
statements. The Sponsor hereby consents to FIIOC's use of such
materials and acknowledges that FIIOC is not responsible for the
accuracy of such third-party information. FIIOC shall seek the
approval of the Fund Vendor prior to retaining any other third-
party vendor to render such data or materials under this
Agreement.
COMPENSATION
FIIOC shall be entitled to fees as set forth in a separate
agreement with the Fund Vendor.
<PAGE>
UNISOURCE ENERGY CORPORATION
220 WEST SIXTH STREET
TUCSON, ARIZONA 85701
Phone: (520) 884-3651
Fax: (520) 884-3991
May 19, 1998
UniSource Energy Corporation
220 West Sixth Street
Tucson, Arizona 85701
Re: Registration on Form S-8 of UniSource
Energy Corporation (the "Company")
At your request, I have examined the Registration
Statement on Form S-8 to be filed by the Company with the
Securities and Exchange Commission in connection with the
registration under the Securities Act of 1933, as amended, of
1,000,000 shares of Common Stock, without par value, of the
Company (the "Shares"), interests in the Tucson Electric Power
Company Triple Investment Plan for Salaried Employees (the
"Plan"), and additional rights to acquire Shares (together with
the Shares and interests in the Plan, the "Securities"), to be
issued pursuant to the Plan. I have examined the proceedings
heretofore taken and to be taken in connection with the
authorization of the Plan and the Securities to be issued
pursuant to and in accordance with the Plan.
Based upon such examination and upon such matters of
fact and law as I have deemed relevant, I am of the option that
the Securities have been duly authorized by all necessary
corporate action on the part of the Company and, when issued in
accordance with such authorization, the provisions of the Plan
and relevant agreements duly authorized by and in accordance with
the terms of the Plan, the Securities will be validly issued,
fully paid and nonassessable.
I consent to the use of this opinion as an exhibit to
the Registration Statement.
Very truly yours,
/s/ Dennis R. Nelson
Dennis R. Nelson,
Vice President, General Counsel and
Corporate Secretary
<PAGE>
[O'Melveny & Myers letterhead]
May
8th
1 9 9 8
(714) 760-9600
877,345-019
0361138.01
UniSource Energy Corporation
220 West Sixth Street
Tucson, Arizona 85701
Re: Registration on Form S-8 of UniSource Energy
Corporation
Gentlemen:
In connection with the preparation of the Registration
Statement on Form S-8 (the "Registration Statement") to be
submitted by UniSource Energy Corporation (the "Company") to the
Securities and Exchange Commission with respect to the Tucson
Electric Power Company Triple Investment Plan for Salaried
Employees, as amended (the "Plan"), you have requested our
opinion as to whether the provisions of the written documents
constituting the Plan comply with the requirements of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"). We consent to the use of this opinion as an exhibit
to the Registration Statement.
We have been advised by you that the Plan, as amended
and restated as of January 1, 1987, received a favorable
determination letter, dated November 5, 1994, from the Internal
Revenue Service (the "Service") that the Plan satisfies the
requirements of the Tax Reform Act of 1986, as amended, and
subsequent legislation (the "Determination Letter"). We have
also been advised by you that certain other Plan amendments have
been adopted in the form of Amendments 1995-I, 1996-II, 1997-I,
1998-I, 1998-II, and 1998-III to the Plan, and that these
amendments will be submitted to the Service on an Application for
Determination for Employee Benefit Plan. You have advised us
that the Plan will be timely amended within the applicable
remedial amendment period with respect to any additional
amendments required by the Service as a condition to granting a
favorable determination letter with respect to the amendments to
the Plan.
Based on the foregoing, and our examination of the Plan
and accompanying trust, it is our opinion that, the form of the
Plan satisfies the essential substantive requirements of ERISA
and the Internal Revenue Code of 1986, as amended. Our opinion
and any determination letter issued by the Internal Revenue
Service covers only the form of the Plan and leaves open the
question of whether in operation the Plan is qualified.
Respectfully submitted,
/s/ O'Melveny & Myers LLP
<PAGE>
May 18, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We are aware that UniSource Energy Corporation has included our report
dated May 5, 1998 (issued pursuant to the provisions of Statement on
Auditing Standards No. 71) in the Prospectus constituting part of its
Registration Statement on Form S-8 for the Tucson Electric Power
Company Triple Investment Plan for Salaried Employees to be filed on or
about May 19, 1998. We are also aware of our responsibilities under the
Securities Act of 1933.
Yours very truly,
/s/ Price Waterhouse LLP
<PAGE>
UniSource Energy Corporation
220 West Sixth Street
Tucson, Arizona 85701
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited
interim financial information of UniSource Energy Corporation and
subsidiaries (the Company) for the period ended March 31, 1997 as
indicated in our report dated February 23, 1998; because we did not
perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which was included in
your Quarterly Report on Form 10-Q for the quarter ended March 31, 1998,
is incorporated by reference in this Registration Statement of the
Company on Form S-8.
We are also aware that the aforementioned report, pursuant to Rule
436(c) under the Securities Act of 1933, is not considered a part of
the Registration Statements prepared or certified by an accountant or a
report prepared or certified by an accountant within the meaning of
Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Tucson, Arizona
May 18, 1998
<PAGE>
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration
Statement of UniSource Energy Corporation on Form S-8 of our report
dated February 23, 1998, appearing in the Annual Report on Form 10-K
of UniSource Energy Corporation, as amended by Form 10K/A, dated
March 5, 1998, for the year ended December 31, 1997.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Tucson, Arizona
May 18, 1998
<PAGE>
