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
SUPPLEMENTAL RETIREMENT ACCOUNT FOR CLASSIFIED 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 Supplemental Retirement Account for Classified
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.
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
and 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
<PAGE>
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
Supplemental Retirement Account for Classified Employees 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
SUPPLEMENTAL RETIREMENT ACCOUNT FOR
CLASSIFIED EMPLOYEES
By: Tucson Electric Power Company
Supplemental Retirement
Account for Classified Employees
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 Supplemental Retirement
Account for Classified 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
SUPPLEMENTAL RETIREMENT ACCOUNT FOR CLASSIFIED EMPLOYEES
(Amended and Restated as of June 1, 1987)
___________________________________________________________
The following is a composite Plan document which includes
the Plan as Amended and Restated as of June 1, 1987,
and reflects the following Plan amendments:
1. Amendment 1996-I, adopted April 4, 1997 and
effective as of October 1, 1996;
2. Amendment 1997-I, adopted December 31, 1997 and
effective as of January 1, 1998;
3. Amendment 1998-I, adopted May 13, 1998 and
effective as of January 1, 1998;
4. Amendment 1998-II, adopted May 13, 1998 and
effective as of January 1, 1998; and
5. Amendment 1998-III, adopted May 13, 1998 and
effective as of June 1, 1998.
<PAGE>
Tucson Electric Power Company
Supplemental Retirement Account for Classified Employees
Table of Contents
ARTICLE IDESIGNATION OF PLAN AND DEFINITIONS . . . . . . . . . 3
Section 1.1 - General . . . . . . . . . . . . . . . . . . . 3
Section 1.2 - Account; Accounts . . . . . . . . . . . . . . 3
Section 1.3 - Beneficiary . . . . . . . . . . . . . . . . . 4
Section 1.4 - Board . . . . . . . . . . . . . . . . . . . . 5
Section 1.5 - Break in Employment . . . . . . . . . . . . . 5
Section 1.6 - Code. . . . . . . . . . . . . . . . . . . . . 5
Section 1.7 - Committee . . . . . . . . . . . . . . . . . . 5
Section 1.8 - Company . . . . . . . . . . . . . . . . . . . 6
Section 1.9 - Company Matching Contributions. . . . . . . . 6
Section 1.10 - Company Matching Contributions
Account . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1.11 - Compensation . . . . . . . . . . . . . . . . 6
Section 1.12 - CPC. . . . . . . . . . . . . . . . . . . . . 8
Section 1.13 - CPC Accounts . . . . . . . . . . . . . . . . 8
Section 1.14 - CPC Agreement. . . . . . . . . . . . . . . . 8
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 . . . . . 10
Section 1.19 - CPC Thrift Plan. . . . . . . . . . . . . . . 11
Section 1.20 - CPC Transferred Employee . . . . . . . . . . 11
Section 1.21 - Defined Benefit Plan Fraction. . . . . . . . 11
Section 1.22 - Defined Contribution Plan Fraction . . . . . 12
Section 1.23 - Effective Date . . . . . . . . . . . . . . . 13
Section 1.24 - Eligible Employee. . . . . . . . . . . . . . 13
Section 1.25 - Employee . . . . . . . . . . . . . . . . . . 13
Section 1.26 - Employment . . . . . . . . . . . . . . . . . 14
Section 1.27 - Entry Date . . . . . . . . . . . . . . . . . 14
Section 1.28 - ERISA. . . . . . . . . . . . . . . . . . . . 15
Section 1.29 - Fiduciary. . . . . . . . . . . . . . . . . . 15
Section 1.30 - Funds. . . . . . . . . . . . . . . . . . . . 15
Section 1.31 - Highly Compensated Employee. . . . . . . . . 17
Section 1.32 - Investment Manager . . . . . . . . . . . . . 20
Section 1.33 - Month. . . . . . . . . . . . . . . . . . . . 21
Section 1.34 - Part-Time Employee . . . . . . . . . . . . . 21
Section 1.35 - Participant. . . . . . . . . . . . . . . . . 21
Section 1.36 - Plan . . . . . . . . . . . . . . . . . . . . 21
Section 1.37 - Plan Year. . . . . . . . . . . . . . . . . . 22
Section 1.38 - Quarter. . . . . . . . . . . . . . . . . . . 22
Section 1.39 - Regular Employee . . . . . . . . . . . . . . 22
Section 1.40 - Related Company. . . . . . . . . . . . . . . 22
Section 1.40A - Rollover Account. . . . . . . . . . . . . . 23
Section 1.41 - Salary Deferral Contributions. . . . . . . . 24
Section 1.42 - Salary Deferral Contributions Account. . . . 24
Section 1.43A - TIP . . . . . . . . . . . . . . . . . . . . 25
Section 1.43 - Subfund. . . . . . . . . . . . . . . . . . . 25
Section 1.44 - Trust Agreement. . . . . . . . . . . . . . . 25
Section 1.45 - Trust Fund . . . . . . . . . . . . . . . . . 25
Section 1.46 - Trustee. . . . . . . . . . . . . . . . . . . 26
Section 1.47 - Union. . . . . . . . . . . . . . . . . . . . 26
Section 1.48 - UniSource. . . . . . . . . . . . . . . . . . 26
Section 1.49 - UniSource Stock. . . . . . . . . . . . . . . 26
Section 1.50 - Year of Employment . . . . . . . . . . . . . 26
ARTICLE IIELIGIBILITY. . . . . . . . . . . . . . . . . . . . . 28
Section 2.1 - Requirements for Participation. . . . . . . . 28
Section 2.2 - Notice of Participation . . . . . . . . . . . 28
Section 2.3 - Enrollment Form . . . . . . . . . . . . . . . 29
Section 2.4 - Participation by CPC Transferred
Employees. . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.5 - Employee Transfers. . . . . . . . . . . . . . 31
ARTICLE IIICOMPANY CONTRIBUTIONS AND ROLLOVER ACCOUNTS . . . . 33
Section 3.1 - Company Contributions . . . . . . . . . . . . 33
Section 3.2 - Payment . . . . . . . . . . . . . . . . . . . 34
Section 3.3 - Limitations on Company
Contributions. . . . . . . . . . . . . . . . . . . . . 34
Section 3.4 - Section 402(g) Limit on Salary
Deferral Contributions . . . . . . . . . . . . . . . . 35
Section 3.5 - Section 401(k) Limitations on
Compensation Deferral Contributions. . . . . . . . . . 37
Section 3.6 - Section 401(m) Limitations on After-
Tax Employee Contributions and Company
Matching Contributions . . . . . . . . . . . . . . . . 43
Section 3.7 - CPC Accounts. . . . . . . . . . . . . . . . . 50
Section 3.8 - Rollover Contributions. . . . . . . . . . . . 52
ARTICLE IVVALUATION OF FUNDS AND ALLOCATION TO
ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 4.1 - Establishment of Accounts . . . . . . . . . . 54
Section 4.2 - Determination of Values . . . . . . . . . . . 54
Section 4.3 - UniSource Stock Fund. . . . . . . . . . . . . 55
Section 4.4 - Section 16 Limitations. . . . . . . . . . . . 57
Section 4.5 - ERISA Section 404(c). . . . . . . . . . . . . 57
Section 4.6 - Fund M Provisions . . . . . . . . . . . . . . 59
ARTICLE VVESTING, IN-SERVICE WITHDRAWALS AND
DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.1 - Vesting . . . . . . . . . . . . . . . . . . . 61
Section 5.2 - Withdrawals From the Plan While
Employed . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.3 - Distribution of Benefits. . . . . . . . . . . 64
Section 5.4 - Valuation of Accounts on Withdrawals
or Distribution. . . . . . . . . . . . . . . . . . . . 72
Section 5.5 - Inability to Locate Participant . . . . . . . 72
Section 5.6 - Payment of Small Benefits . . . . . . . . . . 73
Section 5.7 - Loans to Participants.. . . . . . . . . . . . 74
Section 5.8 - Restrictions on UniSource Stock . . . . . . . 79
ARTICLE VIADMINISTRATION . . . . . . . . . . . . . . . . . . . 81
Section 6.1 - The Committee . . . . . . . . . . . . . . . . 81
Section 6.2 - Committee Action. . . . . . . . . . . . . . . 82
Section 6.3 - Rights and Duties . . . . . . . . . . . . . . 83
Section 6.4 - Investment Responsibility . . . . . . . . . . 88
Section 6.5 - Delegation of Non-Investment
Fiduciary Responsibility . . . . . . . . . . . . . . . 88
Section 6.6 - Duty of Care. . . . . . . . . . . . . . . . . 89
Section 6.7 - Compensation, Indemnity and
Liability. . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE VIIAMENDMENT AND TERMINATION . . . . . . . . . . . . . 92
Section 7.1 - Amendments. . . . . . . . . . . . . . . . . . 92
Section 7.2 - Modifications Required by
Governmental Regulations . . . . . . . . . . . . . . . 93
Section 7.3 - Discontinuance of Plan. . . . . . . . . . . . 94
Section 7.4 - Failure to Contribute . . . . . . . . . . . . 95
Section 7.5 - Merger or Consolidation . . . . . . . . . . . 95
ARTICLE VIIIMISCELLANEOUS. . . . . . . . . . . . . . . . . . . 96
Section 8.1 - Contributions Not Recoverable . . . . . . . . 96
Section 8.2 - Limitation on Participants' Rights. . . . . . 96
Section 8.3 - Receipt or Release. . . . . . . . . . . . . . 96
Section 8.4 - Alienation. . . . . . . . . . . . . . . . . . 97
Section 8.5 - Governing Law . . . . . . . . . . . . . . . . 98
Section 8.6 - Headings, Etc., No Part of
Agreement. . . . . . . . . . . . . . . . . . . . . . . 98
Section 8.7 - Successors and Assigns. . . . . . . . . . . . 99
ARTICLE IXTOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . .100
Section 9.1 - General . . . . . . . . . . . . . . . . . . .100
Section 9.2 - Definitions . . . . . . . . . . . . . . . . .100
Section 9.3 - Top-Heavy Definition. . . . . . . . . . . . .104
Section 9.4 - Minimum Benefits or Contributions,
Compensation Limitations and Section 415
Limitations. . . . . . . . . . . . . . . . . . . . . .106
ARTICLE XLIMITATION ON ANNUAL ADDITIONS. . . . . . . . . . . .111
Section 10.1 - Limitation . . . . . . . . . . . . . . . . .111
Section 10.2 - Definitions. . . . . . . . . . . . . . . . .111
Section 10.3 - Annual Addition Limitations. . . . . . . . .114
<PAGE>
TUCSON ELECTRIC POWER COMPANY
SUPPLEMENTAL RETIREMENT ACCOUNT FOR CLASSIFIED EMPLOYEES
(Amended and Restated as of June 1, 1987)
_____________________
THIS AMENDMENT AND RESTATEMENT OF THE TUCSON ELECTRIC
POWER COMPANY SUPPLEMENTAL RETIREMENT ACCOUNT FOR CLASSIFIED
EMPLOYEES is made and entered into by Tucson Electric Power
Company, an Arizona corporation, and INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS LOCAL 1116, as bargaining agent representing
certain Employees of the Company, effective as of June 1, 1987.
W I T N E S S E T H:
WHEREAS, negotiations were conducted by duly authorized
negotiating committees for the parties hereto and said
negotiations resulted in their agreement to establish a plan
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 Tucson Electric Power Company Supplemental
Retirement Account for Classified Employees was established,
effective as of June 1, 1987;
WHEREAS, the Plan was previously amended and restated
effective as of June 1, 1987, to comply with the Tax Reform Act
of 1986, the Omnibus Budget Reconciliation Act of 1986, the
Omnibus Budget Reconciliation Act of 1987, the Technical and
Miscellaneous Revenue Act of 1988, the Omnibus Budget
Reconciliation Act of 1989, the Omnibus Budget Reconciliation Act
of 1990 and in certain other respects; and
WHEREAS, it is desirable to again amend and restate the
Plan, effective as of June 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, BE IT RESOLVED, that this Plan is hereby
amended in toto, effective as of June 1, 1987, unless otherwise
provided, with respect to Employees who retire or otherwise
terminate employment on or after June 1, 1987.
<PAGE>
ARTICLE I
DESIGNATION OF PLAN AND DEFINITIONS
Section 1.1 - General
This Plan shall be known as the "Tucson Electric Power
Company Supplemental Retirement Account for Classified
Employees," and shall be effective June 1, 1987. 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; Accounts
"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 in writing 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 foregoing, 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
"Break in Employment" shall mean any termination of
employment with the Company or any Related Company by
resignation, discharge, retirement, or death, or the first day
after the end of a one-year period during which an Employee
continuously remains absent from service (with or without pay)
with the Company or any Related Company for any reason other than
quit, discharge, retirement, or death, such as vacation, holiday,
sickness, disability, leave of absence, 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, for Plan Years beginning on or
after January 1, 1989, 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 3.8. 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 3.8. 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 3.8.
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 3.8. 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) of the Code 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 June 1, 1987.
Section 1.24 - Eligible Employee
"Eligible Employee" shall mean each Employee of the
Company or a Related Company, Regular Employee or Part-Time
Employee who (i) is represented by the Union, (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, (iv) is not required to
be treated as employed by the Company or a Related Company
pursuant to Section 414(o) of the Code, and (v) has completed one
Year of Employment. Effective January 1, 1995, clause (v) of the
preceding sentence shall no longer apply.
Section 1.25 - Employee
"Employee" shall mean every employee of the Company or a
Related Company, including (i) any "leased employee" 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 - Employment
"Employment" shall mean that period of service to the
Company or a Related Company following the date an Employee first
performs an hour of service for the Company or a Related Company
and prior to an Employee's Break in Employment. In addition, if
an Employee incurs a Break in Employment and upon returning to
service performs an hour of service for the Company or a Related
Company before either (i) 12 consecutive months have elapsed
since he severed from service on account of a quit, discharge, or
retirement or (ii) 12 consecutive months have elapsed since the
date he was first absent from work if the absence commenced for a
reason other than quit, discharge, or retirement, then the period
of time subsequent to the Break in Employment and before the date
the Employee both returned to service and performed an hour of
service shall be treated as a period of Employment with the
Company or a Related Company. Notwithstanding the foregoing,
Employment shall include any "Employment" (as such term is
defined in the CPC Thrift Plan) credited to a CPC Transferred
Employee under the CPC Thrift Plan as of December 15, 1992.
Section 1.27 - Entry Date
"Entry Date" shall mean the first day of the payroll
period following the date an Employee both (i) becomes an
Eligible Employee, and (ii) 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 1.28 - ERISA
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
Section 1.29 - Fiduciary
"Fiduciary" shall mean all persons defined in Section
3(21) of ERISA associated in any manner with the 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 1.30 - 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) Effective as of September 1, 1987, "Fund D"
shall mean the Fidelity Intermediate Bond Fund.
(e) Effective as of January 1, 1991, "Fund E" shall
mean the Retirement Money Market Portfolio.
(f) Effective as of April 25, 1994, "Fund F" shall
mean the Fidelity Managed Income Portfolio Fund.
(g) Effective as of April 25, 1994, "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 1.31 - 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 1.32 - Investment Manager
"Investment Manager" shall mean a Fiduciary designated by
the Committee under this Plan to whom has been delegated the
responsibility and authority to manage, acquire or dispose of
Plan assets (i) who (A) is registered as an investment adviser
under the Investment Advisers Act of 1940; (B) is a bank, as
defined in that Act; or (C) is an insurance company qualified to
perform investment advisory services under the laws of more than
one state; and (ii) who has acknowledged in writing that he is a
Fiduciary with respect to the management, acquisition, and
control of Plan assets.
Section 1.33 - Month
"Month" shall mean any calendar month.
Section 1.34 - 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 1.35 - Participant
"Participant" shall mean any person included in the Plan
as provided in Article II.
Section 1.36 - Plan
"Plan" shall mean the Tucson Electric Power Company
Supplemental Retirement Account for Classified Employees.
Section 1.37 - Plan Year
"Plan Year" shall mean each 12 consecutive month period
ending on December 31 of each year, except that the Plan Year
ending December 31, 1987 shall commence June 1,
1987. The Plan Year shall be the limitation year for purposes of
Section 415 of the Code.
Section 1.38 - Quarter
"Quarter" shall mean each three consecutive month period
ending March 31, June 30, September 30 or December 31 of each
year.
Section 1.39 - 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 1.40 - 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 extent required by Section 414(a) of
the Code.
Section 1.40A - 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 1.41 - 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 1.42 - 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 1.43A - TIP
"TIP" shall mean the Tucson Electric Power Company Triple
Investment Plan for Salaried Employees, as amended.
Section 1.43 - Subfund
"Subfund" shall mean one of the individual subfunds
designated in Section 1.30.
Section 1.44 - Trust Agreement
"Trust Agreement" shall mean the "Tucson Electric Power
Company Supplemental Retirement Account for Classified 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 1.45 - 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 1.30.
Section 1.46 - Trustee
"Trustee" shall mean the Trustee under the Trust
Agreement.
Section 1.47 - Union
"Union" shall mean the International Brotherhood of
Electrical Workers Local 1116.
Section 1.48 - UniSource
"UniSource" shall mean UniSource Energy Corporation, an
Arizona corporation. UniSource is the parent corporation of the
Company.
Section 1.49 - UniSource Stock
"UniSource Stock" shall mean the common stock of
UniSource.
Section 1.50 - Year of Employment
"Year of Employment" shall mean a 12 consecutive month
period of Employment. If an Employee of the Company with less
than one Year of Employment incurs a Break in Employment and does
not thereafter perform an hour of service for the Company or a
Related Company within 12 consecutive months of the Break in
Employment, all service prior to the Break in Employment shall be
ignored and the Employee shall be treated as a new Employee upon
his returning to service; provided that, in determining whether
12 consecutive months have elapsed, an absence shall be ignored
if it is an absence by reason of (i) the pregnancy of the
Employee, (ii) the birth of a child of the Employee, (iii) the
placement of a child with the Employee in connection with the
adoption of such child by the individual, or (iv) the Employee's
caring for such a child for a period beginning immediately
following birth or placement.
<PAGE>
ARTICLE II
ELIGIBILITY
Section 2.1 - Requirements for Participation
(a) Commencing June 1, 1987, any Employee who is or
becomes an Eligible Employee may become a Participant on the
Entry Date. Notwithstanding the foregoing, a CPC Transferred
Employee who was participating in the CPC Thrift Plan as of
December 15, 1992 shall be an Eligible Employee and may become
a Participant on the Entry Date.
(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
shall 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 TIP, the Accounts and any Plan loan of such
Inactive Participant shall be transferred to the TIP as soon as
administratively practicable.
(c) A Company employee who was a participant in the TIP
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
TIP becomes a Participant, the TIP accounts and any TIP loan of
such Participant shall be transferred from the TIP 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.
(b) Company Matching Contribution. In addition to
Salary Deferral Contributions, the Company may contribute
Matching Contributions. For the 1991 and subsequent Plan Years,
the Company shall contribute each payroll period an amount equal
to the lesser of (i) seventy-five percent (75%) of 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) four and one-half percent (4.5%) 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 - Limitations 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 inaccurately
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
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.
<PAGE>
ARTICLE V
VESTING, IN-SERVICE 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 withdraw from the Participant's
Salary Deferral Contributions Account, Company Matching
Contributions Account or CPC Accounts once each Plan Year
beginning with the Plan Year in which a Participant attains age
59 1/2 an amount equal to either the entire amount or any portion
of any such Account or Accounts.
(c) Effective as of September 1, 1988, 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 Section 213(d) of the Code
incurred by the Participant, the Participant's spouse or
dependents (as defined in Section 152 of the Code), (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 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. Effective as of
January 1, 1991, 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 (a) 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 (a) 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. Furthermore, a
Participant who attains age 70-1/2 prior to 1989 and who has not
retired will be considered to have attained age 70-1/2 in 1989.
If a Participant continues employment past the required beginning
date described above, distributions required to be made shall be
appropriately adjusted to reflect additional accruals. 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
includible 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 Rollover 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.
Treasury Regulations.
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 April 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 TIP and an outstanding Plan
loan, and such Participant's TIP 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 TIP 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 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 (which construction or interpretation shall be
final and binding on all parties), and determine all questions
relating to the eligibility of Employees to participate;
(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
Except as provided in Section 7.2, this Plan shall not be
subject to amendment or change by either party prior to January
1, 1995 unless it is mutually agreed by the parties to do so
sooner. If either party to this agreement desires to negotiate
any change, notice in writing shall be given not less than 60
days (or at any time, if mutually agreed to) prior to the
proposed effective date of such change. Any amendment to this
Plan shall be by the agreement of the parties hereto. It is
expressly understood and agreed that this restriction on
amendment is controlling and superior over any other labor
contracts or employment agreements, or any provisions therein
contained, heretofore or hereafter entered into between the
parties hereto.
It is understood and agreed that no modification or
amendment shall become binding upon the parties hereto or alter
the legal rights and obligations hereby created until approval of
the President of the Company has been first obtained.
Except as may be required to permit the Plan 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:
(a) may cause any of the assets of the Trust, at any
time prior to the satisfaction of all liabilities with respect
to Participants and Beneficiaries, to be used for or diverted
to purposes other than the exclusive benefit of Participants
and Beneficiaries;
(b) may decrease any accrued benefit or eliminate a
distribution option with respect to benefits attributable to
service before the amendment;
(c) shall discriminate in favor of shareholders,
officers, or Highly Compensated Employees of the Company;
(d) shall increase the duties or liabilities of the
Trustee without its written consent.
Section 7.2 - Modifications Required by Governmental
Regulations
Any modification or amendment of the Plan which is
necessary or appropriate to bring the Plan into conformity with
ERISA or the Code or any other provision of law or government
regulations expressing a public policy or condition which must be
conformed with in order to qualify the Plan as an exempt trust
and contributions of the Company thereto as deductions from gross
income under the Code shall be made by the Company and is hereby
agreed to by the Union.
Section 7.3 - Discontinuance of Plan
The Company reserves the right to discontinue the Plan
and its contributions into the Trust for just cause at any time
by following proper legal procedure and after securing the
consent and approval of the Internal Revenue Service and the
Board of Directors of the Company. All benefits hereunder shall
be payable solely from the assets of the Trust except as
otherwise required by ERISA. "Just cause" shall mean failure of
the Company to receive a letter from the Internal Revenue Service
indicating that the Plan is qualified under Section 401 and the
Trust is qualified under Section 501 of the Code, business
necessity, bankruptcy, insolvency, or by directive of any
federal, state, or legal subdivision having jurisdiction of such
matter.
In the event of the lawful termination, partial
termination, or discontinuance of this Plan, the rights of all
affected Participants and Beneficiaries to benefits then accrued
shall remain 100% vested. The Company shall not be liable for
the payment of any benefits under this Plan and all benefits
hereunder shall be payable solely from the assets of the Trust.
The Trustee shall thereafter, upon direction of the appropriate
Committee, distribute to the Participants the amounts in such
Participants' Accounts in the same manner as set forth in Article
V, subject, where appropriate, to Section 403(d)(1) of ERISA and
regulations of the Secretary of Labor thereunder as may affect
allocation of assets upon termination of such Plan.
Section 7.4 - 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 7.5 - 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 then
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 then been
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 the 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 - General
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 (i) 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 defined benefit
plan for benefit equivalent purposes) of his normal retirement
benefit, determined on the Valuation Date as if the Employee
terminated employment 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 (ii)
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:
(1) 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) both more than a 1/2% interest and
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);
(2) a 5% owner of a Company;
(3) a 1% owner of a Company who has an annual
compensation above $150,000; or
(4) an officer of a Company having an annual
compensation greater than 150% of the amount in effect under
Section 415(b)(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). For
purposes of determining the number of Employees taken into
account under this Section 9.2(e)(4), Employees described in
Section 414(q)(8) of the Code shall be excluded.
(f) A "Non-Key Employee" means an Employee who is not a
Key Employee.
(g) "Valuation Date" means the first day (or such other
date which is used for computing plan costs for minimum funding
purposes) of the twelve consecutive month period ending on the
Determination Date.
(h) A "Year of Service" shall be calculated using the
Plan rules that normally apply for determining vesting service.
These definitions shall be interpreted in accordance with
Section 416(i) of the Code and the regulations thereunder and
such rules are hereby incorporated by reference. The term "Key
Employee" shall not include any officer or Employee of an entity
referred to in Section 414(d) of the Code. For the purpose of
this subsection, "compensation" shall mean compensation as
defined in Section 414(q)(7) of the Code and shall be determined
without regard to Sections 125, 402(a)(8), 402(h)(1)(B) or, in
the case of employer contributions made pursuant to a salary
reduction agreement, Section 403(b) of the Code.
Section 9.3 - Top-Heavy Definition
This Plan shall be top-heavy for any Plan Year if, as of
the Determination Date, the "top-heavy-ratio" exceeds 60%. The
top-heavy ratio is the sum of the Benefit Amounts of all
Employees who are Key Employees divided by 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 Non-Key Employees
who were Key Employees during any prior Plan Year shall be
disregarded.
(b) The Benefit Amounts of all Employees who have
not performed any services for any Company at any time during
the five-year period ending on the Determination Date shall be
disregarded; provided, however, if an Employee performs no
services for five years and then again performs services, such
Employee's Benefit Amount shall be taken into account.
(c)(1) Required Aggregation. This calculation
shall be made by aggregating any plans, of the
Company or a Related Company, qualified under
Section 401(a) of the Code in which a Key Employee
participates or which enables this Plan to meet the
requirements of Sections 401(a)(4) or 410 of the
Code; all plans so aggregated constitute the
"aggregation group".
(2) Permissive Aggregation. 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.
If an aggregation group includes two or more defined benefit
plans, the actuarial assumptions used in determining an
Employee's Benefit Amount shall be the same under each defined
benefit plan and shall be specified in such plans. The
aggregation group shall also include any terminated plan which
covered a Key-Employee and which was maintained within the
five-year period ending on the Determination Date.
(d) This calculation shall be made in accordance
with Section 416 of the Code (including 416(g)(3)(B) and
416(g)(4)(A)) and the regulations thereunder and such rules
are hereby incorporated by reference. For purposes of
determining the accrued benefit of a Non-Key Employee who is a
Participant in a defined benefit plan, this calculation shall
be made using the method which is used for accrual purposes
for all defined benefit plans of the Company, or if there is
no such method, as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under Section
411(b)(1)(C) of the Code.
Section 9.4 - Minimum Benefits or Contributions, Compensation
Limitations and Section 415 Limitations
If the Plan is top-heavy for any Plan Year, the following
provisions shall apply to such Plan Year:
(a)(1) 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 purposes of this subsection,
salary reduction contributions on behalf of a Key Employee
must be taken into account. For the purposes of this
subsection, a Non-Key Employee shall be entitled to a
contribution if he is employed on the last day of the Plan
Year (i) whether or not he has 1000 Hours of Service (or the
equivalent) for the accrual computation period, (ii)
regardless of his level of compensation, and (iii) without
regard to whether he has made any mandatory contributions
required under the Plan.
(2) 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 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 (i) the Employee's average compensation
for the five consecutive years when the Employee had the
highest aggregate compensation and (ii) the lesser of two
percent (2%) per Year of Service or twenty percent (20%) (the
"defined benefit minimum"). A Non-Key Employee shall not fail
to accrue a benefit merely because he is not employed on a
specified date or is excluded from participation because (i)
his compensation is less than a stated minimum or (ii) he
fails to make mandatory employee contributions. For purposes
of calculating the defined benefit minimum, (i) compensation
shall not include compensation in Plan Years after the last
Plan Year in which the Plan is top-heavy and (ii) 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)(1)
above).
(3) If a Non-Key Employee is covered by plans
described in both Sections 9.4(a)(1) and (2) above, he shall
only be entitled to the minimum described in Section
9.4(a)(1), except that for purpose of such Section "3% (or, if
lesser, the largest percentage allocated to any Key Employee
for the Plan Year)" shall be replaced by "5%".
Notwithstanding the preceding sentence, if the accrual rate
under the plan described in Section 9.4(a)(2) would comply
with this Section 9.4 absent the modifications required by
this Section, the minimum described in Section 9.4(a)(1) above
shall not be applicable.
(b) For purposes of this Section, "compensation" shall
mean all earnings included on the Employee's Form W-2 for the
calendar year that ends within the Plan Year, not in excess of
$200,000, adjusted at the same time and in the same manner as
under 415(d) of the Code. With respect to Plan Years
commencing on or after January 1, 1989, the $200,000
limitation in the preceding sentence shall not apply; instead,
the limitations described in the Plan's definition of
Compensation under Section 1.11 shall apply with respect to
such Plan Years.
(c)(1) Unless the Plan qualifies for an exception under
Section 9.4(c)(2), "1.0" shall be substituted for "1.25" in
the definitions of Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction contained in this Plan.
(c)(2) A plan qualifies for an exception from the rule
of Section 9.4(c)(1) if the Benefit Amount of all Employees
who are Key Employees does not exceed 90% of the sum of the
Benefit amounts for all Employees and one of the following
requirements is met:
(A) A defined benefit minimum of 3% per Year of
Service (up to 30%) is provided;
(B) For Participants covered only by a defined
contribution plan, a defined contribution minimum of 4%
is provided;
(C) For Participants covered by both types of
plans, benefits from the defined contribution minimum are
comparable to the 3% defined benefit minimum;
(D) The plan provides a floor offset where the
floor is a 3% defined benefit minimum; or
(E) A defined contribution minimum of 7-1/2% of
compensation is provided for any Non-Key Employee who is
covered under both a defined benefit plan and a defined
contribution plan (each of which is top-heavy) of a
Company.
<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(1)(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 SUPPLEMENTAL
RETIREMENT ACCOUNT FOR CLASSIFIED EMPLOYEES
TRUST
___________________________________________
The original Trust document was dated as of June 1, 1987.
This Composite Trust Document incorporates
into the original Trust document the
following Amendments to the Trust:
a. Amendment 1991-I (executed January 22,
1991, effective January 1, 1991);
b. Amendment 1993-I (executed January 25,
1994, effective July 1, 1993);
c. Amendment 1994-I (executed April 27,
1994, effective April 25, 1994);
d. Amendment 1995-I (executed February 10,
1995, effective April 1, 1995);
e. Amendment 1996-I (executed October 14,
1996, effective October 1, 1996)
<PAGE>
TABLE OF CONTENTS
Section Page
1. Trust . . . . . . . . . . . . . . . . . . . . . . . 2
2. Exclusive Benefit and Reversion of Sponsor
Contributions . . . . . . . . . . . . . . . . . . . 3
3. Disbursements . . . . . . . . . . . . . . . . . . . 4
4. Investment of Trust . . . . . . . . . . . . . . . . 5
5. Recordkeeping to Be Performed . . . . . . . . . . . . 11
6. Compensation and Expenses . . . . . . . . . . . . . . 13
7. Directions. . . . . . . . . . . . . . . . . . . . . . 13
8. Resignation or Removal of Trustee . . . . . . . . . . 15
9. Successor Trustee . . . . . . . . . . . . . . . . . . 16
10. Termination . . . . . . . . . . . . . . . . . . . . . 16
11. Resignation, Removal, and Termination Notices . . . . 17
12. Duration. . . . . . . . . . . . . . . . . . . . . . . 17
13. Amendment or Modification . . . . . . . . . . . . . . 17
14. General . . . . . . . . . . . . . . . . . . . . . . . 18
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
TRUST AGREEMENT, dated as of the 1st day of June, 1987,
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 Supplemental Retirement Account for Classified
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 Section 6.1 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; and
WHEREAS, the Sponsor wishes to have the Trustee perform
certain ministerial recordkeeping functions under the Plan: and
WHEREAS, the Committee, established under Section 6.1 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 in
writing 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 Supplemental Retirement Account for
Classified Employees Trust (the "Trust"). 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. In accepting this Trust,
the Trustee shall be accountable for the assets received by it,
subject to the terms and conditions of 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 1986,
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 the
investment companies advised by Fidelity Management & Research
Company, (ii) notes evidencing loans to Plan participants in
accordance with the terms of the Plan, (iii) guaranteed
investment contracts chosen by the Trustee and (iv) collective
investment funds maintained by the Trustee for qualified plans
and invested in such contracts; provided, however, that the
Trustee shall be considered a fiduciary with investment
discretion only with respect to Plan assets that are invested in
such guaranteed investment contracts or in collective investment
funds.
(c) Each Plan participant or the Named Fiduciary, as
provided in the Plan, shall direct the Trustee (through the
Administrator) in which investment option(s) to invest the assets
in the participant's individual accounts. Such investments (or
exchanges among investment options) shall be made on the same
business day that the Trustee receives a proper direction and
monies if received before 4:00 P.M. eastern time; if received
after 4:00 P.M. eastern time, the investments shall be made the
following business day. In the event that the Trustee fails to
receive a proper direction, the assets shall be invested in the
securities of the investment company advised by Fidelity
Management & Research Company set forth on Schedule "C", until
the Trustee receives a proper direction. In addition,
contributions the Trustee receives from the Sponsor on other than
a valuation date shall be invested in the securities of that
investment company until the following valuation date.
Withdrawals (other than those made to accomplish exchanges) shall
be made within ten (10) days of receipt by the Trustee of a
proper direction to withdraw.
(d) At the time of mailing of notice of each annual or
special stockholders' meeting of any investment company, the
Trustee shall send a copy of the notice and all proxy
solicitation materials to each Plan participant who has shares of
the investment company 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.
(e) (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.
(f) The Trustee shall have the following powers and
authority:
(i) Subject to paragraphs (b) and (c) 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 in 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 deemed adopted by the
Sponsor and the provisions thereof incorporated as a part of this
Trust as long as the fund remains exempt from taxation under
Section 401(a) and 501(a) of the Internal Revenue Code of 1986,
as amended.
(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.
(g) 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).
(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.
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 in writing to the
Trustee.
(b) The Trustee shall keep accurate accounts of all
investments, receipts, disbursements, and other transactions
hereunder, and shall value the assets held in the Trust as of the
last day of each fiscal quarter of the Plan and, if not on the
last day of a fiscal quarter, the date on which the Trustee
resigns or is removed as provided in Section 9 of this Agreement
is terminated as provided in Section 10 (the "Valuation Date").
Within thirty (30) days following each valuation date or within
sixty (60) days in the case of the resignation or removal of the
Trustee, or the termination of this Agreement, 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, and setting forth the value of the Trust as of
the Valuation Date. 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 other
individual or person with respect to the Plan or Trust, excepting
only any and all loss, etc., arising solely from the Trustee's
breach of any duty imposed on the Trustee by this Trust Agreement
or ERISA.
(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 John M. Kimpel, Fidelity
Investments, 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. In addition, the
Plan may not be amended in any way that might affect the
Trustee's responsibilities hereunder without first obtaining the
written consent of the Trustee. The Trustee shall not
unreasonably withhold its consent to any amendment or
modification of this Agreement or the Plan required to obtain or
maintain the Trust's qualified status under section 401(a) of the
Internal Revenue Code of 1986. 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 Investments Institutional Operations Company
as Agent for Trustee. The Sponsor specifically acknowledges and
authorizes that Fidelity Investments Institutional Operations
Company may act as agent for the Trustee in the performance of
nonfiduciary, ministerial functions under this Agreement;
Fidelity Investments Institutional Operations Company'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 seven plan investment options:
- Fidelity Equity-Income Fund
- Fidelity Magellan Fund
- Fidelity Growth Company Fund
- Fidelity Intermediate Bond Fund
- Fidelity Retirement Money Market Portfolio
- Fidelity Asset Manager
- Fidelity Managed Income Portfolio
* 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
<PAGE>
Other
* Loans.
<TABLE>
<C> <S>
THE COMMITTEE FIDELITY MANAGEMENT TRUST
COMPANY
By/s/ Frederic N. Finney 1/25/94 By/s/ John P. Reilly, Jr. 2/9/94
Date Date
</TABLE>
<PAGE>
Schedule "B"
FEE SCHEDULE
Recordkeeping Fees
__ Annual Participant Fee Fees will be billed quarterly
and are subject
(See below) to a $5,000.00* per year or
$12.00 per participant per
year minimum fee, whichever is
greater.
Fidelity Funds Only Annual Fee
1-1,000 participants $12 per participant
Next 1,001-3,000 participants $10 per participant over 1,000
Next 3,001-5,000 participants $ 8 per participant over 3,000
5,001 participants and above $ 6 per participant over 5,000
__ Account Establishment Fee $2.00 per participant.
__ Loan Fees: Establishment fee of $35.00
per loan account; annual fee
of $15.00 per loan account.
__ Other Fees: extraordinary expenses
resulting from large numbers
of simultaneous manual
transactions or from errors
not caused by Fidelity.
* This fee will be imposed pro rata 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.
__ Remote Access $1,000 per year. Installation of
one remote access provided free of
charge.
Trustee Fees
__ 0.0125% per calendar quarter of the assets in the Trust as
of the calendar quarter's last valuation date
TUCSON ELECTRIC POWER FIDELITY MANAGEMENT TRUST
COMPANY COMPANY
By/s/ By/s/
Date Executive Vice President 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 Intermediate Bond Fund
- Retirement Money Market Portfolio
- Fidelity Asset Manager
- Fidelity Managed Income Portfolio
The investment company advised by Fidelity Management &
Research Company referred to in Section 4(c) shall be Retirement
Money Market Portfolio.
THE COMMITTEE
By /s/ Steven M. Banzhaf 1/22/91
Date
<PAGE>
Schedules "D" and "E"
TUCSON ELECTRIC POWER COMPANY
220 West Sixth Street, Post Office Box 711
Tucson, Arizona 85702
October 17, 1996
Ms. Sarah L. Mullins
Fidelity Investments
300 Puritan Way, MM3H
Marlborough, MA 01752-3078
RE: Tucson Electric Power Company Supplemental Retirement
Account for Classified 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 Hermarson
/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>
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 Supplemental Retirement Account for Classified 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 LLP letterhead]
May
8th
1 9 9 8
(714) 760-9600
877,345-019
0361128.01
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 Supplemental Retirement Account for
Classified 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 June 1, 1987, received a favorable
determination letter, dated July 22, 1995, 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 1996-I, 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 Supplemental Retirement
Account for Classified 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 AUDITORS' 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>
