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 86-0786732
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
220 West Sixth Street
Tucson, Arizona 85701
______________
(Address of principal executive offices)
___________________
UNISOURCE ENERGY CORPORATION
MANAGEMENT AND DIRECTORS DEFERRED COMPENSATION PLAN
(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
Deferred $3,000,000 100%(2) $3,000,000(2) $885(2)
Compensation
Obligations(1)
_________________
(1) The Deferred Compensation Obligations being registered
are general unsecured obligations of UniSource Energy
Corporation to pay deferred compensation in the future to
participating members of a select group of directors,
management or highly compensated employees in accordance
with the terms of the UniSource Energy Corporation
Management and Directors Deferred Compensation Plan (As
Amended and Restated Effective January 1, 1998) (formerly
the Tucson Electric Power Company Management and
Directors Deferred Compensation Plan).
(2) Estimated solely for the purpose of determining the
registration fee.
(3) Calculated pursuant to Rule 457(h).
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 and directors
as specified by Rule 428(b)(1) of the Securities Act of 1933,
as amended (the "Securities Act"). Such documents need not be
filed with the Securities and Exchange Commission (the
"Commission") either as part of this Registration Statement or
as prospectuses or prospectus supplements pursuant to Rule 424
of the Securities Act. These documents, which include the
statement of availability required by Item 2 of Form S-8, and
the documents incorporated by reference in this Registration
Statement pursuant to Item 3 of Form S-8 (Part II hereof),
taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by
UniSource Energy Corporation (the "Company") are incorporated
herein by reference:
(a) Annual Report on Form 10-K filed with the
Commission on March 3, 1998 for the Company's
fiscal year ended December 31, 1997, as amended
March 6, 1998;
(b) Quarterly Report on Form 10-Q filed with the
Commission on May 13, 1998 for the Company's
fiscal quarter ended March 31, 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 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 UniSource Energy Corporation Management and
Directors Deferred Compensation Plan (As Amended and Restated
Effective January 1, 1998) (the "Plan") provides a select
group of management or highly compensated employees ("Eligible
Employees") and non-employee directors ("Directors") of the
Company and certain of its subsidiaries with the opportunity
to defer the receipt of certain pre-tax cash compensation.
The obligations of the Company under the Plan (the "Deferred
Compensation Obligations") will be general unsecured
obligations of the Company to pay deferred compensation in the
future to participating Eligible Employees and Directors
("Participants") in accordance with the terms of the Plan from
the general assets of the Company or in shares of Company
Common Stock (depending on the elections made by Participants)
and will rank pari passu with other unsecured and
unsubordinated indebtedness of the Company from time to time
outstanding. The Deferred Compensation Obligations will be
denominated and payable in United States dollars or shares of
Company Common Stock, depending on the elections made by
Participants. The Common Stock issuable pursuant to the Plan
was registered on a Form S-8 Registration Statement (No. 333-
43769) filed with the Commission on January 6, 1998.
Subject to certain limits set forth in the Plan, each
Participant may elect to defer up to 100% of his or her salary
or director's fees and/or up to 100% of his or her bonus, if
any, payable with respect to a particular calendar year ("Plan
Year"). Each Participant also elects to have his or her
deferrals credited in the form of cash or "Deferred Shares."
Deferred Shares are non-voting units of measurement that, for
bookkeeping purposes only, are deemed to be equivalent to one
outstanding share of the Company's Common Stock, without par
value ("Common Stock").
The Company maintains bookkeeping accounts to which
Participants' deferrals are credited -- cash deferrals are
credited to a Participant's "Deferral Account" and Deferred
Shares are credited to a Participant's "Stock Account." A
Participant is 100% vested in his or her Deferral Account
and/or Stock Account at all times. A Participant's Deferral
Account is credited on a monthly basis with salary and bonus
deferrals and a deemed rate of earnings. A Participant's
Stock Account is credited on a quarterly basis with a number
of Deferred Shares equal to the total of the Participant's
salary and bonus deferrals (which the Participant has elected
to be credited in the form of Deferred Shares), divided by the
fair market value of the Company's Common Stock as of the
crediting date. A deemed rate of earnings is credited on
deferred amounts to be credited as Deferred Shares until such
time as such amounts are actually credited to the
Participant's Stock Account. Stock Accounts are also credited
on a quarterly basis with dividend equivalents (if any) in the
form of additional Deferred Shares, which represent the amount
of dividends paid on the number of shares of Common Stock
represented by Deferred Shares credited to the Participant's
Stock Account at the time of payment, divided by the fair
market value of the Company's Common Stock as of the crediting
date. Stock Accounts are subject to adjustment in the event
of certain mergers, stock splits or other events affecting the
Common Stock. A Participant may elect to have amounts
credited to his or her Stock Account transferred to his or her
Deferral Account in the form of cash, but Deferral Account
balances may not be transferred to a Stock Account.
If a Participant's employment or services with the
Company or any of its subsidiaries terminate as a result of
retirement or disability, the Deferred Compensation
Obligations will be paid in substantially equal quarterly
installments over fifteen years beginning on the Participant's
Payment Eligibility Date, which is the date as soon as
administratively feasible following the date the Participant
terminates from employment or services with the Company or any
of its subsidiaries. If a Participant timely elects, he or
she may instead receive a lump sum payment and/or
distribution, or receive the quarterly installments over a
period of five or ten years. If a Participant's employment or
services terminate for reasons other than retirement or
disability, or if the total value of a Participant's accounts
is less than $25,000, the Deferred Compensation Obligations
will be paid and/or distributed in one lump sum. Deferral
Accounts will be paid in the form of cash. Deferred Shares
credited to a Participant's Stock Account will be paid in an
equivalent whole number of shares of Common Stock. The Plan
limits the number of shares of Common Stock that may be issued
or delivered under the Plan. If a Participant reaches this
limit, any shares above such limit will instead be paid in
cash.
No amount payable or deliverable under the Plan will
be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, voluntary or
involuntary. Any attempt to dispose of any rights to benefits
payable under the Plan shall be void.
The Deferred Compensation Obligations are not subject
to redemption, in whole or in part, prior to the individual
payment dates selected by the Participants. A Participant may
withdraw up to 90% of the value of his or her Plan accounts;
however, the remaining 10% will be forfeited to the Company
upon such a withdrawal, and the Participant will not be
eligible to participate in the Plan for the remainder of that
Plan Year and the following Plan Year. In addition, the
Company reserves the right to amend or terminate the Plan at
any time.
The total amount of the Deferred Compensation
Obligations are not determinable because the amount will vary
depending upon the level of participation by Eligible
Employees and Directors and the amounts of their salaries,
bonuses or fees. The duration of the Plan is indefinite.
The Deferred Compensation Obligations are not
convertible into another security of the Company (subject to
certain investment elections that a Participant may make to
have amounts deemed to be invested, and eventually paid, in
the form of Company Common Stock). The Deferred Compensation
Obligations will not have the benefit of a negative pledge or
any other affirmative or negative covenant on the part of the
Company. Each Participant will be responsible for acting
independently with respect to, among other things, the giving
of notices, responding to any requests for consents, waivers
or amendments pertaining to the Deferred Compensation
Obligations, enforcing covenants and taking action upon a
default by the Company.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the original issuance of Common Stock
registered hereby is passed on for the Company by Dennis R.
Nelson. Mr. Nelson is the General Counsel of the Company and
is compensated as an employee of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Arizona corporate law generally authorizes, on a non-
exclusive basis, indemnification of officers and directors who
have acted or failed to act, in good faith, in a manner
believed to be in or not opposed to the best interest of the
Company (with certain limitations in the case of actions by or
in the right of the Company) and mandates such indemnification
in the case of an officer or director who is successful on the
merits or otherwise in defense of claims by reason of the fact
or such status as an officer or director.
Article SIXTH of the Amended and Restated Articles of
Incorporation of the Company provides, in part, as follows:
(B) No director of the Company shall be
personally liable to the Company or its shareholders for
money damages for any action taken or any failure to take
any action as a Director; provided, however, that nothing
herein shall be deemed to eliminate or limit any liability
which may not be so eliminated or limited under the laws of
the State of Arizona, as in effect at the effective date of
this paragraph (B) of Article SIXTH or as thereafter
amended. No amendment, modification or repeal of this
paragraph (B) shall eliminate or limit the protection
afforded by this paragraph (B) to a director with respect
to any act or omission occurring before the effective date
thereof.
(C) (1) The Company shall, to the maximum extent
permitted by applicable law, as from time to time in
effect, indemnify any individual who is or was a party to
or otherwise involved in (or threatened to be made a party
to or otherwise involved in) any Proceeding (as hereinafter
defined) because such individual is or was a director or
officer of the Company, or, while a director or officer of
the Company, is or was serving at the request of the
Company as a director, officer, partner, trustee, employee
or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan or
other enterprise, against all Liability (as hereinafter
defined) incurred by such individual in connection with
such Proceeding.
As used in this paragraph (C) of Article
SIXTH, (a) the term "Expenses" includes attorneys' fees and
all other costs and expenses reasonably related to a
Proceeding, (b) the term "Liability" means the obligation
to pay a judgment, settlement, penalty or fine (including
any excise tax assessed with respect to an employee benefit
plan) and reasonable Expenses incurred with respect to a
Proceeding, and includes without limitation obligations and
Expenses that have not yet been paid but that have been or
may be incurred, and (c) the term "Proceeding" means any
threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal, including
without limitation any action, suit or proceeding by or in
the right of the Company and including, further, any appeal
in connection with any such action, suit or proceeding.
(2) The Company shall, to the maximum extent
permitted by applicable law, pay any Expenses incurred by
a director or officer of the Company in defending any such
Proceeding in advance of the final disposition thereof upon
receipt of any undertaking by or on behalf of such
individual to repay such advances if it is ultimately
determined that such individual did not meet any standard
of conduct prescribed by applicable law and upon the
satisfaction of such other conditions as may be imposed by
applicable law.
(3) The Company by resolution of the Board
of Directors, may extend the benefits of this paragraph (C)
of Article SIXTH to employees and agents of the Company
(each individual entitled to benefits under this paragraph
(C) being hereinafter sometimes called an "Indemnified
Person").
(4) All rights to indemnification and to the
advancement of expenses granted under or pursuant to this
paragraph (C) shall be deemed to arise out of a contract
between the Company and each person who is an Indemnified
Person at any time while this paragraph (C) is in effect
any may be evidenced by a separate contract between the
Company and each Indemnified Person; and such rights shall
be effective in respect of all Proceedings commenced after
the effective date of this paragraph (C), whether arising
from acts or omissions occurring before or after such date.
No amendment, modification or repeal of this Article shall
affect any rights or obligations theretofore existing.
(5) The Company may purchase and maintain
insurance on behalf of, or insure or cause to be insured,
any individual who is an Indemnified Person against any
Liability asserted against or incurred by him in any
capacity in respect of which he is an Indemnified Person,
or arising out of his status in such capacity, whether or
not the Company would have the power to indemnify him
against such liability under this Article. The Company's
indemnity of any individual who is an Indemnified Person
shall be reduced by any amounts such individual may collect
with respect to such liability (a) under any policy of
insurance purchased and maintained on his behalf by the
Company or (b) from any other entity or enterprise served
by such individual.
(6) The rights to indemnification and to the
advancement of Expenses and all other benefits provided by,
or granted pursuant to, this Article shall continue as to
a person who has ceased to serve in the capacity in respect
of which such person was an Indemnified Person and shall
inure to the benefit of the heirs, executors and
administrators of such person.
(7) The Board of Directors shall have the
power and authority to make, alter, amend and repeal such
procedural rules and regulations relating to
indemnification and the advancement of Expenses as it, in
its discretion, may deem necessary or expedient in order to
carry out the purposes of this Article, such rules and
regulations, if any, to be set forth in the Bylaws of the
Company or in a resolution of the Board of Directors.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See the attached Exhibit Index on page S-3.
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 this 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 this Registration Statement; and
(iii) To include any material
information with respect to the plan of
distribution not previously disclosed in this
Registration Statement or any material change to
such information in this 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
with or furnished to the Commission pursuant to Section 13
or Section 15(d) of the Exchange Act that are incorporated
by reference in this 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 this 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
The Registrant. 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 the 8th day of May, 1998.
UNISOURCE ENERGY CORPORATION
By: /s/ Charles E. Bayless
Charles E. Bayless
Its: Chairman, President and Chief
Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes
and appoints Charles E. Bayless and Dennis Nelson, or each of
them individually, his or her true and lawful attorney-in-fact
and agent with full powers of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and
to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any
of them individually, or his or her substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Act, this
Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
xx
<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>
EXHIBIT INDEX
Exhibit
Number Description
4. UniSource Energy Corporation Management
and Directors Deferred Compensation Plan
(As Amended and Restated Effective January 1, 1998).
5. Opinion of Counsel (opinion re legality).
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 Exhibit 5).
24. Power of Attorney (included in this
Registration Statement under "Signatures").
<PAGE>
UNISOURCE ENERGY CORPORATION
MANAGEMENT AND DIRECTORS
DEFERRED COMPENSATION PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1998)
TABLE OF CONTENTS
Page
ARTICLE I TITLE AND DEFINITIONS
1.1 - Title . . . . . . . . . . . . . . . . . . . . . . 2
1.2 - Definitions . . . . . . . . . . . . . . . . . . . 2
ARTICLE II PARTICIPATION
2.1 - Participation . . . . . . . . . . . . . . . . . . 7
ARTICLE III DEFERRAL ELECTIONS
3.1 - Elections to Defer Compensation . . . . . . . . . 8
3.2 - Manner of Deferral; Investment Elections for
Deferral Account . . . . . . . . . . . . . . . . 10
ARTICLE IV ACCOUNTS
4.1 - Deferral Account. . . . . . . . . . . . . . . . . 12
4.2 - Stock Account . . . . . . . . . . . . . . . . . . 13
ARTICLE V VESTING
5.1 - Deferral Account. . . . . . . . . . . . . . . . . 15
5.2 - Stock Account . . . . . . . . . . . . . . . . . . 15
ARTICLE VI ADJUSTMENTS TO AND TRANSFERS OUT OF STOCK
ACCOUNTS
6.1 - Adjustments in Case of Changes in Common
Stock. . . . . . .. . . . . . . . . . . . . . . . 16
6.2 - Transfers to Deferral Accounts. . . . . . . . . . 16
ARTICLE VII DISTRIBUTIONS
7.1 - Distribution of Deferred Compensation and
Common Stock.. . .. . . . . . . . . . . . . . . . 18
7.2 - Early Distributions . . . . . . . . . . . . . . . 20
7.3 - Inability to Locate Participant . . . . . . . . . 20
ARTICLE VIII ADMINISTRATION
8.1 - Committee.. . . . . . . . . . . . . . . . . . . . 21
8.2 - Committee Action. . . . . . . . . . . . . . . . . 21
8.3 - Powers and Duties of the Committee. . . . . . . . 21
8.4 - Construction and Interpretation . . . . . . . . . 22
8.5 - Information . . . . . . . . . . . . . . . . . . . 22
8.6 - Compensation, Expenses and Indemnity. . . . . . . 23
8.7 - Quarterly Statements. . . . . . . . . . . . . . . 23
ARTICLE IX MISCELLANEOUS
9.1 - Unsecured General Creditor. . . . . . . . . . . . 24
9.2 - Trust Arrangement . . . . . . . . . . . . . . . . 24
9.3 - Restriction Against Assignment. . . . . . . . . . 24
9.4 - Withholding . . . . . . . . . . . . . . . . . . . 25
9.5 - Amendment, Modification, Suspension or
Termination . . . . . . . . . . . . . . . . . . . 25
9.6 - Governing Law; Severability . . . . . . . . . . . 26
9.7 - Receipt or Release. . . . . . . . . . . . . . . . 26
9.8 - Payments on Behalf of Persons Under
Incapacity. . . . . . . . . . . . . . . . . . . . 26
9.9 - No Right to Employment. . . . . . . . . . . . . . 26
9.10 - Compliance with Laws. . . . . . . . . . . . . . . 26
9.11 - Plan Construction . . . . . . . . . . . . . . . . 27
9.12 - Headings, etc. Not Part of Agreement. . . . . . . 27
9.13 - Government and Other Regulations. . . . . . . . . 27
<PAGE>
UNISOURCE ENERGY CORPORATION
MANAGEMENT AND DIRECTORS DEFERRED COMPENSATION PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1998)
WHEREAS, on January 1, 1998 UniSource Energy Corporation (the
"Company") and Tucson Electric Power Company ("Tucson Electric")
completed a statutory stock exchange (the "Exchange") on a share-
for-share basis, whereby each outstanding share of common stock,
without par value, of Tucson Electric was exchanged for a share of
common stock, without par value, of the Company;
WHEREAS, upon the consummation of the Exchange, Tucson Electric
became a wholly-owned subsidiary of UniSource;
WHEREAS, Tucson Electric maintained the Tucson Electric Power
Company Management and Directors Deferred Compensation Plan (As
Amended and Restated Effective April 1, 1997) and, in connection
with the Exchange and by resolutions of the respective Boards of
Directors of Tucson Electric and the Company, the sponsorship of
such plan was transferred from Tucson Electric to and assumed by the
Company;
WHEREAS, the Tucson Electric Power Company Management and
Directors Deferred Compensation Plan is now known as the UniSource
Energy Corporation Management and Directors Deferred Compensation
Plan (the "Plan");
WHEREAS, the Company maintains the Plan to provide for the
future payment of compensation deferred by Participants under the
Plan for the purpose of (i) promoting ownership of the Common Stock
of the Company, and (ii) providing Participants with supplemental
retirement income benefits; and
WHEREAS, it is desirable to amend and restate the Plan in order
to reflect the resolutions adopted by the Board of Directors of the
Company in connection with the Exchange;
NOW, THEREFORE, the Plan is hereby amended in its entirety,
effective as of January 1, 1998, as follows:
ARTICLE I
TITLE AND DEFINITIONS
1.1 - TITLE.
This Plan shall be known as the UniSource Energy Corporation
Management and Directors Deferred Compensation Plan.
1.2 - DEFINITIONS.
Whenever the following words and phrases are used in this Plan,
with the first letter capitalized, they shall have the meanings
specified below.
"Account" or "Accounts" shall mean a Participant's Deferral
Account and/or Stock Account.
"Beneficiary" or "Beneficiaries" shall mean the person or
persons, including a trustee, personal representative or other
fiduciary, last designated in writing by a Participant in accordance
with procedures established by the Committee to receive the benefits
specified hereunder in the event of the Participant's death. No
beneficiary designation shall become effective until it is filed
with the Committee, and no beneficiary designation of someone other
than the Participant's spouse shall be effective unless such
designation is consented to by the Participant's spouse on a form
provided by and in accordance with the procedures established by the
Committee. If there is no Beneficiary designation in effect, or if
there is no surviving designated Beneficiary, then the Participant's
surviving spouse shall be the Beneficiary. If there is no surviving
spouse to receive any benefits payable in accordance with the
preceding sentence, the duly appointed and currently acting personal
representative of the participant's estate (which shall include
either the Participant's probate estate or living trust) shall be
the Beneficiary. In any case where there is no such personal
representative of the Participant's estate duly appointed and acting
in that capacity within 90 days after the Participant's death (or
such extended period as the Committee determines is reasonably
necessary to allow such personal representative to be appointed, but
not to exceed 180 days after the Participant's death), then
Beneficiary shall mean the person or persons who can verify by
affidavit or court order to the satisfaction of the Committee that
they are legally entitled to receive the benefits specified
hereunder. In the event any amount is payable under the Plan to a
minor, payment shall not be made to the minor, but instead be paid
(a) to that person's living parent(s) to act as custodian, (b) if
that person's parents are then divorced, and one parent is the sole
custodial parent, to such custodial parent, or (c) if no parent of
that person is then living, to a custodian selected by the Committee
to hold the funds for the minor under the Uniform Transfers or Gifts
to Minors Act in effect in the jurisdiction in which the minor
resides. If no parent is living and the Committee decides not to
select another custodian to hold the funds for the minor, then
payment shall be made to the duly appointed and currently acting
guardian of the estate for the minor or, if no guardian of the
estate for the minor is duly appointed and currently acting within
60 days after the date the amount becomes payable, payment shall be
deposited with the court having jurisdiction over the estate of the
minor.
"Board of Directors" or "Board" shall mean the Board of
Directors of the Company.
"Bonus" shall mean any annual incentive compensation payable
to a Participant in addition to the Participant's Salary.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Committee" shall mean the Compensation Committee of the Board
which shall administer the Plan in accordance with Article VIII.
"Common Stock" shall mean the common stock, without par value,
of UniSource Energy Corporation, subject to adjustment pursuant to
Section 6.1 of the Plan.
"Company" shall mean UniSource Energy Corporation, and any
successor corporation.
"Compensation" shall mean the Salary and Bonus that the
Participant is entitled to for services rendered to the Company or
a Subsidiary.
"Deferral Account" shall mean the bookkeeping account
maintained by the Committee for each Participant that is credited
with amounts equal to (1) the portion of the Participant's Salary
that he or she elects to defer and invest in the manner described
in Section 3.2, (2) the portion of the Participant's Bonus that he
or she elects to defer and invest in the manner described in Section
3.2, and (3) earnings or losses pursuant to Section 4.1.
"Deferred Share" shall mean a non-voting unit of measurement
which is deemed solely for bookkeeping purposes under this Plan to
be equivalent to one outstanding share of Common Stock (subject to
Section 6.1).
"Director" shall mean any individual who is serving as a non-
emeritus member of the Board and who is not an employee of the
Company or one of its Subsidiaries.
"Disability" shall mean a mental or physical disability which
the Committee determines, based upon competent medical advice, has
rendered the Participant incapable of performing substantial
services for the Company or a Subsidiary.
"Distribution Subaccounts" shall mean the subaccount of a
Participant's Deferral Account and/or Stock Account established
separately to account for deferred Salary and/or Bonus which are
subject to different distribution elections.
"Dividend Equivalent" shall mean the amount of cash dividends
or other cash distributions paid by the Company on that number of
shares of Common Stock equal to the number of Deferred Shares
credited to a Participant's Stock Account as of the applicable
record date for the dividend or other distribution, which amount
shall be credited in the form of additional Deferred Shares to the
Participant's Stock Account, as provided in Section 4.2(b).
"Earnings Rate" shall mean, for each Fund, an amount equal to
the net rate of gain or loss on the assets of such Fund during each
month.
"Effective Date" of this amendment and restatement of the Plan
shall mean January 1, 1998.
"Eligible Employee" shall mean any Officer or key employee of
the Company and its Subsidiaries who has been selected to
participate in this Plan. The Committee shall limit Eligible
Employee status to a select group of management or highly
compensated employees, as set forth in Sections 201, 301 and 401 of
ERISA.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
"Fair Market Value" shall mean on any date the closing price
of the Common Stock on the Composite Tape, as published in the
Western Edition of The Wall Street Journal, of the principal
securities exchange or market on which the Common Stock is so
listed, admitted to trade, or quoted on such date, or, if there is
no trading of (or no available closing price of) the Common Stock
on such date, then the closing price of the Common Stock as quoted
on such Composite Tape on the next preceding date on which there was
trading in such shares. If the Common Stock is not so listed,
admitted or quoted, the Committee may designate such other exchange,
market or source of data as it deems appropriate for determining
such value for purposes of this Plan.
"Fund" or "Funds" shall mean one or more of the investment
funds or portfolios selected by the Committee pursuant to Section
3.2(b).
"Officer" shall mean the President, any Senior Vice President,
and any Vice President of the Company.
"Participant" shall mean any Eligible Employee or Director who
elects to defer Compensation in accordance with Section 3.1.
"Payment Eligibility Date" shall mean the date as soon as
administratively feasible following the date a Participant
terminates from employment or services with the Company and its
Subsidiaries.
"Plan" shall mean this UniSource Energy Corporation Management
and Directors Deferred Compensation Plan set forth herein, now in
effect, or as amended from time to time.
"Plan Year" shall mean the 12 consecutive month period
beginning January 1 each year.
"Retirement" shall mean the Participant has attained his or her
Early Retirement Age or Normal Retirement Age, as such terms are
defined in the Tucson Electric Power Company Salaried Employees
Retirement Plan.
"Salary" shall mean all cash salary, fees (including Director's
fees), and similar payments (other than Bonuses) paid to a
Participant for services rendered to the Company (or a Subsidiary)
before reduction on account of: (1) any withholding such as income
taxes (but excluding social security and health insurance taxes),
and (2) any deferrals under this Plan.
"Stock Account" shall mean a bookkeeping account maintained by
the Committee for each Participant that is credited with any
Deferred Shares and Dividend Equivalents with respect to such
Deferred Shares.
"Subsidiary" shall mean each corporation which is a member of
a controlled group of corporations (within the meaning of Section
414(b) of the Code) of which the Company is a component member.
"Trust" means the grantor trust maintained under the terms of
the Trust Agreement.
"Trust Agreement" means that certain agreement entered into by
and between the Company and the Trustee with respect to this Plan,
as amended from time to time.
"Trustee" means the entity which has entered into the Trust
Agreement as Trustee of the Trust thereunder, and any duly appointed
successor.
<PAGE>
ARTICLE II
PARTICIPATION
2.1 - PARTICIPATION.
An Eligible Employee or Director shall become a Participant in
the Plan by electing to defer all or a portion of his or her
Compensation in accordance with Section 3.1.
<PAGE>
ARTICLE III
DEFERRAL ELECTIONS
3.1 - ELECTIONS TO DEFER COMPENSATION.
(a) General Rule. Subject to the minimum deferral provisions
in paragraph (b) below, the amount of Compensation which an Eligible
Employee or Director may elect to defer is as follows:
(1) Any percentage of Salary up to 100%; and/or
(2) Any percentage or dollar amount of Bonus up to 100%;
provided, however, that no election shall be effective to reduce the
Compensation payable to an Eligible Employee for a calendar year to
an amount which is less than the amount that the Company or a
Subsidiary is required to withhold from such Eligible Employee or
Director's Compensation for such calendar year for purposes of
federal, state and local (if any) income tax, employment tax
(including without limitation Federal Insurance Contributions Act
(FICA) tax), and other tax withholdings.
(b) Minimum Deferrals. For each year during which an Eligible
Employee or Director is a Participant, the minimum amount that may
be elected under Section 3.1(a)(1) is $3,500.
(c) Initial Election. This Plan was originally established
for Officers and Directors. Effective April 1, 1997, Eligible
Employees (other than Officers) who satisfy the eligibility
requirements of Section 2.1 may also participate in this Plan by
filing with the Committee an initial election that conforms to the
requirements of this Section 3.1, on a form provided by the
Committee, no later than April 1, 1997. Such an election to defer
Compensation shall be irrevocable and shall be effective with
respect to Salary earned during the first pay period beginning after
April 1, 1997 and to the Bonus payable in 1998. Notwithstanding the
foregoing, an Eligible Employee or Director who commences employment
or service with the Company or a Subsidiary after April 1, 1997 may
elect to participate in the Plan by filing an initial election with
the Committee no later than the 30th day following his or her
employment or service commencement date. Such election shall be
effective with respect to Salary earned in the first pay period
beginning after the filing of such election and, if the election is
filed on or before October 15 of a Plan Year, to the Bonus payable
for the Plan Year in which the election is filed.
(d) Duration of Salary Deferral Election. Any Salary deferral
election made under this Section 3.1 shall remain in effect,
notwithstanding any change in the Participant's Salary, until
changed or terminated in accordance with the terms of this paragraph
(d). Subject to the limitations of Section 3.1(a) and the minimum
deferral requirements of Section 3.1(b), a Participant may increase,
decrease or terminate his or her Salary deferral election, effective
for Salary earned during pay periods beginning after any January 1,
by filing a new election, in accordance with the terms of this
Section 3.1, with the Committee on or before the preceding
December 15.
(e) Duration of Bonus Deferral Election. Any Bonus deferral
election made under this Section 3.1 shall be irrevocable and shall
apply only to the Bonus payable with respect to services performed
during the Plan Year in which the election is made. For each
subsequent Plan Year, an Eligible Employee may make a new election,
subject to the limitations set forth in this Section 3.1, to defer
a percentage or dollar amount of his or her Bonus earned in such
Plan Year. Such election shall be on forms provided by the
Committee and shall be made on or before the October 15 of the Plan
Year in which such Bonus is earned.
(f) Subsequent Elections. Any Eligible Employee who fails to
make an initial election to defer Compensation in accordance with
Section 3.1(c), may subsequently become a Participant, and any
Eligible Employee who has terminated a prior Salary deferral
election may elect to again defer Salary, by filing an election, on
a form provided by the Committee, to defer Compensation as described
in paragraph (a) above. An election to defer Salary must be filed
on or before December 15 and will be effective for Salary earned
during pay periods beginning after the following January 1; an
election to defer a Bonus must be filed on or before October 15 and
will be effective for the Bonus earned with respect to services
performed in the Plan Year in which the election is made.
(g) Life Insurance Applications. In connection with an
Eligible Employee's deferral election, the Committee may require the
Eligible Employee to complete and return a life insurance
application on a form provided by the Committee. The Committee may
establish rules and a deadline for the return and filing of such
application. The Committee, in its sole discretion, may void the
Eligible Employee's deferral election if the application is not
timely returned or filed.
3.2 - MANNER OF DEFERRAL; INVESTMENT ELECTIONS FOR DEFERRAL
ACCOUNT.
(a) This Section 3.2 shall be effective as of April 1, 1997
for Eligible Employees (other than Officers) and shall be effective
as of January 1, 1998 for Officers and Directors. At the time of
making the deferral elections described in Section 3.1, the
Participant shall specify, on a form provided by the Committee,
whether the Compensation he or she elects to defer is to be deferred
in the form of (i) cash and credited to the Participant's Deferral
Account in accordance with Section 4.1, and/or (ii) Deferred Shares
and credited to the Participant's Stock Account in accordance with
Section 4.2. Notwithstanding anything else contained herein to the
contrary, amounts credited to a Participant's Deferral Account
cannot be transferred to the Participant's Stock Account. However,
amounts credited to a Participant's Stock Account may be transferred
to the Participant's Deferral Account in accordance with Section
6.2. Furthermore, notwithstanding anything else contained herein
to the contrary, amounts deferred by an Officer or Director pursuant
to a deferral election entered into before January 1, 1997 shall
remain credited to the Participant's Stock Account in the form of
Deferred Shares.
(b) If a Participant elects to defer all or a portion of his
or her Compensation in cash, the Participant shall designate, on a
form provided by the Committee, which of the following types of
investment funds or portfolios the Participant's Deferral Account
will be deemed to be invested in for purposes of determining the
amount of earnings to be credited to each such Deferral Account:
1) Bond
2) Managed
3) Money Market
4) Growth and Income
5) Small Cap
6) Balanced
7) Growth
8) Income Growth
9) International Equity
10) Corporate Bond
11) Aggressive Growth
12) World Stock
13) International
In making the designation pursuant to this Section 3.2(b), the
Participant must specify, in whole numbers, the percentage of his
or her Deferral Account which shall be deemed to be invested in one
or more of the types of investment funds or portfolios listed above,
which percentage must be at least 10% for each investment fund or
portfolio selected. Effective as of the end of any calendar
quarter, a Participant may change the designation made under this
Section 3.2(b) by filing an election, on a form provided by the
Committee, at least 30 days prior to the end of such quarter. If
a Participant fails to elect a type of fund under this Section
3.2(b), he or she shall be deemed to have elected the Money Market
option.
(c) Although the Participant may designate the type of
investment funds or portfolios in paragraph (b) above, the Committee
shall select from time to time, in its sole discretion, a
commercially available investment funds or portfolios of each of the
types described in paragraph (b) above to be the Funds. The
Interest Rate of each such commercially available investment fund
or portfolio shall be used to determine the amount of earnings or
losses to be credited to Participants' Deferral Account under
Article IV. The Committee may change the number and/or types of
Funds at any time.
<PAGE>
ARTICLE IV
ACCOUNTS
4.1 - DEFERRAL ACCOUNT.
This Section 4.1 shall apply to Eligible Employees (other than
Officers) as of April 1, 1997 and shall apply to Officers and
Directors as of January 1, 1998 with respect to amounts deferred
pursuant to a deferral election entered into after January 1, 1997.
The Committee shall establish and maintain a Deferral Account for
each Participant under the Plan. Each Participant's Deferral
Account shall consist of such Distribution Subaccounts as necessary
to account for the amounts payable under different distribution
options elected by a Participant. In addition, each Participant's
Deferral Account shall be further divided into separate subaccounts
("investment subaccounts"), each of which corresponds to an
investment fund or portfolio elected by the Participant pursuant to
Section 3.2(b). A Participant's Deferral Account shall be credited
as follows:
(a) As of the last day of each month, the Committee shall
credit the investment subaccounts of the Participant's Deferral
Account with an amount equal to Salary deferred by the
Participant during each pay period ending in that month in
accordance with the Participant's elections under Sections
3.2(a) and 3.2(b); that is, the portion of the Participant's
deferred Salary that the Participant has elected to be deferred
in cash and to be deemed to be invested in a certain type of
investment fund or portfolio shall be credited to the
investment subaccount corresponding to that investment fund or
portfolio;
(b) As of the last day of the month in which the Bonus or
partial Bonus would have been paid, the Committee shall credit
the investment subaccounts of the Participant's Deferral
Account with an amount equal to the portion of the Bonus
deferred by the Participant's elections under Sections 3.2(a)
and 3.2(b); that is, the portion of the Participant's deferred
Bonus that the Participant has elected to be deferred in cash
and to be deemed to be invested in a particular type of
investment fund or portfolio shall be credited to the
investment subaccount corresponding to that investment fund or
portfolio; and
(c) As of the last day of each month, each investment
subaccount of a Participant's Deferral Account shall be
credited with earnings or losses in an amount equal to that
determined by multiplying the balance credited to such
investment subaccount as of the last day of the preceding month
by the Earnings Rate for the corresponding Fund selected by the
Company pursuant to Section 3.2(c).
(d) The Committee may provide that amounts shall be
credited more frequently than the date or dates otherwise
provided in this Section 4.1 or Section 4.2.
4.2 - STOCK ACCOUNT.
(a) The Committee shall establish and maintain a Stock Account
for each Participant who has elected under Section 3.2(a) to defer
all or a portion of his or her Compensation in Deferred Shares.
Each Participant's Stock Account shall consist of such Distribution
Subaccounts as necessary to account for Deferred Shares payable
under different distribution options elected by a Participant.
(b) A Participant's Stock Account shall be credited once each
quarter. Compensation deferred under a Participant's Stock Account
will be deemed, during the quarter in which it is deferred and prior
to the crediting date, to be invested in a short-term investment
fund, money-market fund or similar fund selected by the Committee.
As of the tenth business day following the close of each calendar
quarter in which the deferred Compensation would otherwise have been
paid, a Participant's Stock Account shall be credited with a number
of Deferred Shares determined by dividing the applicable portion of
the Participant's Compensation deferred during the quarter (plus any
applicable earnings determined under the previous sentence) by the
Fair Market Value of a share of Common Stock as of the tenth
business day following the close of such calendar quarter.
(c) As of the tenth business day following the close of each
calendar quarter (the "Crediting Date"), the Participant's Stock
Account shall be credited with additional Deferred Shares in an
amount equal to the amount of the Dividend Equivalents representing
cash dividends paid during such quarter on that number of shares
equal to the aggregate Deferred Shares in the Participant's Stock
Account as of the tenth business day of such quarter, divided by the
Fair Market Value of a share of Common Stock as of the Crediting
Date.
(d) A Participant's Stock Account shall be a memorandum
account on the books of the Company. The Deferred Shares credited
to a Participant's Stock Account shall be used solely as a device
for the determination of the number of shares of Common Stock to be
eventually distributed to such Participant in accordance with this
Plan. The Deferred Shares shall not be treated as property or as
a trust fund of any kind. No Participant shall be entitled to any
voting or other stockholder rights with respect to Deferred Shares
granted or credited under this Plan. The number of Deferred Shares
credited (and the Common Stock to which the Participant is entitled
under this Plan) shall be subject to adjustment in accordance with
Section 6.1 of this Plan.
<PAGE>
ARTICLE V
VESTING
5.1 - DEFERRAL ACCOUNT.
A Participant's Deferral Account shall be 100% vested at all
times.
5.2 - STOCK ACCOUNT.
A Participant's Stock Account shall be 100% vested at all
times.
<PAGE>
ARTICLE VI
ADJUSTMENTS TO AND TRANSFERS OUT OF STOCK ACCOUNTS
6.1 - ADJUSTMENTS IN CASE OF CHANGES IN COMMON STOCK.
If any stock dividend, stock split, recapitalization, merger,
consolidation, combination or other reorganization, exchange of
shares, sale of all or substantially all of the assets of the
Company, split-up, split-off, extraordinary redemption, liquidation
or similar change in capitalization or any distribution to holders
of the Company's Common Stock (other than cash dividends and cash
distributions) shall occur, proportionate and equitable adjustments
consistent with the effect of such event on stockholders generally
(but without duplication of benefits if Dividend Equivalents are
credited) shall be made in the number and type of shares of Common
Stock or other securities, property and/or rights contemplated
hereunder and of rights in respect of Deferred Shares and Stock
Accounts credited under this Plan so as to preserve the benefits
intended.
6.2 - TRANSFERS TO DEFERRAL ACCOUNTS.
This Section 6.2 shall be effective as of April 1, 1997 for
Eligible Employees (other than Officers) and shall be effective as
of January 1, 1998 for Officers and Directors. Effective as of the
end of any calendar quarter, a Participant may elect to have the
Committee reduce the number of any Deferred Shares allocated to his
or her Stock Account and credit an amount equal to the Fair Market
Value of the same number of shares of Common Stock as the number of
Deferred Shares so deducted to such Participant's Deferral Account.
Any such election shall be filed with the Committee on a form
provided by the Committee at least 30 days prior to the end of the
calendar quarter. The amount transferred to a Participant's
Deferral Account pursuant to this Section 6.2 shall thereafter
remain credited to such Deferral Account, be deemed to be invested
in accordance with the Participant's election as to the deemed
investment of his or her Deferral Account, and be subject to the
provisions of this Plan which are applicable to Deferral Accounts.
Notwithstanding the foregoing, the Committee may establish
alternative procedures for, and timing of, elective transfers with
respect to any Participants who are subject to the short-swing
profit provisions of Section 16 of the Exchange Act. Furthermore,
notwithstanding anything else contained herein to the contrary, the
portion of an Officer's or Director's Stock Account attributable to
amounts deferred pursuant to a deferral election entered into before
January 1, 1997 shall remain credited to the Participant's Stock
Account in the form of Deferred Shares.
<PAGE>
ARTICLE VII
DISTRIBUTIONS
7.1 - DISTRIBUTION OF DEFERRED COMPENSATION AND COMMON STOCK.
(a) This Section 7.1 shall apply to Compensation deferred by
Eligible Employees (other than Officers) after April 1, 1997 and it
shall apply to Compensation deferred by Officers and Directors after
December 31, 1997. Any Compensation deferred pursuant to an
election made by an Officer or Director with respect to Plan Years
beginning prior to January 1, 1998 shall be paid in the manner and
at the times required by Section 4.1 of the prior version of this
Plan and the Officer or Director's related deferral election.
(b) If a Participant terminates from employment or service
with the Company and its Subsidiaries by a reason other than
Retirement or Disability, then, on the Participant's Payment
Eligibility Date, the amount credited to his or her Deferral Account
shall be paid to the Participant (or, in the case of his or her
death, Beneficiary) in the form of a cash lump sum payment and the
Deferred Shares credited to his or her Stock Account shall be
distributed in the form of an equivalent number of whole shares of
Common Stock. The Fair Market Value of any fractional vested
Deferred Shares shall be paid in the form of cash.
(c) If a Participant terminates from employment or service
with the Company and its Subsidiaries by reason of Retirement or
Disability, the amount credited to his or her Deferral Account shall
be paid to the Participant in the form of cash and Deferred Shares
credited to his or her Stock Account shall be distributed in the
form of an equivalent number of whole shares of Common Stock. Such
amounts shall be paid in substantially equal quarterly installments
over fifteen years beginning as soon as practical following the
Participant's Payment Eligibility Date. The Fair Market Value of
any fractional Deferred Shares shall be paid in the form of cash.
Notwithstanding the foregoing, a Participant may elect that one of
the following optional forms of distribution shall apply in the
event of his or her termination by reason of Retirement or
Disability, provided that his or her election is filed with the
Committee at least one year prior to his or her Payment Eligibility
Date or, if later, by April 1, 1997:
(1) A lump sum payment on the Participant's Payment
Eligibility Date;
(2) Substantially equal quarterly installments over five
years beginning on the Participant's Payment Eligibility Date;
or
(3) Substantially equal quarterly installments over a
period of ten years beginning on the Participant's Payment
Eligibility Date.
Notwithstanding the foregoing, in the event that the
amount credited to the Participant's Accounts as of his or her
Payment Eligibility Date is less than $25,000, the amount credited
to the Participant's Deferral Account shall be paid to the
Participant in the form of a cash lump sum payment and the Deferred
Shares credited to his or her Stock Account shall be distributed in
a lump sum in the form of an equivalent number of whole shares of
Common Stock. The Fair Market Value of any fractional Deferred
Shares shall be paid in cash.
(d) The Participant's Deferral Account shall continue to be
credited monthly with earnings pursuant to Section 4.1 of the Plan,
and the Participant's Stock Account will continue to be credited
with Dividend Equivalents pursuant to Section 4.2, until all amounts
credited to his or her Accounts the Plan have been distributed.
(e) In the event that a former Participant dies while
receiving installment payments under this Plan, any remaining
balance in the Participant's Accounts shall be paid to the
Participant's Beneficiary as soon as administratively practical.
(f) Notwithstanding Sections 7.1(a) or 7.1(b), if the
Committee determines in good faith that there is a reasonable
likelihood that any benefits paid to a Participant for a taxable
year of the Company would not be deductible by the Company solely
by reason of the limitation under Section 162(m) of the Code, then,
to the extent reasonably deemed necessary by the Committee to ensure
that the entire amount of any distribution to the Participant
pursuant to this Plan is deductible, the Committee may defer all or
any portion of a distribution under this Plan. The amounts so
deferred shall be distributed to the Participant or his or her
Beneficiary (in the event of the Participant's death) at the
earliest possible date, as determined by the Committee in good
faith, on which the deductibility of compensation paid or payable
to the Participant for the taxable year of the Company during which
the distribution is made will not be limited by Section 162(m) of
the Code.
7.2 - EARLY DISTRIBUTIONS.
At any time, a Participant, at his or her sole discretion, may
elect to have 90% of the balance of his or her Accounts distributed
in a single lump sum; provided, however, that the remaining 10% of
such Accounts shall be forfeited to the Company. The 10% penalty
shall be permanently and irrevocably forfeited. The Company shall
thereafter have no obligation to pay the forfeited amount. In
addition, upon an Account distribution and forfeiture pursuant to
this Section 7.2, the Participant's deferral election for that Plan
Year shall automatically terminate and, notwithstanding anything
else contained herein to the contrary, the Participant shall not be
eligible to defer any amounts of Compensation under this Plan for
the remainder of that Plan Year and the following Plan Year.
7.3 - INABILITY TO LOCATE PARTICIPANT.
In the event that the Committee is unable to locate a
Participant or Beneficiary within two years following the
Participant's Payment Eligibility Date, or if later, within two
years following the date on which benefits hereunder are to
commence, the amount allocated to the Participant's Deferral Account
and Stock Account shall be forfeited. If, after such forfeiture,
the Participant or Beneficiary later claims such benefits, such
benefits shall be reinstated without interest, earnings or Dividend
Equivalents.
<PAGE>
ARTICLE VIII
ADMINISTRATION
8.1 - COMMITTEE.
The Committee shall be appointed by, and serve at the
pleasure of, the Board of Directors. The number of members
comprising the Committee shall be determined by the Board which may
from time to time vary the number of members. A member of the
Committee may resign by delivering a written notice of resignation
to the Board. The Board may remove any member by delivering a
certified copy of its resolution of removal to such member.
Vacancies in the membership of the Committee shall be filled
promptly by the Board.
8.2 - COMMITTEE ACTION.
The Committee shall act at meetings by affirmative vote of a
majority of the members of the Committee. Any action permitted to
be taken at a meeting may be taken without a meeting if, prior to
such action, a written consent to the action is signed by all
members of the Committee and such written consent is filed with the
minutes of the proceedings of the Committee. A member of the
Committee shall not vote or act upon any matter which relates solely
to himself or herself as a Participant. The Chairman or any other
member or members of the Committee designated by the Chairman may
execute any certificate or other written direction on behalf of the
Committee.
8.3 - POWERS AND DUTIES OF THE COMMITTEE.
(a) The Committee, on behalf of the Participants and their
Beneficiaries, shall enforce the Plan in accordance with its terms,
shall be charged with the general administration of the Plan, and
shall have all powers necessary to accomplish its purposes,
including, but not by way of limitation, the following:
(1) To select the funds or portfolios to be the Funds in
accordance with Section 3.2(b) hereof;
(2) To construe and interpret the terms and provisions of
this Plan;
(3) To compute and certify to the Company and to the
Trustee the amount and kind of benefits payable to
Participants and their Beneficiaries, and to
determine the time and manner in which such benefits
are paid;
(4) To maintain all records that may be necessary for the
administration of the Plan;
(5) To provide for the disclosure of all information and
the filing or provision of all reports and statements
to Participants, Beneficiaries or governmental
agencies as shall be required by law;
(6) To make and publish such rules for the regulation of
the Plan and procedures for the administration of the
Plan as are not inconsistent with the terms hereof;
(7) To appoint a plan administrator or any other agent,
and to delegate to them such powers and duties in
connection with the administration of the Plan as the
Committee may from time to time prescribe;
(8) To authorize all disbursement by the Company and the
Trustee pursuant to this Plan and the Trust; and
(9) To direct the Trustee concerning the performance of
various duties and responsibilities under the Trust.
8.4 - CONSTRUCTION AND INTERPRETATION.
The Committee shall have full discretion to construe and
interpret the terms and provisions of this Plan, which
interpretation or construction shall be final and binding on all
parties, including but not limited to the Company, its Subsidiaries
and any Participant or Beneficiary. The Committee shall administer
such terms and provisions in a uniform and nondiscriminatory manner
and in full accordance with any and all laws applicable to the Plan.
8.5 - INFORMATION.
To enable the Committee to perform its functions, the Company
shall supply full and timely information to the Committee on all
matters relating to the Compensation of all Participants, their
death or other cause of termination, and such other pertinent facts
as the Committee may require.
8.6 - COMPENSATION, EXPENSES AND INDEMNITY.
(a) The members of the Committee shall serve without
compensation for their services hereunder.
(b) The Committee is authorized at the expense of the Company
to employ such legal counsel as it may deem advisable to assist in
the performance of its duties hereunder. Expenses and fees in
connection with the administration of the Plan shall be paid by the
Company.
(c) To the extent permitted by applicable state law, the
Company shall indemnify and save harmless the Committee and each
member thereof, the Board of Directors and any delegate of the
Committee who is an 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,
other than 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 or
otherwise, as such indemnities are permitted under state law.
8.7 - QUARTERLY STATEMENTS.
Under procedures established by the Committee, a Participant
shall receive a statement with respect to such Participant's
Accounts on a quarterly basis as of each March 31, June 30,
September 30 and December 31.
<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1 - UNSECURED GENERAL CREDITOR.
Participants and their Beneficiaries, heirs, successors, and
assigns shall have no legal or equitable rights, claims, or interest
in any specific property or assets of the Company. No assets of the
Company shall be held under any trust (except as provided in Section
9.2), or held in any way as collateral security for the fulfilling
of the obligations of the Company under this Plan. Any and all of
the Company's assets shall be, and remain, the general unpledged,
unrestricted assets of the Company. The Company's obligation under
the Plan shall be merely that of an unfunded and unsecured promise
of the Company to pay money in the future, and the rights of the
Participants and Beneficiaries shall be no greater than those of
unsecured general creditors.
9.2 - TRUST ARRANGEMENT.
Notwithstanding Section 9.1, the Company may at any time
transfer assets representing all or any portion of a Participant's
Accounts to the Trust to be held and invested and reinvested by the
Trustee pursuant to the terms of the Trust Agreement and Section
3.2. However, to the extent provided in the Trust Agreement only,
such transferred amounts shall remain subject to the claims of
general creditors of the Company. To the extent that assets
representing a Participant's Accounts are held in the Trust when his
or her benefits under the Plan become payable, the Committee may
direct the Trustee to pay such benefits to the Participant from the
assets of the Trust.
9.3 - RESTRICTION AGAINST ASSIGNMENT.
The Company shall pay all amounts payable hereunder only to the
person or persons designated by the Plan and not to any other person
or corporation. No part of a Participant's Accounts shall be
liable for the debts, contracts, or engagements of any Participant,
his or her Beneficiary, or successors in interest, nor shall a
Participant's Accounts be subject to execution by levy, attachment,
or garnishment or by any other legal or equitable proceeding, nor
shall any such person have any right to alienate, anticipate,
commute, pledge, encumber, or assign any benefits or payments
hereunder in any manner whatsoever. If any Participant, Beneficiary
or successor in interest is adjudicated bankrupt or purports to
anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any distribution or payment from the Plan, voluntarily or
involuntarily, the Committee, in its discretion, may cancel such
distribution or payment (or any part thereof) to or for the benefit
of such Participant, Beneficiary or successor in interest in such
manner as the Committee shall direct.
9.4 - WITHHOLDING.
(a) The Company (or the Subsidiary by which the Participant
employed) may satisfy any state or federal employment tax
withholding obligation with respect to Compensation deferred under
the Plan by deducting such amounts from any compensation payable by
the Company (or Subsidiary) to the Participant.
(b) There shall be deducted from each payment or distribution
made under the Plan or any other compensation payable to the
Participant (or Beneficiary) all taxes which are required to be
withheld by the Company (or a Subsidiary) in respect to such payment
or distribution or this Plan. The Company (or the Subsidiary by
which the Participant is or was employed) shall have the right to
reduce any payment or distribution (or other compensation) by the
amount of cash and/or shares of Common Stock sufficient to provide
the amount of said taxes. To the extent that any shares of Common
Stock are withheld, the determination of the appropriate number of
shares required to satisfy all or a portion of any such tax will be
based on the Fair Market Value of a share of Common Stock on the day
prior to the date of distribution. If the Company (or a
Subsidiary), for any reason, elects not to (or cannot) satisfy the
withholding obligation from the amounts otherwise payable or the
shares of Common Stock otherwise distributable under this Plan, the
Participant shall pay or provide for payment in cash of the amount
of any taxes which the Company (or a Subsidiary) may be required to
withhold with respect to the benefits hereunder.
9.5 - AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION.
The Company may amend, modify, suspend or terminate the Plan
in whole or in part, except that no amendment, modification,
suspension or termination shall have any retroactive effect to
reduce any amounts allocated to a Participant's Accounts. In the
event that this Plan is terminated, the amounts credited to a
Participant's Accounts shall be distributed to the Participant or,
in the event of his or her death, his or her Beneficiary in a lump
sum within thirty (30) days following the date of termination.
9.6 - GOVERNING LAW; SEVERABILITY.
This Plan shall be construed, governed and administered in
accordance with the laws of the State of Arizona. If any provisions
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.
9.7 - RECEIPT OR RELEASE.
Any payment to a Participant or the Participant's Beneficiary
in accordance with the provisions of the Plan shall, to the extent
thereof, be in full satisfaction of all claims against the
Committee, the Company and its Subsidiaries, and the Trustee. The
Committee may require such Participant or Beneficiary, as a
condition precedent to such payment, to execute a receipt and
release to such effect.
9.8 - PAYMENTS ON BEHALF OF PERSONS UNDER INCAPACITY.
In the event that any amount becomes payable under the Plan to
a person who, in the sole judgement of the Committee, is considered
by reason of physical or mental condition to be unable to give a
valid receipt therefore, the Committee may direct that such payment
be made to any person found by the Committee, in its sole judgement,
to have assumed the care of such person. Any payment made pursuant
to such determination shall constitute a full release and discharge
of the Committee, the Company and its Subsidiaries.
9.9 - NO RIGHT TO EMPLOYMENT.
Participation in this Plan shall not give any person the right
to continued employment or service or any rights or interests other
than as herein provided. No Participant shall have any right to any
payment or benefit hereunder except to the extent provided in this
Plan.
9.10 - COMPLIANCE WITH LAWS.
This Plan and the offer, issuance and delivery of shares of
Common Stock and/or the payment of money through the deferral of
compensation under this Plan are subject to compliance with all
applicable federal and state laws, rules and regulations (including
but not limited to state and federal securities law) and to such
approvals by any listing, agency or any regulatory or governmental
authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities
delivered under this Plan shall be subject to such restrictions, and
the person acquiring such securities shall, if requested by the
Company, provide such assurances and representations to the Company
as the Company may deem necessary or desirable to assure compliance
with all applicable legal requirements.
9.11 - PLAN CONSTRUCTION.
It is the intent of the Company that transactions pursuant to
this Plan satisfy and be interpreted in a manner that satisfies the
applicable requirements of Rule 16b-3 promulgated under the Exchange
Act ("Rule 16b-3") so that, to the extent elections are timely made,
the crediting of Deferred Shares, the distribution of shares of
Common Stock and any other event with respect to Deferred Shares
under the Plan will be entitled to the benefits of Rule 16b-3 or
other exemptive rules under Section 16 of the Exchange Act and will
not be subjected to avoidable liability thereunder.
9.12 - HEADINGS, ETC. NOT 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.
9.13 - GOVERNMENT AND OTHER REGULATIONS.
The obligations of the Company to issue or transfer and deliver
shares of Common Stock with respect to Deferred Shares credited to
Participant's Stock Accounts under the Plan shall be subject to
(a) the effectiveness of a registration statement under the
Securities Act of 1933, as amended, with respect to such issue or
transfer, (b) the condition that the shares of Common Stock
authorized to be issued hereunder shall have been listed (or
authorized for listing upon official notice of issuance) upon each
stock exchange on which outstanding shares of Common Stock may then
be listed and (c) all other applicable laws, regulations, rules and
orders which shall then be in effect.
IN WITNESS WHEREOF, the Company has caused this document to be
executed by its duly authorized officer effective as of January 1,
1998.
UNISOURCE ENERGY CORPORATION
By /s/ Charles E. Bayless
Its Chairman, President & CEO
<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
$3,000,000 of Deferred Compensation Obligations of the Company
(the "Obligations"), to be issued pursuant to the UniSource
Energy Corporation Management and Directors Deferred Compensation
Plan. I have examined the proceedings heretofore taken and to be
taken in connection with the authorization of the Plan and the
Obligations 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 opinion that
the Obligations 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 Obligations will be validly issued,
legally binding obligations of the Company.
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>
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 UniSource Energy Corporation
Management and Directors Deferred Compensation Plan 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 within the meaning of Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Tucson, Arizona
May 18, 1998
<PAGE>
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration
Statement of UniSource Energy Corporation on Form S-8 of our report
dated February 23, 1998, appearing in the Annual Report on Form 10-K
of UniSource Energy Corporation, as amended by Form 10K/A, dated
March 5, 1998, for the year ended December 31, 1997.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Tucson, Arizona
May 18, 1998
<PAGE>
