As filed with the Securities and Exchange Commission on December 29, 1999
Registration No. [ ]
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
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 Identification No.)
incorporation or organization)
220 WEST SIXTH STREET
TUCSON, ARIZONA, 85701
(520) 571-4000
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
Dennis R. Nelson, Esq. John T. Hood, Esq.
UniSource Energy Corporation J. Anthony Terrell, Esq.
220 West Sixth Street Thelen Reid & Priest LLP
Tucson, Arizona, 85701 40 West 57th Street
(520) 571-4000 New York, New York 10019
(212) 603-2000
(Names and addresses, including zip codes, and telephone numbers, including
area codes, of agents for service)
-----------------------
Approximate date of commencement of proposed sale of the
securities to the public: AS SOON AS PRACTICABLE AFTER THIS
REGISTRATION STATEMENT BECOMES EFFECTIVE.
-----------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box.[x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.[ ]
CALCULATION OF REGISTRATION FEE
==============================================================================
TITLE OF PROPOSED
EACH CLASS PROPOSED MAXIMUM
OF SECURITIES MAXIMUM AGGREGATE AMOUNT OF
TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT* PRICE* FEE
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Common Stock,
no par value 1,000,000+ $11.78125 $11,781,250 $3,110.25
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Preferred
Share Purchase
Rights (1) 1,000,000 N/A N/A N/A
===============================================================================
*Solely for the purpose of calculating the registration fee pursuant to Rule
457(c), the proposed maximum offering price has been determined on the basis of
the average of the high and low prices per share for the Common Stock on
December 21, 1999 as reported in the consolidated reporting system for
securities traded on the New York Stock Exchange.
+The combined Prospectus filed herewith pursuant to Rule 429 also relates to an
additional 940,282 shares of Common Stock, no par value, registered pursuant
to Registration No. 333-31043-99, which remain unsold and for which a
registration fee of $4,425 has been paid. Pursuant to Rule 429, the combined
Prospectus filed herewith also relates to Registration No. 333-31043-
99.
(1) Since no separate consideration is paid for the Preferred Share Purchase
Rights (the "Rights"), the registration fee for such securities is included in
the fee for the Common Stock. The value attributable to the Rights, if any, is
reflected in the market price of the Common Stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated December 29, 1999
P R O S P E C T U S
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UNISOURCE ENERGY CORPORATION
220 WEST SIXTH STREET
TUCSON, ARIZONA 85701
(520) 571-4000
1,940,282 SHARES
UNISOURCE ENERGY CORPORATION
INVESTMENT PLUS PLAN
COMMON STOCK
WITHOUT PAR VALUE
-------------------------------------
This plan provides a simple and convenient method for anyone to invest in
UniSource Energy common stock and the attached preferred share purchase rights.
It also provides current UniSource Energy shareholders a simple and convenient
method of investing their dividends in additional shares of UniSource Energy
common stock.
In each case, investors pay no brokerage commissions or service charges.
UniSource Energy's prior plan did not provide for automatic dividend
reinvestment. That prior plan has been amended and now constitutes a part of
this plan. If you were a participant in the prior plan you are now automatically
enrolled in this plan and you need not complete an enrollment form unless you
wish to automatically reinvest your dividends in additional shares of UniSource
Energy common stock.
The law in some jurisdictions requires us to offer shares through this plan only
through a registered broker/dealer. In those instances we use BNY FSI & Co., a
subsidiary of The Bank of New York Company, Inc., as the registered
broker/dealer.
UniSource Energy's common stock is listed on the New York Stock Exchange and
Pacific Exchange. The ticker symbol is: UNS.
You should read this prospectus carefully before
you invest and retain this prospectus for
future reference.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS."
-------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS ________, 1999.
<PAGE>
TABLE OF CONTENTS
Page
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WHERE YOU CAN FIND MORE INFORMATION..................................1
RISK FACTORS.........................................................3
UNISOURCE ENERGY.....................................................6
THE PLAN.............................................................7
CERTAIN DEFINITIONS.............................................7
PURPOSE OF THE PLAN.............................................8
ADVANTAGES AND DISADVANTAGES OF THE PLAN........................8
PLAN ADMINISTRATION.............................................9
PARTICIPATION IN THE PLAN......................................10
DIVIDEND REINVESTMENT..........................................11
DIRECT DEPOSIT OF DIVIDENDS NOT REINVESTED.....................13
DIRECT PURCHASE --INITIAL INVESTMENTS AND OPTIONAL
INVESTMENTS...................................................13
PURCHASES......................................................15
CERTIFICATES...................................................16
SAFEKEEPING OF CERTIFICATES....................................16
GIVING PLAN SHARES TO OTHERS...................................17
SALE OF SHARES.................................................18
CHANGE IN PLAN PARTICIPATION...................................19
COSTS..........................................................20
REPORTS TO PARTICIPANTS........................................21
OTHER INFORMATION..............................................21
FEDERAL INCOME TAX INFORMATION.................................23
USE OF PROCEEDS.....................................................24
DESCRIPTION OF CAPITAL STOCK........................................24
EXPERTS.............................................................27
PARTICIPANT INFORMATION.............................................27
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
AVAILABLE INFORMATION
UniSource Energy Corporation ("UniSource Energy") files reports, proxy
statements and other information with the Securities and Exchange Commission
("SEC"). You may read and copy this information at the SEC's Public Reference
Room and at the Regional Offices of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D. C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois
60661-2551
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.
C. 20549, at prescribed rates. You may obtain further information on the
operation of the SEC's Public Reference Room in Washington, D. C. by calling the
SEC at 1-800-SEC-0330.
The SEC also maintains an Internet world wide web site that contains
reports, proxy statements and other information about issuers, such as UniSource
Energy, who file electronically with the SEC. The address of that site is
http://www.sec.gov.
UniSource Energy's common stock is listed on the New York Stock
Exchange and on the Pacific Exchange (ticker symbol: UNS) and reports, proxy
statements and other information concerning UniSource Energy can also be
inspected at the offices of the New York Stock Exchange at 20 Broad Street, New
York, New York 10005 or Pacific Exchange, Inc. 301 Pine Street, San Francisco,
California 94104. In addition, reports, proxy statements and other information
concerning UniSource Energy can be inspected at its offices at 220 West Sixth
Street, Tucson, Arizona 85701. You may obtain more information by contacting the
UniSource Energy Internet world wide web site (http://www.unisourceenergy.com).
This prospectus is part of a registration statement that we filed with
the SEC. You may obtain the full registration statement from the SEC or
UniSource Energy, as indicated below.
INCORPORATION BY REFERENCE
The rules of the SEC allow us to "incorporate by reference" information
into this prospectus, which means that we can disclose important information to
you by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus,
and later information that we file with the SEC will automatically update and
supersede that information. The prospectus incorporates by reference the
documents set forth below that have been previously filed with the SEC. These
documents contain important information about UniSource Energy.
o Annual Report on Form 10-K for the year ended December 31,
1998 (the "1998 10-K")
o Quarterly Reports on Form 10-Q for the quarters ended March
31, 1999, as amended by Form 10-Q/A, dated May 24, 1999, June
30, 1999, and September 30, 1999 (the "Third Quarter 10-Q")
<PAGE>
o Current Reports on Form 8-K dated, respectively, January 8,
1999, February 16, 1999, March 16, 1999, June 18, 1999, June
25, 1999, August 9, 1999, December 2, 1999 and December 6,
1999
We are also incorporating by reference additional documents that
UniSource Energy files with the SEC pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
after the date of this prospectus and all documents that UniSource Energy files
with the SEC pursuant to the Exchange Act after the date of the initial
registration statement and prior to the effectiveness of the registration
statement.
UniSource Energy will provide without charge to each person, including
any beneficial owner, to whom a copy of this prospectus has been delivered a
copy of any and all of these filings. You may request a copy of these filings by
writing or telephoning us at:
UniSource Energy Corporation
220 West Sixth Street
Tucson, Arizona 85701
Attention: Records and Library Services
Telephone: (520) 745-3362
The information contained at the Internet site of UniSource Energy is
not incorporated in this prospectus by reference and you should not consider it
a part of this prospectus.
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<PAGE>
RISK FACTORS
UniSource Energy is presenting the following discussion solely to
furnish limited introductory information regarding selected risks and
uncertainties facing UniSource Energy. This discussion does not contain all the
information you should consider. You should read the entire prospectus, before
making any investment decision.
The financial condition and results of operations of Tucson Electric
Power Company ("TEP") are currently the principal factors affecting the
financial condition and results of operations of UniSource Energy on an annual
basis since TEP currently accounts for substantially all of UniSource Energy's
assets and revenues.
ELECTRIC UTILITY DEREGULATION RULES ISSUED BY THE ARIZONA CORPORATION COMMISSION
(ACC) WILL SUBJECT TEP, FOR THE FIRST TIME, TO COMPETITION FOR ENERGY SALES TO
RETAIL CUSTOMERS.
The ACC approved the final retail electric competition rules for
Arizona utilities in September 1999. On November 22, 1999, the ACC approved
TEP's Settlement Agreement that was entered into between TEP and certain
customer groups relating to stranded costs and unbundled distribution tariffs.
See the December 2nd 8-K. As a result, consumer choice for energy supply will be
phased-in during the first quarter of 2000, with full retail competition
beginning in January 2001. While these ACC actions provide TEP with a reasonable
opportunity to recover all stranded generation costs, we cannot predict with
certainty the full impact of retail competition on our future operating results,
financial condition and cash flows. Some of the factors which may affect
our future financial results include:
o lower than expected growth in distribution revenues from TEP's
service territory
o weather variations which may affect customer energy usage; and
o the outcome of the required filing of a general rate case in 2004.
OUR HIGH DEBT LEVERAGE MIGHT LIMIT OUR ACCESS TO CAPITAL MARKETS.
Our capital structure is highly leveraged. Although TEP was able to
refinance and extend the maturities of certain debt obligations at favorable
rates and terms in 1997 and 1998, TEP may not continue to have such favorable
access to the capital markets. See ITEM 7. - MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION -"Overview" and ITEM
8.- Financial Statements and Supplementary Data in the 1998 10-K and Item 1 -
Financial Statements and ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS - "Overview" in the Third
Quarter 10-Q.
ASSET DIVESTITURE, TAX LAW CHANGES OR INDUSTRY OR SYSTEM OPERATION CHANGES COULD
MAKE IT NECESSARY FOR US TO REDEEM TAX-EXEMPT BONDS.
A substantial portion of TEP's utility plant assets have been financed
with the proceeds from the issuance of tax-exempt bonds (approximately $580
million at the date of this prospectus). The interest on these bonds is excluded
from bondholders' gross income for federal income tax purposes. The following
could make it necessary to redeem or defease these bonds:
o asset divestiture;
o tax law changes;
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<PAGE>
o industry or system operation changes.
See ITEM 7. -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONs -- "Liquidity and Capital Resources, Investing and
Financing Activities, TEP - Regulated Electric Utility, Tax Exempt Local
Furnishing Bonds," in the 1998 10-K.
WE MAY EXPERIENCE FURTHER LOSSES FROM UNREGULATED ENERGY BUSINESSES.
Our investments in the unregulated energy businesses owned by
Millennium Energy Holdings, Inc. (Millennium) comprise approximately 3% of the
consolidated total assets of UniSource Energy, but at times, have had a more
significant impact on consolidated net income. Millennium recorded a net loss of
$8.1 million for the year ended December 31, 1998, and net income of $15.0
million for the nine months ended September 30, 1999. Net losses from our equity
investment in NewEnergy, Inc. were the primary contributors to net losses at
Millennium in 1998. We sold our investment in this business in the third quarter
of 1999 for an after-tax gain of $20.8 million. See the Third Quarter 10-Q and
the August 9 8-K for additional information on this transaction. This gain was
partially offset by $5.2 million in net losses recorded by Nations Energy due to
project development costs and expenses.
Other energy related businesses held by Millennium are in the
developement and start-up stages, have limited operating histories and, to
date, have had limited profitability. Consequently, there can be no
assurance that the activities of its other unregulated businesses will be
profitable in future periods.
OUR ABILITY TO CONTINUE TO PAY DIVIDENDS IS UNCERTAIN AND DEPENDS UPON CASH FLOW
FROM OUR SUBSIDIARIES, TEP AND MILLENNIUM. TEP COMPRISES SUBSTANTIALLY ALL OF
OUR ASSETS. TEP IS SUBJECT TO CONSTRAINTS WHICH LIMIT ITS ABILITY TO PAY
DIVIDENDS TO UNISOURCE ENERGY.
On December 3, 1999, the Board of Directors of UniSource Energy
declared a dividend in the amount of $0.08 per share of common stock. This
is our first dividend to shareholders. Our principal operating subsidiary,
TEP, last paid a common stock dividend to public shareholders in 1989.
In December 1998, TEP declared and paid a dividend to UniSource Energy
of $30 million on its common stock. In December 1999, TEP declared a dividend of
$34 million on its common stock, payable prior to year-end 1999. TEP's ability
to pay dividends is limited by the following constraints:
o TEP's credit agreement allows TEP to pay dividends if it
maintains compliance with the agreement and meets certain
financial covenants, including a covenant that requires TEP
to maintain a minimum level of net worth. As of September 30,
1999, the required minimum net worth was $199 million. As of
September 30, 1999, TEP was in compliance with the terms of
the Credit Agreement.
o Pursuant to an ACC order, until such time as TEP's equity
ratio equals 37.5% of total capital (excluding capital lease
obligations), TEP may not pay dividends to UniSource Energy
in excess of 75% of TEP's earnings. As of September 30, 1999,
TEP's equity ratio, as so calculated, was 18.5%.
o In addition to these restrictive covenants, the Federal Power
Act states that dividends shall not be paid out of funds
properly included in the capital account. Although the terms
of the Federal Power Act are unclear, TEP believes that there
is a reasonable basis to pay dividends from current year
earnings.
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<PAGE>
In the third quarter of 1999, Millennium paid a $10 million cash
dividend to UniSource Energy. Millennium used some of the proceeds of the sale
of AES Corporation common stock received in consideration for the sale of
NewEnergy to pay this dividend. We cannot predict, however, the amount or the
timing of future dividends from Millennium.
UNISOURCE ENERGY
UniSource Energy was incorporated under the laws of the State of
Arizona on March 8, 1995. UniSource Energy is a holding company which owns all
of the outstanding common stock of TEP and Millennium Energy Holdings, Inc.
(Millennium). On January 1, 1998, TEP and UniSource Energy completed a statutory
share exchange, pursuant to which the outstanding common stock of TEP was
exchanged, on a share-for-share basis, for shares of UniSource Energy common
stock, no par value. Following the share exchange, TEP transferred the stock of
its subsidiary, MEH Corporation (MEH), to UniSource Energy in exchange for a
promissory note in the approximate amount of $95 million. MEH subsequently
changed its name to Millennium Energy Holdings, Inc. on November 20, 1998.
UniSource Energy's stock is traded on the New York and Pacific Stock Exchanges
under the ticker symbol UNS.
TEP is the principal subsidiary of UniSource Energy and accounts for
substantially all of its assets and revenues. TEP is an operating public utility
engaged in delivering energy services to retail customers primarily in the
Tucson, Arizona metropolitan area and to wholesale customers throughout the
Western United States. As a public utility, TEP falls under the jurisdiction of
the Arizona Corporation Commission which has the authority to approve rates and
certain other corporate actions.
TEP provides electric power to approximately 325,000 retail customers.
In 1998, TEP generated more than 10,000 gigawatt hours and sold more than 7,600
gigawatt hours of energy to retail customers and 4,500 gigawatt hours to other
customers at wholesale. TEP owns or leases 1,896 MW of generating capacity
located in Arizona and New Mexico. TEP also has transmission and distribution
assets to transmit electricity from TEP's remote generating facilities to the
Tucson area for use by TEP's retail customers and to provide interconnections to
neighboring utilities. Operating revenues from energy sales and transmission and
distribution services exceeded $768 million in 1998.
Millennium owns all of the outstanding common stock of the following
subsidiaries:
o Advanced Energy Technologies, Inc. (AET), which currently owns 50%
of Global Solar Energy, L.L.C. (Global Solar), a manufacturer of
thin-film photovoltaic cells and other thin-film products. In
November 1999, Millennium entered into an agreement to contribute
additional capital to this subsidiary. This agreement will change
the ownership structure of both AET and Global Solar. See the
Third Quarter 10-Q.
o Nations Energy Corporation (Nations Energy), which is active in the
development of independent power projects worldwide. We are
actively seeking to sell all or part of our investment in this
subsidiary.
o Southwest Energy Solutions, Inc. (SES), a regional energy services
company.
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<PAGE>
THE PLAN
The following is a complete statement of the plan.
Nothing contained herein or in any other plan information represents a
recommendation that any person buy, hold or sell UniSource Energy common stock.
You should make a decision to purchase shares of common stock through the plan
only after reading this prospectus.
CERTAIN DEFINITIONS
For convenience of reference, the definitions of certain terms are
provided below.
Acknowledgement Form -- A form acknowledging the participant's enrollment in
the plan.
Business Day -- A day on which the plan administrator is open for
business.
Independent Agent -- BNY ESI & Co., a wholly-owned subsidiary of The Bank
of New York Company, Inc., the registered
broker-dealer selected by the plan administrator
to purchase and/or sell shares of common
stock for participants.
Initial Investment -- A payment made to UniSource Energy for the initial
purchase of shares of common stock to open a plan
account. The minimum Initial Investment is $250.
An Initial Investment is not required from holders
of shares registered in their names who are
enrolling in the plan for the purpose of reinvest-
ment of dividends or from prior participants in
the plan.
Investment Date -- Investments from participants will be invested on
the 10th and 25th day of each month (or, if not a
Business Day, the preceding Business Day).
Dividends will be reinvested on the dividend
payment date. Investments made automatically
through Electronic Funds Transfer are deducted on
the 25th day of each month and will be invested on
the next Investment Date after receipt of the
funds.
Optional Investment -- A payment made subsequent to enrollment in the plan.
An Optional Investment is $50 or more.
Safekeeping -- The plan's "safekeeping" service which participants
may use to deposit any common stock certificates
in their possession with the plan administrator
and have credited to their plan account.
Transaction Request Form -- A form completed by the participant in order to make
Optional Investments, address changes, deposits of
certificates, withdrawals of shares, sales of
shares, or an account termination.
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<PAGE>
PURPOSE OF THE PLAN
1. WHAT IS THE PURPOSE OF THE PLAN?
The plan provides interested investors with a convenient method of purchasing
UniSource Energy common stock directly through the plan administrator and
provides current shareholders with a convenient method of investing cash
dividends on their UniSource Energy shares in additional shares of common stock.
ADVANTAGES AND DISADVANTAGES OF THE PLAN
2. WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF THE PLAN?
ADVANTAGES:
DIRECT PURCHASE OF STOCK--Participants may purchase common stock
directly through the plan administrator, without the cost of brokerage
or other fees.
FULL OR PARTIAL REINVESTMENT OF DIVIDENDS-- Participants may reinvest
dividends on all of their shares (full reinvestment), on some or all of
shares held in certificate form (partial reinvestment), or receive all
dividends in cash (no reinvestment).
FULL INVESTMENT OF FUNDS--The full amount of dividends, Initial
Investments and Optional Investments is invested because the plan
permits fractional shares to be credited to plan accounts.
SAFEKEEPING OF CERTIFICATE --Participants may deposit their UniSource
Energy common stock certificates with the plan administrator, whether
or not the common stock represented by those certificates was purchased
through the plan. This convenience is provided at no cost to the
participant and eliminates the possibility of loss, inadvertent
destruction or theft of certificates. Also, because we treat shares
deposited for Safekeeping in the same manner as shares purchased
through the plan, they may be transferred or sold through the plan.
GIVING PLAN SHARES--An investor may give plan shares by:
o making an initial investment to establish a plan account for the
recipient;
o making Optional Investments to the recipient's existing plan
account; or
o transferring shares from the investor's plan account to the
recipient's plan account.
SELL STOCK--Participants may sell shares held in their plan account,
including odd-lot sales.
BROKERAGE COMMISSIONS--Investors pay no brokerage commissions in
connection with purchases and reinvestments under the plan.
SIMPLIFIED RECORDKEEPING--We will mail a statement of account to a
participant after any investment activity and a comprehensive statement
annually.
DISADVANTAGES:
NO INTEREST ON FUNDS PENDING INVESTMENT--Investors receive no interest
on dividends, Initial Investments or Optional Investments that are held
pending investment.
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<PAGE>
DELAY IN DETERMINING PURCHASE PRICE--The plan administrator will not
determine the number of shares purchased for a participant's plan
account and the purchase price until all shares for the relevant
Investment Date have been purchased. Therefore, participants will not
know the number of shares purchased or the purchase price until after
the applicable Investment Date.
RETURN OF INITIAL OR OPTIONAL INVESTMENTS--The plan administrator will
not return Initial Investments or Optional Investments to a participant
unless the plan administrator receives a written request two Business
Days prior to the applicable Investment Date. However, the plan
administrator reserves the right to return an Initial or Optional
Investment for any reason (an unsigned check, for example).
BROKERAGE COMMISSIONS--Sales under the plan are subject to brokerage
commissions.
PRICE OF SHARES--Participants cannot designate a specific price at
which to sell or purchase common stock. Therefore, participants bear
the risk of fluctuations in the market price of common stock.
INSURANCE--Plan accounts are not insured by the Securities Investor
Protection Corporation, the Federal Deposit Insurance Corporation or
any other entity.
PLAN ADMINISTRATION
3. WHO ADMINISTERS THE PLAN?
The Bank of New York acts as plan administrator. The Bank of New York is a
recognized leader in the securities processing industry and is committed to
providing shareholders of UniSource Energy with quality service.
As plan administrator, The Bank of New York will
o receive participant's reinvested dividends,
o purchase and hold shares of common stock acquired under the plan,
o keep records,
o send reports of account activity to participants, and
o perform other duties relating to the plan.
The plan administrator will register in its name, or the name of its nominee for
the benefit of the participants, all shares purchased under the plan and held by
the plan administrator for each participant's account. In the event that the
plan administrator ceases to act as plan administrator, UniSource Energy will
appoint a new plan administrator to administer the plan.
The plan administrator also acts as transfer agent and registrar for the common
stock. Questions can be answered by contacting The Bank of New York at the
following locations:
o Participants may contact the plan administrator toll free at
1-888-269-8845.
o The plan administrator's Internet worldwide web site address
is http://stock.bankofny.com.
o The plan administrator's e-mail address is
[email protected]. The plan administrator will
respond to messages sent through the Internet within one
business day.
o The plan administrator's mailing address is as follows (other
addresses may be published for the plan administrator from
time to time):
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For Inquiries: For Transaction Processing:
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The Bank of New York The Bank of New York
Shareholder Relations Department - 11E Dividend Reinvestment Department
PO Box 11258 P.O. Box 1958
Church Street Station Newark, NJ 07101-1958
New York, NY 10286
THE BANK OF NEW YORK PROVIDES NO ADVICE AND MAKES NO RECOMMENDATIONS WITH
RESPECT TO ANY SECURITY. ANY DECISION TO PURCHASE OR SELL MUST BE MADE BY EACH
INDIVIDUAL PLAN PARTICIPANT BASED ON HIS OR HER OWN RESEARCH AND JUDGMENT.
PARTICIPATION IN THE PLAN
4. WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN?
DIRECT PURCHASE
Any interested investor is eligible to participate in the plan for direct
purchase of common stock provided that (i) they meet the requirements for
participation as described in the following paragraph and (ii) in the case of
citizens or residents of a country other than the United States, its territories
or possessions, participation would not violate local laws applicable to
UniSource Energy or the participant.
In certain jurisdictions, applicable laws require us to use a registered
broker-dealer to offer common stock under the plan to persons not presently
shareholders of record. No offers or sales will be effected in those
jurisdictions unless UniSource Energy has satisfied the requirements of the
state securities laws applicable to the operation of the plan. To the extent
required by applicable law in certain jurisdictions, we will offer shares of
common stock under the plan to persons not presently shareholders of record of
common stock only through a registered broker/dealer in those jurisdictions. The
plan administrator has selected BNY ESI & Co. as the registered broker/dealer
through whom we will offer shares in those instances and for all plan trading
activity.
DIVIDEND REINVESTMENT
The dividend reinvestment option of the plan is available to investors who
directly hold shares (as certificates registered in their names) and to
investors who hold shares through the plan. Any shareholder whose stock is
registered in a name other than the shareholder's own name (for example, in the
name of a broker or bank nominee) may participate by having certificates
registered in the shareholder's own name issued for some or all of the
shareholder's shares.
5. HOW DOES AN ELIGIBLE INVESTOR ENROLL IN THE PLAN?
PARTICIPANTS IN THE PRIOR PLAN are, without further action, enrolled in the
plan. Prior plan participants are not required to make any initial investment.
However, prior plan participants who wish to automatically reinvest their
dividends must complete a new enrollment form and return it to the plan
administrator at the address shown in "Plan Administration." See Question 3.
Prior plan participants who wish to withdraw from the plan may do so by
following the procedure outlined in Question 31.
After receiving a plan prospectus, OTHER ELIGIBLE INVESTORS may join the plan by
completing and signing an enrollment form and returning it to the plan
administrator at the address shown in "Plan Administration." See Question 3.
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Shareholders of record should sign their names on the enrollment form exactly as
they appear on their certificates.
The enrollment form serves both to initiate participation and to appoint the
Independent Agent to act on behalf of the participant in buying and selling
shares of common stock under the plan. An eligible applicant who is enrolling in
the plan for reinvestment of dividends and who is not a shareholder of record of
common stock must enclose an Initial Investment of $250 or more with the
enrollment form. See Questions 12 and 13.
You can make requests for enrollment forms, as well as other plan forms and
another copy of this prospectus, by writing to or telephoning the plan
administrator or by calling the plan administrator. See "Plan Administration,"
Question 3.
6. WHEN WILL PLAN ENROLLMENT COMMENCE?
The plan administrator will promptly process enrollment forms. Once enrolled in
the plan, participants will remain enrolled until (i) they withdraw from the
plan, (ii) UniSource Energy terminates their participation in the plan, or (iii)
UniSource Energy terminates the plan. See "Change in Plan Participation,"
Questions 30-33.
7. MAY THE PLAN ADMINISTRATOR RESTRICT PARTICIPATION IN THE PLAN?
Yes. The plan administrator reserves the right to restrict or
terminate participation in the plan if such participation appears to be contrary
to the general intent of the plan or in violation of applicable law. See "Change
in Plan Participation," Questions 30-33.
DIVIDEND REINVESTMENT
8. WHEN MAY AN ELIGIBLE SHAREHOLDER PARTICIPATE IN AUTOMATIC DIVIDEND
REINVESTMENT?
An eligible shareholder may participate in automatic dividend reinvestment at
any time.
Participation with respect to the reinvestment of dividends on common stock
registered in a participant's name will commence with the first dividend payable
following receipt by the plan administrator of the signed enrollment form if
that form is received on or before the record date relating to that dividend. If
the plan administrator receives the enrollment form after the record date, the
dividend will be paid in cash and participation will be delayed until the
following dividend is declared.
9. WHAT OPTIONS ARE AVAILABLE TO PARTICIPANTS IN THE PLAN?
Participants in the plan may participate in the following ways:
OPTION 1
FULL REINVESTMENT - If you choose this option 100% of all cash dividends on your
shares held in the plan as well as all shares held directly by you (as
certificates) registered in your name will be reinvested in additional shares of
common stock. This includes any future shares you acquire either directly or
through the plan.
We will reduce the amount reinvested by any amount that is required to be
withheld under any applicable tax or other statutes. See "Federal Income Tax
Information", Question 44.
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OPTION 2
PARTIAL REINVESTMENT - You may choose this option only if you hold any shares in
certificate form registered in your name. If you choose this option you can
direct that dividends on a specified number of your shares held in certificate
form be paid to you in cash. We will reinvest dividends on the remaining shares
you hold in certificate form as well as all shares held in the plan.
Buying more shares in certificate form will not change your election.
Selling shares in certificate form will not change your election unless the
number of shares you hold in certificate form falls below the number you
specified for cash dividend payment. In that case, we will pay cash dividends to
you on the number of shares you hold in certificate form.
OPTION 3
CASH DIVIDENDS - No Reinvestment - If you choose this option you may enroll in
the plan only to make additional Optional Investments and/or deposit
certificates into the plan for Safekeeping. By choosing this option you will
receive all dividends in cash and no dividends will be reinvested. In lieu of
receiving a dividend check, you may authorize the plan administrator to
electronically credit your checking or savings account on the dividend payment
date. (See "Direct Deposit of Dividends Not Reinvested")
YOU MAY CHANGE YOUR REINVESTMENT OPTION AT ANY TIME BY SENDING A NEW ENROLLMENT
FORM TO THE PLAN ADMINISTRATOR.
To be effective for a particular dividend, the plan administrator must receive
your instructions on or before the record date relating to the dividend. IF THE
PLAN ADMINISTRATOR DOES NOT RECEIVE INSTRUCTIONS ON OR BEFORE THE RECORD DATE,
THE INSTRUCTIONS WILL NOT BECOME EFFECTIVE UNTIL AFTER THE DIVIDEND IS PAID.
IF YOU ARE A NEW PLAN PARTICIPANT AND YOU DO NOT MAKE A REINVESTMENT ELECTION,
YOUR ACCOUNT WILL BE CODED FOR FULL REINVESTMENT AND WE WILL INVEST ALL OF YOUR
DIVIDENDS.
IF YOU ARE A PRIOR PLAN PARTICIPANT AND YOU DO NOT MAKE A REINVESTMENT ELECTION,
YOUR ACCOUNT WILL BE CODED FOR "NO REINVESTMENT" AND YOU WILL RECEIVE ALL
DIVIDENDS IN CASH AND NO DIVIDENDS WILL BE REINVESTED.
The plan permits us to credit fractions of shares, as well as full shares, to
participants' accounts. In addition, dividends in respect of such fractions, as
well as full shares, will be reinvested in shares of common stock and such
shares will be credited to participants' accounts.
10. WHEN WILL THE DIVIDENDS BE INVESTED?
If the enrollment form is received by the plan administrator on or before the
record date for the dividend payment, we will reinvest dividends on the next
dividend payment date.
If the enrollment form is received after the record date for the dividend
payment, we will pay the current dividend to you. The dividend after the next
record date will be reinvested.
If it is not possible, for any reason, to purchase shares, than any moneys plan
administrator holds for more than 30 days will be returned to you. In no event
will dividends remain uninvested more than 35 days after the date of payment. We
will reduce the amount of dividends reinvested by any amount that we are
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required to withhold under any applicable tax or other statutes. No interest
will be paid on moneys held by the plan administrator pending investment.
DIRECT DEPOSIT OF DIVIDENDS NOT REINVESTED
11. CAN I HAVE MY DIVIDENDS SENT DIRECTLY TO MY CHECKING ACCOUNT?
Yes. If you elect not to reinvest dividends you may receive your dividends by
electronic deposit to your bank, savings, or credit union account. To receive a
direct deposit of funds, you must complete and sign a Direct Deposit
Authorization form and return it to the plan administrator. Direct deposit will
become effective as soon as practicable after the plan administrator has
received a completed Direct Deposit Authorization form.
You may change direct deposit designations by delivering written instructions or
a new Direct Deposit Authorization form to the plan administrator.
DIRECT PURCHASE -- INITIAL INVESTMENTS AND OPTIONAL INVESTMENTS
12. WHO IS REQUIRED TO MAKE AN INITIAL INVESTMENT?
Investors who do not have shares of common stock registered in their names and
who wish to purchase common stock through the plan must make an Initial
Investment. Shareholders who have shares of common stock registered in their
names and who are electing to reinvest their dividends through the plan do not
need to make an Initial Investment.
13. HOW IS AN INITIAL INVESTMENT MADE?
Any investor whose signed enrollment form has been accepted by the plan
administrator is eligible to make an Initial Investment. A participant may make
the Initial Investment when enrolling. An Initial Investment must be $250 or
more and should be in the form of a check, money order or wire transfer payable
through a U.S. bank or other financial institution, to "The Bank of New York."
The plan administrator will not accept third party checks. DO NOT SEND CASH.
Investors making wire transfers should contact the plan administrator for wire
instructions and may be charged fees by their institution. Please use the
pre-addressed envelope provided to send the signed enrollment form and any
Initial Investment.
NOTICE TO TEP CUSTOMERS: Do NOT include Initial Investments and an enrollment
form with payment for utility service billings or other payments due TEP or
affiliates.
14. WHAT ARE OPTIONAL INVESTMENTS?
Once enrolled, plan participants are eligible to make periodic Optional
Investments, as frequently as twice monthly to purchase additional shares of
common stock. The minimum Optional Investment is $50.
Participants may make Optional Investments in the form of a check, money order
or wire transfer, payable through a U.S. bank or other financial institution, to
"The Bank of New York." The plan administrator will not accept third party
checks. DO NOT SEND CASH. A participant may also make Optional Investments on a
monthly basis automatically through Electronic Funds Transfer. See Question 15.
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Participants are under no obligation to make Optional Investments and may cease
making Optional Investments at any time without withdrawing from the plan.
The plan administrator will not accept Optional Investments if a participant
imposes any restrictions with respect to the shares to be purchased. In
addition, the plan administrator will not purchase shares for a participant
without advance payment, nor will it refund any part of a participant's Optional
Investment after shares are purchased. It is not possible for the plan
administrator to inform a participant in advance of how much money to send for
the purchase of a full or fractional share because the per-share price will not
be known until the shares are purchased.
15. HOW DOES A PARTICIPANT MAKE OPTIONAL INVESTMENTS?
OPTIONAL INVESTMENTS BY MAIL
A participant may make an Optional Investment by enclosing a check with the
Transaction Request form attached to the statement of account, which the plan
administrator will send to each participant. A participant may also send in a
check without this form, however, the plan account number must be included on
the check. You should mail payments to the following address:
The Bank of New York
Dividend Reinvestment Department
P.O. Box 1958
Newark, NJ 07101-1958
OPTIONAL INVESTMENTS BY ELECTRONIC FUNDS TRANSFER
A participant may contact the plan administrator to arrange for Optional
Investments to be made automatically through Electronic Fund Transfers (EFT).
EFT payments are deducted monthly from the participant's designated account
through any financial institution that participates in the Automated Clearing
House. Deductions are made on the 25th day of each month, or if that date is not
a Business Day, the deduction will be made on the preceding Business Day. We
will invest amounts received on the next Investment Date after receipt of the
funds. Some financial institutions charge participants for this service.
PAYROLL DEDUCTION
Employees who participate in the plan may authorize payroll deductions to
purchase shares under the plan. Payroll Deduction forms can be obtained from our
Payroll Department. Employees may change or terminate payroll deductions at any
time by completing a new Payroll Deduction Authorization form. The commencement,
change or termination will become effective as soon as practicable after we
receive the authorization form.
16. WHEN WILL A PARTICIPANT'S INITIAL INVESTMENT OR OPTIONAL INVESTMENT BE
INVESTED?
The plan administrator must receive Optional Investments and Initial Investments
at least three Business Days prior to an Investment Date to be invested on that
Investment Date. Otherwise, the plan administrator will hold the Optional
Investment or Initial Investment for investment until the next Investment Date.
See Question 15 for information regarding when we invest EFT funds.
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The plan administrator will promptly deposit Initial Investments and Optional
Investments that it receives into a segregated escrow account pending
investment. No Initial Investment or Optional Investment will remain uninvested
more than 35 days following receipt by UniSource Energy.
17. WHAT HAPPENS IF A CHECK SUBMITTED FOR INVESTMENT IS RETURNED UNPAID?
If the plan administrator returns unpaid for any reason a check submitted for
investment, the plan administrator will consider the request for investment of
such funds null and void. We will immediately remove from the participant's
account any shares purchased with those funds. The plan administrator may sell
those shares to satisfy any uncollected amounts, including the returned-check
fee. If the net proceeds of the sale of those shares are insufficient to satisfy
the balance of the uncollected amounts, the plan administrator may sell
additional shares from the participant's account to satisfy the uncollected
balance.
18. MAY A PARTICIPANT REQUEST THAT AN INITIAL INVESTMENT OR OPTIONAL
INVESTMENT
BE RETURNED?
Yes. A participant may request, in writing, the return of an Initial Investment
or Optional Investment that has not yet been invested. The plan administrator
will return the funds if the request is received at least two Business Days
immediately preceding the applicable Investment Date. However, no refund of a
check or money order will be made until the funds have been actually deposited
into escrow by the plan administrator. Accordingly, a refund may be delayed for
up to three weeks.
PURCHASES
19. HOW IS COMMON STOCK PURCHASED FOR THE PLAN PARTICIPANTS?
We will purchase common stock through the plan, either directly from UniSource
Energy or on the open market, at our sole discretion. We will issue any shares
purchased directly from UniSource Energy from UniSource Energy's previously
authorized but unissued shares. Open market transactions are effected through
the Independent Agent appointed by the plan administrator. In either case,
participants pay no commission charges on the purchase of common stock. The
Independent Agent will have full discretion in all matters related to open
market purchases, including the day and time of purchase, price paid, number of
shares purchased, and the markets or persons through whom the purchases are
made. The purchase price to the plan participant is the same, however, the tax
basis may differ. See Question 44.
20. WHEN ARE SHARES PURCHASED FOR THE PLAN?
When the plan purchases shares directly from UniSource Energy, purchases will be
made on each Investment Date. See the definition of Investment Date.
Purchases on the open market will usually be within 5 days of the Investment
Date. The plan may purchase shares over a longer period of time to avoid having
an impact on market prices. In all cases, if an investment is not completed
within 30 days, we will return all funds to be invested to participants. The
plan makes open market purchases through the Independent Agent, BNY ESI & Co., a
wholly-owned subsidiary of The Bank of New York Company, Inc.
21. WHEN WILL SHARES BE CREDITED TO A PARTICIPANT'S ACCOUNT?
We consider shares purchased, settled and credited to a participant's plan
account on the Investment Date.
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22. HOW IS THE PURCHASE PRICE OF THE COMMON STOCK DETERMINED?
When the plan purchases shares from UniSource Energy, the price per share will
be 100% of the average of the highest and lowest price for the common stock on
the consolidated tape as reported by Dow Jones on the applicable Investment
Date.
When the plan purchases shares on the open market, the price per share is the
weighted average of all shares purchased for the applicable Investment Date.
23. HOW MANY SHARES OF COMMON STOCK WILL BE PURCHASED FOR A PARTICIPANT?
The number of shares purchased for a participant will be equal to the
participant's dividends reinvested, Initial Investment or Optional Investment
for the applicable Investment Date to be divided by the purchase price of the
shares. We will credit the participant's plan account with the whole and
fractional shares (to four decimal places).
24. CAN A PARTICIPANT REQUEST THE PURCHASE OF A SPECIFIC NUMBER OF SHARES
OR A SPECIFIC PRICE?
No. Since the purchase price of the common stock cannot be calculated until we
purchase the common stock, a participant may not request the purchase of a
specific number of shares.
CERTIFICATES
25. WILL CERTIFICATES BE ISSUED FOR SHARES PURCHASED THROUGH THE PLAN?
No. The plan administrator will register the certificates for shares purchased
through the plan in its name or the name of its nominee. Participants requesting
the issuance of a certificate for their plan shares must submit a Transaction
Request Form to the plan administrator, specifying the number of whole shares
and certificates to be issued. We cannot issue certificates for fractional
shares; a participant must sell fractional shares when terminating
participation. We will issue the certificate in the name(s) of the
participant(s) only. After the issuance of a certificate, we will deem the
shares represented thereby as withdrawn from the plan. We will issue
certificates within five Business Days following the receipt of the request. See
Questions 27 and 28 for information on giving or transferring plan shares to
others.
SAFEKEEPING OF CERTIFICATES
26. CAN CERTIFICATES BE DEPOSITED WITH THE PLAN ADMINISTRATOR TO BE HELD IN
THE PARTICIPANT'S PLAN ACCOUNT?
Yes. Participant's may use the plan's "Safekeeping" service to deposit any
common stock certificates in their possession with the plan administrator. Some
of the advantages of certificate Safekeeping are:
o No risk associated with the loss of stock certificates. Normally,
an owner cannot sell or transfer shares without first obtaining
replacements for any lost or stolen certificates. This process
could take several weeks and results in cost and paperwork for the
owner and the transfer agent. Our Safekeeping policy eliminates
this risk.
o We treat certificates deposited in the plan for Safekeeping in
the same manner as shares of common stock purchased through the
plan. These may be conveniently sold or transferred through the
plan.
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o Participants who choose Safekeeping still have the option of
receiving dividends in cash or reinvesting them.
o There is no charge for depositing certificates for Safe-keeping.
Participants may submit certificates for Safekeeping at any time.
Each participant bears the risk of the method used to submit certificates for
Safekeeping. UniSource Energy strongly recommends that participants use
registered mail with insurance when sending stock certificates.
We will transfer all shares represented by the certificates submitted for
Safekeeping into the name of the plan administrator or its nominee and credit
them to the participant's plan account. We will then mark the physical
certificate submitted to the plan administrator for Safekeeping "canceled" and
ultimately discard them. We will mail to the participant a statement of account
showing the number of shares credited to the participant's plan account.
A participant may not assign or pledge shares of common stock held in his or her
account. (See Question 44). Participants must replace lost certificates before
they can be submitted for Safekeeping.
It is the participant's responsibility to establish and maintain a record of the
cost of shares represented by certificates sent to the plan administrator for
Safekeeping. In addition, the plan administrator reserves the right to establish
limits on the number of shares held for Safekeeping and minimum time periods for
retention of these shares in the plan. This reservation is intended to minimize
administrative expense and discourage use of the plan for purposes other than as
a continuing investment service.
GIVING PLAN SHARES TO OTHERS
27. CAN PLAN SHARES BE GIVEN TO OTHERS?
Yes. Common stock can be given to others in three ways:
o A donor may make an Initial Investment to establish an account
in the recipient's name. Under this method, the donor
completes and submits to the plan administrator an enrollment
form in the recipient's name together with an Initial
Investment of $250 or more.
o A donor may submit an Optional Investment in an amount of $50
or more on behalf of an existing participant; or
o An existing participant may transfer shares from his or her
account to a new or existing recipient's account. See Question 28.
In order to establish a new account for a gift recipient a participant must
complete and submit to the plan administrator an enrollment form in the
recipient's name. See Question 28.
Unless otherwise requested by the donor, the recipient will receive a statement
of account showing the number of shares given to and held in the recipient's
plan account.
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28. MAY PARTICIPANTS ASSIGN OR TRANSFER ALL OR PART OF THEIR SHARES HELD
UNDER THE PLAN TO ANOTHER PERSON?
Yes. Participants may transfer or give shares held in their plan account, as
gifts, at any time. Transfers can be made in book-entry or certificate form.
Participants should call or write to the plan administrator to make
requests.
To transfer shares from an existing plan account to a new participant plan
account follow the steps listed below. There is no fee for transferring shares
to another participant.
o Call the plan administrator toll free at 888-269-8845 and
request a current plan prospectus and enrollment form.
Complete the enrollment form, providing the full registration
name, address and social security number of the new
participant.
o Mail the completed enrollment form and a written request
indicating the number of shares (full and fractional) which
should be transferred to the new participant. All participants
in the current account must sign the instructions and their
signatures must be guaranteed by a bank, broker or financial
institution that is a member of the Signature Guarantee
Medallion Program.
o Unless otherwise directed on the enrollment form, the new
account will automatically be enrolled in the plan with all
dividends reinvested.
SALE OF SHARES
29. HOW MAY PARTICIPANTS SELL THEIR PLAN SHARES?
Participants may instruct the plan administrator to sell any or all shares held
in a plan account at any time. Simply complete and sign the tear-off portion of
your account statement (Transaction Request Form) and mail it to the plan
administrator. The request should indicate the number of shares to be sold and
must be signed by ALL account owners. Participants may sell shares acquired
through and held in the plan, as well as shares surrendered for Safekeeping, in
this manner. You can also call the plan administrator's toll-free number to
obtain a "PIN" number which will allow you to make sales by phone.
The plan administrator aggregates all requests to sell shares then sells the
total number of shares on the open market. Sales are made through the BNY ESI &
Co., the Independent Agent. The shares may be sold on any exchange on which the
shares are listed. Shares are sold at least weekly, and depending on the volume,
as frequently as daily.
The selling price will not be known until the sale is completed. The common
stock price may fall between the time you request the sale and the sale is made.
A PARTICIPANT MAY NOT REVOKE A REQUEST TO SELL SHARES.
A check will be issued for the proceeds of the sale less any brokerage
commission, service fees and applicable taxes within four Business Days
following the date of such sale. The check will be made payable to the
registered account owners only. See Questions 34 and 44.
The Independent Agent will have full discretion in all matters related to the
sale, including the day and time of sale, sale price, and the markets or persons
through whom the shares are sold. Participants cannot specify a price at which
to sell their shares.
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Shareholders who hold shares outside the plan may not sell those shares through
the plan.
PARTICIPANTS WHO SELL ALL OF THEIR SHARES THAT ARE HELD IN THE PLAN
AUTOMATICALLY TERMINATE THEIR PARTICIPATION IN THE PLAN. A PARTICIPANT MAY NOT
REVOKE A REQUEST TO SELL SHARES AFTER IT IS RECEIVED BY THE PLAN ADMINISTRATOR.
HOWEVER, PARTICIPANTS MAY ELECT TO RE-ENROLL AT ANY TIME PROVIDED THAT THEY
REMAIN ELIGIBLE TO PARTICIPATE. See Questions 4 and 5.
CHANGE IN PLAN PARTICIPATION
30. HOW MAY A PARTICIPANT CHANGE OPTIONS UNDER THE PLAN?
A participant may change investment options by signing a new enrollment form and
returning it to the plan administrator. Participants may obtain new enrollment
forms from the plan administrator by written request. Any change in options with
respect to reinvestment of dividends must be received by the plan administrator
prior to the record date relating to a dividend payment in order to be effective
for that particular dividend.
31. HOW MAY A PARTICIPANT TERMINATE PARTICIPATION IN THE PLAN?
Participants may terminate participation in the plan at any time. To withdraw
from the plan, complete the tear-off stub at the bottom of your account
statement (Transaction Advice Form) and mail it to the plan administrator. All
account owners must sign the request.
When you withdraw from the plan, or if the plan is terminated by UniSource
Energy, we will issue a certificate for all whole shares held in your plan
account and sell any fractional shares held in your plan account. We will not
issue certificates for fractional shares; a participant must sell fractional
shares when terminating participation. See Questions 34 and 44.
We will invest Optional Investments received prior to the request to terminate
plan participation on the next Investment Date unless the participant timely
requests the return of that Optional Investment. See Question 18.
32. WHAT HAPPENS TO FRACTIONAL SHARES WHEN PARTICIPANTS TERMINATE THEIR
PLAN ACCOUNTS?
As soon as practicable after the settlement for the applicable sale we will mail
to each participant that terminates their plan accounts cash payments
representing any fractional share held, less brokerage commissions, taxes and
service fees. For participants selling fractional shares, the proceeds, if any,
of the sale of fractional shares will be the fraction multiplied by the
whole-share price less applicable brokerage commissions.
33. MAY THE PLAN ADMINISTRATOR TERMINATE A PARTICIPANT'S PLAN
PARTICIPATION?
Yes. The plan administrator may terminate a plan account for any of the
following reasons:
o the plan account becomes subject to any unclaimed property law;
o the plan administrator receives proper notification of a
participant's death or incapacity;
o the participant does not maintain at least one whole share
of common stock in the plan account; or
o the plan administrator believes that a participant's participation
in the plan is contrary to the general intent of the plan or in
violation of applicable law.
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The plan administrator will notify the participant prior to such termination.
The plan administrator will issue a certificate for whole shares and a check for
the net cash value of any fractional share in the plan account, less applicable
brokerage commissions, taxes and service fees.
In the event that the plan account is terminated for any of the foregoing
reasons, we will distribute the account assets to the appropriate state for
unclaimed property purposes, the participant, or his or her beneficiary, as the
case may be.
In addition, UniSource Energy retains the right, in its sole discretion, to
terminate or suspend the plan. See Question 40 below.
COSTS
34. WHAT COSTS ARE ASSOCIATED WITH PARTICIPATION IN THE PLAN?
In most cases UniSource Energy will pay the fees and expenses to operate the
plan. However, there are some service fees and brokerage commissions which will
be charged directly to participants. You will incur no broker fees, commissions
or other charges for shares PURCHASED from UniSource Energy for your plan
account. Your cost in administrative service fees and brokerage commission for
each type of transaction are as follows and are considered part of the "Terms
and Conditions" of the plan:
PURCHASES
Dividend Reinvestments.................................Company Paid
Initial Investments / Enrollment.......................Company Paid
Optional Investments...................................Company Paid
Brokerage commissions - newly-issued stock.....................None
Brokerage commissions - open market purchases..........Company Paid
This may result in taxable income and an
increase in tax basis. See Question 44.
SALES
Service fee............................................$ 5.00 per
transaction
Plus brokerage commission..............................$ 0.10
per share sold
See Question 44.
OTHER
Deposit of certificates for Safekeeping................Company Paid
Transfer of shares to another participant
(Book to Book).........................................Company Paid
Account termination....................................$ 5.00
per account
Issuance of certificates...............................Company Paid
FEES ARE SUBJECT TO CHANGE; WRITTEN NOTIFICATION WILL BE PROVIDED 90
DAYS PRIOR.
MINIMUM INVESTMENTS
Initial Investment.....................................$250.00
Optional Investments....................................$50.00
Maximum investments.......................................None
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REPORTS TO PARTICIPANTS
35. WHAT REPORTS ARE SENT TO PARTICIPANTS?
The plan administrator will send to you a transaction advice as soon as
practicable after each investment. The advice will show the purchase price,
service fees (if any) and shares credited to your account.
The plan administrator will mail to you a quarterly statement showing all
year-to-date transactions as soon as practicable, after each dividend payment
date. RETAIN THESE STATEMENTS FOR TAX PURPOSES.
Statements and transaction advices have tear-off instruction forms which you
should fill out when providing the plan administrator with instructions for
certificate issuance, sales, purchases, terminations or certificate deposits.
EACH PARTICIPANT SHOULD RETAIN ALL CONFIRMATIONS AND STATEMENTS OF ACCOUNT FOR
THEIR RECORDS SO AS TO BE ABLE TO ESTABLISH THE COST BASIS OF SHARES PURCHASED
UNDER THE PLAN FOR INCOME TAX AND OTHER PURPOSES.
The plan administrator will also provide a statement of account upon request.
THERE IS A $10.00 CHARGE FOR PROVIDING A COPY OF AN ACCOUNT STATEMENT THAT IS
MORE THAN 12 MONTHS OLD.
In addition, participants will receive copies of any amendments to the
prospectus relating to the plan and will receive copies of the same
communications sent to all other shareholders, including UniSource Energy's
quarterly reports and annual reports to shareholders, notices of annual meetings
and accompanying proxy materials. The plan administrator will address all
communication to participants to the latest address of record; therefore, it is
important that participants promptly notify the plan administrator of any change
of address.
OTHER INFORMATION
36. WHAT HAPPENS IF UNISOURCE ENERGY DECLARES A DIVIDEND PAYABLE IN COMMON
STOCK OR A STOCK SPLIT?
We will credit any dividends in the form of shares of common stock and any
shares resulting from a common stock split on shares held in a participant's
plan to the participant's plan account. We will mail notification of a stock
dividend or stock split directly to the participant in the same manner as to
shareholders who are not participating in the plan. We may curtail or suspend
transaction processing until the completion of any stock dividend or stock
split.
37. IF UNISOURCE ENERGY HAS A RIGHTS OFFERING, HOW WILL A PARTICIPANT'S
ENTITLEMENT BE COMPUTED?
We will base a participant's entitlement in a regular rights offering upon his
total holdings. We will issue rights certificates for the number of whole shares
only, however, and we will sell rights based on a fraction of a share held in a
participant's account for his account and the net proceeds will be invested. We
may curtail or suspend transaction processing until the completion of any rights
offering.
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38. WILL A PARTICIPANT'S SHARES BE VOTED AT MEETINGS OF SHAREHOLDERS?
Participants in the plan will receive a proxy statement and a proxy card
representing whole plan account shares as well as any common stock held of
record. Participants may vote shares held in the plan in person or by proxy,
just like any other share.
39. WHAT IS THE RESPONSIBILITY OF UNISOURCE ENERGY AND ITS AGENTS UNDER THE
PLAN?
Neither UniSource Energy, the plan administrator, nor the Independent Agent (nor
any of their respective agents, representatives, employees, officers or
directors) will be liable for any act done in good faith or for any good faith
omission to act with respect to the plan, including, without limitation, any
claim of liability arising out of failure to terminate a participant's account
upon such participant's death prior to receipt of notice in writing of such
death or with respect to the prices or times at which, or sources from which,
shares are purchased or sold for participants, or with respect to any
fluctuation in market value before or after any purchase or sale of shares. This
limitation of liability will not constitute a waiver by any participant of their
rights under the federal securities laws of the United States.
UNISOURCE ENERGY CANNOT AND WILL NOT GUARANTEE A PROFIT, OR PROTECT PARTICIPANTS
AGAINST LOSS, ON SHARES PURCHASED OR SOLD PURSUANT TO THE PLAN. THE MARKET PRICE
OF COMMON STOCK CAN FLUCTUATE SUBSTANTIALLY.
40. MAY THE PLAN BE CHANGED OR DISCONTINUED?
Yes. UniSource Energy may suspend, modify or terminate the plan at any time in
whole or in part. The plan administrator will notify all participants of any
suspension, modification or termination of the plan. UniSource Energy also
reserves the right to interpret and regulate the plan as it deems necessary or
desirable. UniSource Energy may register additional shares for sale under the
plan from time to time.
41. MAY COMMON STOCK HELD IN A PLAN ACCOUNT BE PLEDGED AS COLLATERAL?
No. Participants may not assign or pledge as collateral common stock held in a
plan account. Participants wishing to assign or pledge their common stock as
collateral must have certificates issued for the shares. After the issuance of a
certificate, we will deem the shares represented thereby as withdrawn from the
plan. Those certificates can then be delivered for collateral.
42. HOW MAY INSTRUCTIONS BE GIVEN TO THE PLAN ADMINISTRATOR?
Statements and transaction advices have tear-off instruction forms which you
should fill out when providing the plan administrator with instructions for
certificate issuance, sales, purchases, terminations or certificate deposits.
You can call the plan administrator's toll-free number to obtain a "PIN" number
which will enable you to perform certain telephone transactions.
43. UNDER WHAT STATE'S LAW WILL THE PLAN BE GOVERNED?
Arizona law governs the terms and conditions of the plan.
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FEDERAL INCOME TAX INFORMATION
44. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PLAN PARTICIPATION?
UniSource Energy believes the following is an accurate summary of the federal
income tax consequences of participation in the plan. This discussion is based
on federal income tax law in effect as of the date of this prospectus.
Participants should consult their tax advisors with respect to the impact of any
future legislative proposals or legislation enacted after the date of this
prospectus. Please consult your tax or financial advisor with respect to
federal, state, local and other tax laws which apply to your specific situation.
PURCHASES
- ---------
Participants who purchase common stock through voluntary payments to the plan
are not treated for federal income tax purposes as recognizing income by virtue
of the purchase of common stock with the voluntary payment. Any brokerage
commissions paid by UniSource Energy upon the purchase of shares in the open
market will constitute TAXABLE INCOME to the participant on whose behalf such
commissions are paid. The TAX BASIS of shares purchased with Initial Investments
and Optional Investments will be the amount of the investment plus the amount of
any brokerage commissions paid by UniSource Energy on behalf of the participant
and included in the taxable income of the participant.
Employees who purchase common stock through automatic payroll deductions will
recognize the same amount of compensation income for federal income tax purposes
which they would have recognized had they not purchased common stock through
automatic payroll deductions but rather received cash.
DIVIDEND REINVESTMENT
- ---------------------
With respect to reinvested cash dividends used to purchase shares in the
open market, a participant will be treated for federal income tax purposes
as having received on the dividend payment date a distribution in an amount
equal to the cash reinvested plus the brokerage fees paid by UniSource Energy
to obtain the shares. That distribution will be treated as dividend income to
the participant to the extent of the current and accumulated earnings and
profits of UniSource Energy, as determined for federal income tax purposes.
The tax basis of the shares so purchased will be equal to the amount of the
distribution, including those charges paid by UniSource Energy.
With respect to reinvested cash dividends used to purchase authorized but
unissued shares of common stock directly from UniSource Energy, a participant
will be treated for federal income tax purposes as having received on the
dividend payment date a distribution in an amount equal to the fair market value
on that date of the full number of shares and any fractional share purchased
with reinvested dividends. The fair market value of those shares on the
dividend payment date will be treated as dividend income to the participant to
the extent of the current and accumulated earnings and profits of UniSource
Energy, as determined for federal income tax purposes. The tax basis of the
shares so purchased will be equal to the fair market value of those shares on
the dividend payment date.
SALES
- -----
Upon the sale of either a portion or all of the shares from the plan, a
participant may recognize gain or loss based on the difference between the
sales proceeds, net of brokerage commissions, and the tax basis in the shares
sold, including any fractional shares.
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WITHHOLDING AND TAX REPORTS
- ---------------------------
Participants who are non-resident aliens or non-U.S. corporations, trusts and
estates are subject to U.S. income tax withholding on dividends paid on shares
held in their accounts. The amount of withholding is determined in accordance
with U.S. Treasury Regulations, subject to adjustment by applicable income tax
treaties. Other participants may be subject to U.S. backup withholding. For
participants who are subject to U.S. withholding tax or backup withholding,
UniSource Energy will withhold the required taxes from the gross dividends or
proceeds from the sale of shares. The dividends or proceeds of a sale received
by the participant, or dividends reinvested on behalf of the participant, will
be net of the required taxes.
The Form 1099-DIV mailed to each participant with respect to each year-end will
report the dividend income realized by the participant during the year,
including brokerage fees paid by UniSource Energy in respect of reinvested
dividends or optional cash investments. That income may differ from the total
of the reinvested dividends. We will furnish a Form 1099-B to the participant
for any shares sold through the plan.
USE OF PROCEEDS
To the extent that shares are purchased directly from UniSource Energy,
UniSource Energy intends to use the net proceeds for general corporate purposes.
UniSource Energy has no basis for estimating either the number of shares of
common stock that will ultimately be sold pursuant to the plan or the prices at
which such shares will be sold. UniSource Energy will receive no net proceeds
from the offering of shares which are purchased by the Independent Agent in open
market transactions.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of UniSource Energy presently consists of
76,000,000 shares, consisting of 75,000,000 shares of common stock without par
value, and 1,000,000 shares of preferred stock without par value ("Preferred
Stock"). As of November 8, 1999, there were 32,339,606 shares of Common Stock
outstanding and no shares of Preferred Stock outstanding.
The following is a summary of certain rights and privileges of the
holders of UniSource Energy's stock. This summary does not purport to be
complete. The following information is qualified in its entirety by reference to
UniSource Energy's Restated Articles of Incorporation and shareholder rights
plan and to the laws of the State of Arizona.
COMMON STOCK
Dividend Rights. UniSource Energy may pay dividends on shares of common
stock out of any funds legally available for payment, when and as declared by
UniSource Energy's Board of Directors. Payment of dividends may be subject to
certain limitations specified with respect to the Preferred Stock, or any series
of Preferred Stock.
Liquidation Rights. In the event of any dissolution or other winding up
of UniSource Energy, whether voluntary or involuntary, the assets of UniSource
Energy available for payment and distribution to shareholders shall be
distributed ratably in accordance with their holdings to the holders of shares
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of the common stock. Those distributions may be subject to certain limitations
specified with respect to the Preferred Stock, or any series of Preferred Stock.
Voting Rights. All voting power is vested in the holders of the common
stock, except as otherwise specified with respect to the Preferred Stock, or any
series of Preferred Stock. With respect to the election of directors and each
other matter coming before any meeting of shareholders, each holder of the
common stock shall be entitled to one (1) vote for each share of such stock
outstanding in the name of that holder on the books of UniSource Energy.
The participant will vote the shares held in the plan in the same
manner as shares in certificated form. Each participant in the plan will receive
a Notice of the Annual Meeting, a Proxy Statement, a proxy voting card and
UniSource Energy's Annual Report to Shareholders. The proxy voting card will
solicit proxies for the whole plan shares held in a participant's plan account
along with any shares a participant may hold in certificated form outside of the
plan.
Miscellaneous. The common stock has no preemptive or conversion rights
redemption or sinking fund provisions and the outstanding common stock is fully
paid and non-assessable.
PREFERRED STOCK
The Board of Directors of UniSource Energy has authority to divide the
Preferred Stock into series and to determine the designation, preferences, and
voting powers of the shares of each series so established and the restrictions
and qualifications thereof, all to the extent and in the manner provided by law.
PREFERRED SHARE PURCHASE RIGHTS
General
On March 5, 1999, UniSource Energy Corporation ("UniSource Energy")
adopted a shareholder rights plan. Under that plan, UniSource Energy will grant
one preferred share purchase right ("Right") on each outstanding share of common
stock to holders of common stock outstanding on April 1, 1999 or issued
thereafter. The description and terms of the Rights are set forth in the Rights
Agreement, dated as of March 5, 1999 (the "Rights Agreement"), between UniSource
Energy and The Bank of New York, as Right Agent. The following statements are
qualified in their entirety reference to the Rights Agreement.
Each Right will entitle the registered holder, subject to regulatory
approvals and other specified conditions, to purchase one ten-thousandth of a
share of Preferred Stock, Series X, without par value, of UniSource Energy (the
"Series X Preferred Stock"), at a purchase price of $50.00 (the "Purchase
Price").
Distribution of Rights
UniSource Energy has distributed one Right to shareholders of UniSource
Energy for each share of common stock owned of record by them at the close of
business on April 1, 1999. Until the earliest of
o such time as any person or group acquires 15% or more of the
outstanding shares of common stock,
o March 31, 2009 or
o the redemption of the Rights,
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<PAGE>
UniSource Energy will issue one Right with each share of common stock that is
issued after April 1, 1999 so that all shares of common stock will have attached
Rights. UniSource Energy has initially authorized and reserved 10,000 shares of
Preferred Stock for issuance upon exercise of the Rights.
Exercise
The Rights will be exercisable only if a person or group:
o acquires 15% or more of the outstanding shares of common
stock or
o commences a tender or exchange offer, the consummation of
which would result in the beneficial ownership by a person
or group of 15% or more of the outstanding shares of common stock.
Until that time the Rights will be evidenced by and will trade with the
shares of common stock. The Rights will expire on March 31, 2009 unless
UniSource Energy first redeems or exchanges them, in each case as described
below.
The purchase of stock pursuant to the Rights may be subject to
regulatory approval and other specified conditions. Under no circumstance will
the person or group that acquired 15% of the common stock be entitled to
exercise Rights.
"Flip-in"
If any person or group acquires 15% or more of the outstanding shares
of common stock, each Right will entitle its holder to purchase that number of
shares of common stock or, at the option of UniSource Energy, Preferred Stock
which has a market value at that time of twice the Purchase Price.
"Flip-over"
In addition, in the event that any person or group has acquired 15% or
more of the outstanding shares of common stock and UniSource Energy
o consolidates or merges with or into, or
o sells 50% or more of its assets or earning power to,
any person or group, each Right would instead entitle its holder to purchase the
acquiring company's common shares having a market value of twice the Purchase
Price.
Exchange
If a person or group acquires more than 15% but less than 50% of the
outstanding shares of common stock, UniSource Energy may exchange each
outstanding Right for one share of common stock or cash, securities or other
assets having a value equal to the market value of one share of common stock.
That exchange may be subject to regulatory approval.
Redemption
UniSource Energy may redeem the Rights, at a redemption price of $0.001
per Right, at any time until any person or group has acquired 15% or more of the
outstanding shares of common stock.
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<PAGE>
Certain Adjustments
The Purchase Price, the amount and type of securities covered by each
Right and the number of Rights outstanding will be adjusted to prevent dilution
o in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock,
o if holders of the Preferred Stock are granted certain
rights, options or warrants to subscribe for Preferred Stock or
securities convertible into Preferred Stock or equivalent preferred
shares at less than the current market price of the Preferred
Stock, or
o upon the distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding regular quarterly
cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustments in the Purchase Price will be
made until cumulative adjustments amount to a least 1% of the Purchase Price.
UniSource Energy will not issue fractional shares of Series X Preferred Stock
other than in integral multiples of one ten-thousandth of a share. Instead,
UniSource Energy will make an adjustment in cash based on the market price of
the Series X Preferred Stock on the last trading date prior to the date of
exercise.
Amendment
UniSource Energy may amend the Rights Agreement in any respect until
any person or group has acquired 15% or more of the outstanding shares of common
stock. Thereafter, UniSource Energy may amend the Rights Agreement in any manner
which will not adversely affect the holders of the Rights in any material
respect.
EXPERTS
The consolidated financial statements incorporated in this prospectus
by reference to the Annual Report on Form 10-K for the year ended December 31,
1998, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
With respect to the unaudited consolidated financial information of
UniSource Energy and TEP for the three-month periods ended March 31, 1999 and
1998, the six-month periods ended June 30, 1999 and 1998 and the nine-month
periods ended September 30, 1999 and 1998, incorporated by reference in this
prospectus, PricewaterhouseCoopers LLP reported that they have applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate reports dated May 17, 1999, May 24, 1999,
August 12, 1999 and November 10, 1999, incorporated by reference herein, state
that they did not audit and they do not express an opinion on that unaudited
consolidated financial information. Accordingly, the degree of reliance on
their reports on such information should be restricted in light of the limited
nature of the review procedures applied. PricewaterhouseCoopers LLP is not
subject to the liability provisions of Section 11 of the Securities Act of 1933
for their reports on the unaudited consolidated financial information because
those reports are not a "report" or a "part" of the registration statement
prepared or certified by PricewaterhouseCoopers LLP within the meaning of
Sections 7 and 11 of the Act.
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<PAGE>
The consolidated financial statements as of December 31, 1997 and for
each of the two years in the period then ended, incorporated in this prospectus
by reference from the 1998 10-K have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report included in the 1998 10-K which
is incorporated herein by reference, and have been so incorporated in reliance
upon the report of such firm given upon their authority as experts in accounting
and auditing.
PARTICIPANT INFORMATION
UniSource Energy Corporation
HEADQUARTERS: UniSource Energy Corporation
220 West Sixth Street
Tucson, AZ 85701
(520) 571-4000
ACCOUNT INFORMATION:
--Stock Transfer Requirements, The Bank of New York
Plan and Account Information: Shareholder Relations Dept. - 11E
P.O. Box 11258
Church Street Station
New York, NY 10286-1258
--Telephone Number: (888) 269-8845
--Home page: http://stock.bankofny.com
--Email address: [email protected]
Plan Transaction Processing The Bank of New York
Mailing Address: Dividend Reinvestment Department
P.O. Box 1958
Newark, NJ 07101-1958
OTHER INFORMATION:
--Mailing Address: UniSource Energy Corporation
Investor Relations
P.O. Box 711
Tucson, AZ 85702
--Telephone Number: (520) 884-3661
--Home Page: http:\\www.UniSourceEnergy.com
--Fax Number: (520) 884-3888
--Email address [email protected]
To Order Reports and Copies of
Incorporated Documents: UniSource Energy Corporation
Records & Library Services-RC102
P.O. Box 711
Tucson, AZ 85702
(520) 745-3362
Stock Listing Information:
--Ticker Symbol (NYSE & PEX): UNS
--Financial Listings UniSrcEngy
(Wall Street Jrnl):
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<PAGE>
CUSIP Number: 909205 10 6
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<PAGE>
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY UNISOURCE ENERGY CORPORATION. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER
TO BUY, ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS,
OR AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, SUCH SECURITIES IN
ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE OF SUCH INFORMATION.
UNISOURCE ENERGY CORPORATION
INVESTMENT PLUS PLAN
------------
COMMON STOCK
WITHOUT PAR VALUE
------------
PROSPECTUS
1,940,282 Shares
, 1999
-------------
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
S.E.C. Filing Fee.......................................$3,110.25
Listing Fees............................................ 6,000.00
Printing Expenses*......................................53,500.00
Accounting Fees and Expenses............................15,000.00
Legal Fees and Expenses*................................25,000.00
Marketing Fees and Expenses*............................11,500.00
Miscellaneous*.......................................... 1,000.75
---------
Total*..............................................$115,111.00
--------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article SIXTH of the Restated Articles of Incorporation of UniSource
Energy, as amended provides in pertinent part as follows:
SIXTH:
(B) No director of the Corporation shall be personally liable to
the Corporation 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 Corporation 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 hereafter defined) because such
individual is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation 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 Corporation and including, further, any appeal in
connection with any such action, suit or proceeding.
(2) The Corporation shall, to the maximum extent permitted by
applicable law, pay any Expenses incurred by a director or officer of the
Corporation in defending any such Proceeding in advance of the final disposition
II-1
<PAGE>
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 Corporation, by resolution of the Board of Directors,
may extend the benefits of this paragraph (C) of Article SIXTH to employees and
agents of the Corporation (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 Corporation 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 Corporation 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 Corporation may purchase and maintain insurance on
behalf of, or insure or cause to be insured, any person 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 Corporation would have the power to indemnify
him against such liability under this Article. As used in this Section,
"insurance" includes retrospectively rated and self-insured programs; provided,
however, that no such program shall provide coverage for directors and officers
which is prohibited by applicable law. The Corporation'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 Corporation 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
Corporation or in a resolution of the Board of Directors.
ITEM 16. EXHIBITS
Reference is made to the Exhibit Index on page II-7 hereof.
ITEM 17. 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:
II-2
<PAGE>
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (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. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end
of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than a 20% change on the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement;
(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) of this
section do not apply if the registration statement is on Form S-3 or
Form S-8 and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act
of 1934, as amended (the "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 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.
(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.
(4) 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 that is
incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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 under
Item 15 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
II-3
<PAGE>
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.
II-4
<PAGE>
POWER OF ATTORNEY
EACH DIRECTOR AND/OR OFFICER OF REGISTRANT WHOSE SIGNATURE APPEARS
BELOW HEREBY APPOINTS IRA R. ADLER, DENNIS R. NELSON AND KAREN G. KISSINGER, AND
EACH OF THEM SEVERALLY, AS HIS ATTORNEY-IN-FACT TO SIGN IN HIS NAME AND BEHALF,
IN ANY AND ALL CAPACITIES STATED BELOW, AND TO FILE WITH THE SECURITIES AND
EXCHANGE COMMISSION, ANY AND ALL AMENDMENTS, INCLUDING POST-EFFECTIVE
AMENDMENTS, TO THIS REGISTRATION STATEMENT AND THE REGISTRANT HEREBY ALSO
APPOINTS EACH SUCH AGENT FOR SERVICE AS ITS ATTORNEY-IN-FACT WITH THE AUTHORITY
TO SIGN AND FILE ANY SUCH AMENDMENTS IN ITS NAME AND BEHALF.
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-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized to sign, in the City of Tucson, and the State of Arizona, on
December 29, 1999.
UNISOURCE ENERGY CORPORATION
By: /s/ Ira R. Adler
-------------------------------
IRA R. ADLER
Executive Vice President,
Principal Financial Officer
and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ James S. Pignatelli
Date: December 29, 1999 -------------------------------
James S. Pignatelli
Chairman of the Board, President
and Principal Executive Officer
/s/ Ira R. Adler
Date: December 29, 1999 -------------------------------
Ira R. Adler
Executive Vice President,
Principal Financial Officer
and Director
/s/ Karen G. Kissinger
Date: December 29, 1999 -------------------------------
Karen G. Kissinger
Principal Accounting Officer
/s/ Elizabeth T. Bilby
Date: December 29, 1999 -------------------------------
Elizabeth T. Bilby
Director
II-5
<PAGE>
/s/ Larry W. Bickle
Date: December 29, 1999 -------------------------------
Larry W. Bickle
Director
/s/ Harold W. Burlingame
Date: December 29, 1999 -------------------------------
Harold W. Burlingame
Director
/s/ Jose L. Canchola
Date: December 29, 1999 -------------------------------
Jose L. Canchola
Director
/s/ John L. Carter
Date: December 29, 1999 -------------------------------
John L. Carter
Director
/s/ Daniel W.L. Fessler
Date: December 29, 1999 -------------------------------
Daniel W.L. Fessler
Director
/s/ John A. Jeter
Date: December 29, 1999 -------------------------------
John A. Jeter
Director
/s/ R.B. O'Rielly
Date: December 29, 1999 -------------------------------
R.B. O'Rielly
Director
/s/ Martha R. Seger
Date: December 29, 1999 -------------------------------
Martha R. Seger
Director
/s/ H. Wilson Sundt
Date: December 29, 1999 -------------------------------
H. Wilson Sundt
Director
II-6
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
* 4(a) -- Amended and Restated Articles of Incorporation
(filed with the Commission on
January 30, 1998, as Exhibit 2(a) to Registrant's
Amendment No. 1 to Form 8-A and
incorporated herein by reference thereto).
* 4(b) -- Bylaws (filed with the Commission on December 23,
1997 as Exhibit 2(b) to Registrant's Form 8-A and
incorporated herein by reference thereto).
5(a) -- Opinion of Dennis R. Nelson, Esq.
5(b) and 8 -- Opinion of Thelen Reid & Priest LLP.
15 -- Letter of PricewaterhouseCoopers LLP regarding
unaudited interim financial information.
23(a) -- The Consents of Dennis R. Nelson and Thelen Reid &
Priest LLP are contained in their opinions as
Exhibits 5(a) and 5(b) and 8, respectively.
23(b) -- Consent of Independent Accountants -
PricewaterhouseCoopers LLP
23(c) -- Consent of Independent Accountants -
PricewaterhouseCoopers LLP
23(d) -- Independent Auditors' Consent-- Deloitte & Touche
LLP
24 -- Power of Attorney is contained herein at page II-5.
- --------------------------------
* Previously filed.
II-7
Exhibit 5(a)
UNISOURCE ENERGY CORPORATION
220 West Sixth Street
P.O. Box 711
Tucson, Arizona 85702
December 29, 1999
Unisource Energy Corporation
220 West Sixth Street
Tucson, Arizona 85701
Ladies and Gentlemen:
I am Vice President and General Counsel of UniSource Energy Corporation, an
Arizona corporation (the "Company"), and have acted as such in connection with
the filing by the Company of a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), relating to the registration of one million shares (the "Shares") of the
Company's common stock, without par value ("Common Stock") and the attached
Preferred Share Purchase Rights (the "Rights"), to be issued under its
Investment Plus Plan (the "Plan").
Subject to the qualifications hereinafter expressed, I am of the opinion
that:
1. The company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Arizona.
2. With respect to the outstanding shares of Common Stock to be purchased
in the open market for sale pursuant to the Plan, when
(a) the Registration Statement shall have become effective under the
Act, and
(b) such shares of Common Stock shall have been so purchased,
such Common Stock will have been legally and validly issued and will be
fully paid and nonassessable; provided, however, that with respect to such
Common Stock heretofore issued pursuant to the Plan and other offerings to
employees and directors, I have necessarily assumed, without investigation,
that the certificates for such Common Stock have been duly countersigned
and registered by a transfer agent and registrar and that, upon the
issuance of such Common Stock, the Company received the full consideration
therefor authorized by the Company's Board of Directors; and provided,
further, that this opinion does not extend to Common Stock issued
subsequent to the date hereof (except as indicated in paragraph (3) below).
3. With respect to authorized but unissued shares of Common Stock to be
issued and sold pursuant to the Plan, when
(a) the Registration Statement shall have become effective under the
Act, and
(b) such Shares shall have been issued, sold and delivered by the
company pursuant to the Plan, all as contemplated by, and in
conformity with, the acts, proceedings and documents referred to
above and the Company's Amended and Restated Articles of
Incorporation,
such Common Stock will have been validly issued and will be fully paid and
nonassessable.
4. The Rights, when issued as contemplated by the Registration Statement,
will be validly issued.
As a member of the Bar of the State of Arizona, I do not hold myself out as
an expert on the laws of other states.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission as Exhibit 5(a) to the Registration Statement and the use of
my name, as counsel, therein. In giving the foregoing consent, I do not thereby
admit that I belong to the category of persons whose consent is required under
Section 7 of the Act, or the rules and regulations promulgated by the Securities
and Exchange Commission thereunder.
Very truly yours,
/s/ Dennis R. Nelson, Esq.
------------------------------
Dennis R. Nelson, Esq.
Vice President and General Counsel
Exhibit 5(b) and 8
THELEN REID & PRIEST LLP
40 West 57th Street
New York, New York 10019
December 29, 1999
UniSource Energy Corporation
220 West Sixth Street
Tucson, Arizona 85701
Ladies and Gentlemen:
We are acting as counsel to UniSource Energy Corporation, an Arizona
corporation (the "Company"), in connection with the filing by the Company of a
Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), relating to the registration of
one million shares (the "Shares") of the Company's Common Stock, without par
value ("Common Stock") and the attached Preferred Share Purchase Rights (the
"Rights"), to be issued under its Investment Plus Plan (the "Plan").
Subject to the qualifications hereinafter expressed, we are of the opinion
that:
1. The company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Arizona.
2. With respect to the authorized but unissued shares of Common Stock to
be issued and sold pursuant to the Plan, when
(a) the Registration Statement shall have become effective under the
Act, and
(b) such Shares shall have been issued, sold and delivered by the
Company pursuant to the Plan, all as contemplated by, and in
conformity with resolutions of the Company's Board of Directors
adopted at a meeting duly held on December 3, 1999 and the
Company's Amended and Restated Articles of Incorporation,
such Common Stock will have been legally and validly issued and will
be fully paid and nonassessable.
3. The Rights, when issued as contemplated by the Registration Statement,
will be validly issued.
We are further of the opinion that the statements contained in the
Prospectus portion of the Registration Statement under the caption "FEDERAL
INCOME TAX INFORMATION" describing certain federal income tax consequences to
holders of the Shares issued pursuant to the Plan, as qualified therein,
constitutes an accurate description, in general terms, of the indicated United
States federal income tax consequences to holders of such Shares.
As members of the New York bar, we do not hold ourselves out as experts of
the laws of other states. To the extent the opinions expressed are dependent
upon matters governed by the law of the State of Arizona, we have relied, with
your consent, upon the opinion of even date herewith rendered to you by Dennis
R. Nelson, Esq.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as Exhibit 5(b) and 8 to the Registration Statement. In
giving the foregoing consent, we do not thereby admit that we belong to the
category of persons whose consent is required under Section 7 of the Act, or the
rules and regulations promulgated by the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Thelen Reid & Priest LLP
THELEN REID & PRIEST LLP
Exhibit 15
December 22, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Commissioners:
We are aware that our reports dated May 17, 1999, May 24, 1999, August 12, 1999
and November 10, 1999 on our review of interim financial information of
UniSource Energy Corporation and its subsidiaries (the Company) and Tucson
Electric Power Company and its subsidiaries (TEP) as of and for the periods
ended March 31, 1999, June 30, 1999 and September 30, 1999 and included in the
Company's and TEP's quarterly reports on Form 10-Q for the quarters then ended
are incorporated by reference in this Registration Statement on Form S-3.
Very truly yours,
/s/ PricewaterhouseCoopers LLP
Exhibit 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 5, 1999 relating to the
consolidated financial statements, which appears in UniSource Energy
Corporation's Annual Report on Form 10-K for the year ended December 31, 1998.
We also consent to the references to us under the heading "Experts" in such
Registration Statement.
/s/ PricewaterhouseCoopers LLP
Los Angeles, California
December 22, 1999
Exhibit 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 30, 1999 relating to the
consolidated financial statements of NewEnergy, Inc. (formerly known as New
Energy Ventures, Inc.), which appears in UniSource Energy Corporation's
Annual Report on Form 10-K for the year ended December 31, 1998.
/s/ PricewaterhouseCoopers LLP
Los Angeles, California
December 22, 1999
Exhibit 23(d)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
UniSource Energy Corporation on Form S-3 of our report dated February 23, 1998,
(March 11, 1999 as to information with respect to 1997 and 1996 periods in
Note 4 and Note 12), appearing in the Annual Report on Form 10-K of UniSource
Energy Corporation for the year ended December 31, 1997 and to the reference
to us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Phoenix, Arizona
December 22, 1999
