Exhibit 4(a)





Exhibit 4(a)




 





INDENTURE OF TRUST

(2010 SERIES A)




BETWEEN




THE INDUSTRIAL DEVELOPMENT AUTHORITY

OF THE COUNTY OF PIMA




AND




U.S. BANK TRUST NATIONAL ASSOCIATION




 






DATED AS OF OCTOBER 1, 2010




 






Authorizing

Industrial Development Revenue Bonds,

2010 Series A

(Tucson Electric Power Company Project)




 





 


 









 







TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I DEFINITIONS
	 	 	2	 
	Section 1.01 Definitions
	 	 	2	 
	ARTICLE II THE BONDS
	 	 	8	 
	Section 2.01 Creation of Bonds
	 	 	8	 
	Section 2.02 Form of Bonds
	 	 	9	 
	Section 2.03 Execution of Bonds
	 	 	9	 
	Section 2.04 Authentication of Bonds
	 	 	10	 
	Section 2.05 Bonds Not General Obligations
	 	 	10	 
	Section 2.06 Prerequisites to Authentication of Bonds
	 	 	10	 
	Section 2.07 Lost or Destroyed Bonds or Bonds Canceled in Error
	 	 	11	 
	Section 2.08 Transfer, Registration and Exchange of Bonds
	 	 	11	 
	Section 2.09 Other Obligations
	 	 	13	 
	Section 2.10 Temporary Bonds
	 	 	13	 
	Section 2.11 Cancellation of Bonds
	 	 	13	 
	Section 2.12 Payment of Principal and Interest
	 	 	13	 
	Section 2.13 Applicability of Book-Entry Provisions
	 	 	14	 
	ARTICLE III REDEMPTION OF BONDS
	 	 	14	 
	Section 3.01 Redemption Provisions
	 	 	14	 
	Section 3.02 Selection of Bonds to be Redeemed
	 	 	15	 
	Section 3.03 Procedure for Redemption
	 	 	16	 
	Section 3.04 Payment of Redemption Price
	 	 	17	 
	Section 3.05 No Partial Redemption After Default
	 	 	17	 
	ARTICLE IV THE BOND FUND
	 	 	17	 
	Section 4.01 Creation of Bond Fund
	 	 	17	 
	Section 4.02 Liens
	 	 	17	 
	Section 4.03 Deposits into Bond Fund
	 	 	17	 
	Section 4.04 Use of Moneys in Bond Fund
	 	 	18	 
	Section 4.05 Custody of Bond Fund; Withdrawal of Moneys
	 	 	18	 
	Section 4.06 Bonds Not Presented for Payment
	 	 	18	 
	Section 4.07 Moneys Held in Trust
	 	 	19	 






 


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TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE V THE CONSTRUCTION FUND
	 	 	19	 
	Section 5.01 Creation of, and Disbursements from, Construction Fund
	 	 	19	 
	Section 5.02 Completion of Facilities; Termination of Construction
	 	 	20	 
	Section 5.03 Redemption of All Outstanding Bonds
	 	 	21	 
	Section 5.04 Acceleration of Bonds
	 	 	21	 
	Section 5.05 Refunding of Bonds
	 	 	21	 
	Section 5.06 Moneys Held in Trust
	 	 	22	 
	ARTICLE VI INVESTMENTS
	 	 	22	 
	Section 6.01 Investments
	 	 	22	 
	ARTICLE VII GENERAL COVENANTS
	 	 	22	 
	Section 7.01 No General Obligations
	 	 	22	 
	Section 7.02 Performance of Covenants of the Authority; Representations
	 	 	23	 
	Section 7.03 Maintenance of Rights and Powers; Compliance with Laws
	 	 	23	 
	Section 7.04 Enforcement of Obligations of the Company; Amendments
	 	 	23	 
	Section 7.05 Further Instruments
	 	 	23	 
	Section 7.06 No Disposition of Trust Estate
	 	 	23	 
	Section 7.07 Financing Statements
	 	 	24	 
	Section 7.08 Tax Covenants; Rebate Fund
	 	 	24	 
	ARTICLE VIII DEFEASANCE
	 	 	25	 
	Section 8.01 Defeasance
	 	 	25	 
	ARTICLE IX DEFAULTS AND REMEDIES
	 	 	26	 
	Section 9.01 Events of Default
	 	 	26	 
	Section 9.02 Remedies
	 	 	27	 
	Section 9.03 Restoration to Former Position
	 	 	28	 
	Section 9.04 Owners’ Right to Direct Proceedings
	 	 	28	 
	Section 9.05 Limitation on Owners’ Right to Institute Proceedings
	 	 	28	 
	Section 9.06 No Impairment of Right to Enforce Payment
	 	 	29	 
	Section 9.07 Proceedings by Trustee without Possession of Bonds
	 	 	29	 
	Section 9.08 No Remedy Exclusive
	 	 	29	 
	Section 9.09 No Waiver of Remedies
	 	 	29	 






 


-ii-









 





TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 9.10 Application of Moneys
	 	 	29	 
	Section 9.11 Severability of Remedies
	 	 	30	 
	ARTICLE X TRUSTEE
	 	 	30	 
	Section 10.01 Acceptance of Trusts
	 	 	30	 
	Section 10.02 No Responsibility for Recitals
	 	 	30	 
	Section 10.03 Limitations on Liability
	 	 	30	 
	Section 10.04 Compensation, Expenses and Advances
	 	 	31	 
	Section 10.05 Notice of Events of Default
	 	 	31	 
	Section 10.06 Action by Trustee
	 	 	32	 
	Section 10.07 Good Faith Reliance
	 	 	32	 
	Section 10.08 Dealings in Bonds and with the Authority and the Company
	 	 	32	 
	Section 10.09 Allowance of Interest
	 	 	32	 
	Section 10.10 Construction of Indenture
	 	 	32	 
	Section 10.11 Resignation of Trustee
	 	 	33	 
	Section 10.12 Removal of Trustee
	 	 	33	 
	Section 10.13 Appointment of Successor Trustee
	 	 	33	 
	Section 10.14 Qualifications of Successor Trustee
	 	 	34	 
	Section 10.15 Judicial Appointment of Successor Trustee
	 	 	34	 
	Section 10.16 Acceptance of Trusts by Successor Trustee
	 	 	34	 
	Section 10.17 Successor by Merger or Consolidation
	 	 	34	 
	Section 10.18 Standard of Care
	 	 	35	 
	Section 10.19 Notice to Owners of Bonds of Event of Default
	 	 	35	 
	Section 10.20 Intervention in Litigation of the Authority
	 	 	35	 
	Section 10.21 Notices of Trustee
	 	 	35	 
	ARTICLE XI EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND PROOF OF OWNERSHIP OF BONDS
	 	 	35	 
	Section 11.01 Execution of Instruments; Proof of Ownership
	 	 	35	 
	ARTICLE XII MODIFICATION OF THIS INDENTURE AND THE LOAN AGREEMENT
	 	 	36	 
	Section 12.01 Limitations
	 	 	36	 
	Section 12.02 Supplemental Indentures without Owner Consent
	 	 	36	 






 


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TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 12.03 Supplemental Indentures with Consent of Owners
	 	 	37	 
	Section 12.04 Effect of Supplemental Indenture
	 	 	38	 
	Section 12.05 Consent of the Company
	 	 	38	 
	Section 12.06 Amendment of Loan Agreement without Consent of Owners
	 	 	38	 
	Section 12.07 Amendment of Loan Agreement with Consent of Owners
	 	 	39	 
	ARTICLE XIII MISCELLANEOUS
	 	 	39	 
	Section 13.01 Successors of the Authority
	 	 	39	 
	Section 13.02 Parties in Interest
	 	 	40	 
	Section 13.03 Severability
	 	 	40	 
	Section 13.04 No Personal Liability of Authority Officials
	 	 	40	 
	Section 13.05 Bonds Owned by the Authority or the Company
	 	 	40	 
	Section 13.06 Counterparts
	 	 	40	 
	Section 13.07 Governing Law
	 	 	41	 
	Section 13.08 Notices
	 	 	41	 
	Section 13.09 Holidays
	 	 	41	 
	Section 13.10 Statutory Notice Regarding Cancellation of Contracts
	 	 	41	 
	 
	 	 	 	 
	Exhibit A — Form of 2010 Series A Bond
	 	 	A-1	 
	Exhibit B — Form of Endorsement of Transfer
	 	 	B-1	 
	Exhibit C — Form of Certificate of Authentication
	 	 	C-1	 
	Exhibit D — Form of Requisition
	 	 	D-1	 





 





	 	 	 
	*	 	This table of contents is not a part of the Indenture and is for convenience only. The
captions herein are of no legal effect and do not vary the meaning or legal effect of any part
of the Indenture.





 


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INDENTURE OF TRUST




THIS INDENTURE OF TRUST (2010 Series A), dated as of October 1, 2010 (this “Indenture”),
between THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE COUNTY OF PIMA, an Arizona nonprofit
corporation designated by law as a political subdivision of the State of Arizona (hereinafter
called the “Authority”), and U.S. Bank Trust National Association, as trustee (hereinafter called
the “Trustee”),



W I T N E S S E T H:




WHEREAS, the Authority is authorized and empowered under Title 35, Chapter 5, Arizona Revised
Statutes, as amended (the “Act”), to issue its bonds in accordance with the Act and to make secured
or unsecured loans for the purpose of financing or refinancing the acquisition, construction,
improvement or equipping of projects consisting of land, any building or other improvement, and all
real and personal properties, including machinery and equipment, whether or not now in existence or
under construction, whether located within or without the State of Arizona or Pima County, which
shall be suitable for, among other things, facilities for the furnishing of electric energy, gas or
water, and to charge and collect interest on such loans and pledge the proceeds of loan agreements
as security for the payment of the principal of and interest on bonds, or designated issues of
bonds, issued by the Authority and any agreements made in connection therewith, whenever the Board
of Directors of the Authority finds such loans to further advance the interest of the Authority or
the public and in the public interest; and



WHEREAS, the Authority proposes to issue and sell its revenue bonds as provided herein (the
“Bonds”) for the purpose of financing a portion of the costs of the acquisition, construction,
improvement and equipping certain of the facilities for the furnishing of electric energy (the
“Facilities”) as described in Exhibit A to the Loan Agreement, dated as of October 1, 2010 (the
“Loan Agreement”), between the Authority and Tucson Electric Power Company, an Arizona corporation
(the “Company”);



NOW, THEREFORE, for and in consideration of these premises and the mutual covenants herein
contained, of the acceptance by the Trustee of the trusts hereby created, of the purchase and
acceptance of the Bonds by the Owners (as hereinafter defined) thereof, and for other good and
valuable consideration the receipt and sufficiency of which are hereby acknowledged, in order to
secure the payment of the principal of and interest on the Bonds at any time Outstanding (as
hereinafter defined) under this Indenture according to their tenor and effect and the performance
and observance by the Authority of all the covenants and conditions expressed or implied herein and
contained in the Bonds, the Authority does hereby grant, bargain, sell, convey, mortgage, pledge
and assign, and grant a security interest in, the Trust Estate (as hereinafter defined) to the
Trustee, its successors in trust and their assigns forever;



TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby conveyed and
assigned, or agreed or intended so to be, to the Trustee, its successors in trust and their assigns
forever;



IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth, first, for the equal and
proportionate benefit and security of all Owners of the Bonds issued under and secured by this
Indenture without preference, priority or distinction as to the lien of any Bonds over any other
Bonds;


 


 









 





PROVIDED, HOWEVER, that if, after the right, title and interest of the Trustee in and to the
Trust Estate shall have ceased, terminated and become void in accordance with ARTICLE VIII hereof,
the principal of and interest on the Bonds shall have been paid to the Owners thereof, or shall
have been paid to the Company pursuant to Section 4.06 hereof, then and in that case these presents
and the estate and rights hereby granted shall cease, terminate and be void, and thereupon the
Trustee shall cancel and discharge this Indenture and execute and deliver to the Authority and the
Company such instruments in writing as shall be requisite to evidence the discharge hereof;
otherwise this Indenture is to be and remain in full force and effect.



THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is expressly declared, that all Bonds
issued and secured hereunder are to be issued, authenticated and delivered, and the Trust Estate
and the other estate and rights hereby granted are to be dealt with and disposed of, under, upon
and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and
purposes as hereinafter expressed, and the Authority has agreed and covenanted, and does hereby
agree and covenant, with the Trustee and with the respective Owners, from time to time, of the
Bonds, as follows:



ARTICLE I




DEFINITIONS




Section 1.01 Definitions. The terms defined in this ARTICLE I shall, for all purposes of this
Indenture, have the meanings herein specified, unless the context clearly requires otherwise:



Act:




“Act” shall mean Title 35, Chapter 5, Arizona Revised Statutes, and all acts supplemental
thereto or amendatory thereof.



Administration Expenses:




“Administration Expenses” shall mean the reasonable expenses incurred by the Authority with
respect to the Loan Agreement, this Indenture and any transaction or event contemplated by the Loan
Agreement or this Indenture, including the compensation and reimbursement of expenses and advances
payable to the Trustee and a pro rata share of the Authority’s annual operating expenses in
accordance with the provisions of Section 4.02(c) of The Industrial Development Authority of the
County of Pima Procedural Pamphlet II, as more fully described in the Tax Agreement.



Authority:



“Authority” shall mean The Industrial Development Authority of the County of Pima, an Arizona
nonprofit corporation designated by law as a political subdivision of the State of Arizona
incorporated for and with the approval of Pima County, Arizona, pursuant to the provisions of the
Constitution of the State of Arizona and the Act, its successors and their assigns.


 


2









 





Authorized Company Representative:




“Authorized Company Representative” shall mean each person at the time designated to act on
behalf of the Company by written certificate furnished to the Authority and the Trustee containing
the specimen signature of such person and signed on behalf of the Company by its President, any
Vice President or its Treasurer, together with its Secretary or any Assistant Secretary.



Bond Counsel:




“Bond Counsel” shall mean any firm or firms of nationally recognized bond counsel experienced
in matters pertaining to the validity of, and exclusion from gross income for federal tax purposes
of interest on bonds issued by states and political subdivisions, selected by the Company and
acceptable to the Authority.



Bond Fund:





“Bond Fund” shall mean the fund created by Section 4.01 hereof.



Bonds:





“Bond” or “Bonds” shall mean the bonds authorized to be issued under this Indenture.



Code:




“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. Each
reference to a section of the Code herein shall be deemed to include the United States Treasury
Regulations proposed or in effect thereunder and applicable to the Bonds or the use of proceeds
thereof, unless the context clearly requires otherwise. References to any particular Code section
shall, in the event of a successor to the Code, be deemed to be a reference to the successor to
such Code section.



Company:




“Company” shall mean Tucson Electric Power Company, a corporation organized and existing under
the laws of the State of Arizona, its successors and their assigns, including, without limitation,
any successor obligor under Section 6.01 or 7.01 of the Loan Agreement to the extent of the
obligations assumed thereunder.


 


3









 





Completion Date:




“Completion Date” shall mean the date specified in Section 3.05 of the Loan Agreement.



Construction (and other forms of the word “construct”):




“Construction” (and other forms of the word “construct”) shall mean, when used with respect to
the Facilities, the construction of the Facilities and shall include, without limitation, the
acquisition, construction, improvement and equipping of the Facilities, all as authorized by the
Act.



Construction Fund:





“Construction Fund” shall mean the fund created by Section 5.01 hereof.



Cost of Construction:




“Cost of Construction” shall embrace all costs paid or incurred by the Company with respect to
the Facilities and the financing thereof for the payment of which the Authority is authorized to
issue bonds under the Act, and shall include without limitation: (a) obligations paid or incurred
by the Company for labor, materials and other expenses and to contractors, builders and materialmen
in connection with the construction of the Facilities; (b) the costs paid or incurred by the
Company for contract bonds and for insurance of all kinds that may be deemed by the Company to be
desirable or necessary during the course of construction of the Facilities; (c) the expenses paid
or incurred by the Company for test borings, surveys, estimates, plans and specifications, and
preliminary investigations therefor, with respect to the Facilities and for supervising
construction, as well as for the performance of all other duties required by or reasonably
necessary for the proper construction, of the Facilities; (d) Administration Expenses paid or
incurred prior to the Completion Date and legal, accounting, financial, underwriting, advertising,
recording and printing expenses and all other fees and expenses paid or incurred by the Company in
connection with the issuance and sale of the Bonds; (e) amounts in respect of interest accruing
upon the Bonds until the Completion Date; (f) all other costs that the Company shall be required to
pay under the terms of any contract or contracts for the construction of the Facilities; and (g)
any other costs or expenses paid or incurred by the Company, and any sums required to reimburse the
Company for work done by it, with respect to the Facilities which are properly chargeable to the
capital account of the Company with respect to the Facilities or would be so chargeable for federal
income tax purposes either with a proper election or but for a proper election to deduct the same.
For purposes of the application of the proceeds of the Bonds, the Cost of Construction shall be
deemed to include the payment or redemption, or provision therefor, of any obligations, other than
the Bonds, issued to finance or refinance any of the costs listed above. The Cost of Construction
shall also be deemed to include all costs paid or incurred with respect to the Facilities by any
Person to whom the Facilities have been leased or sold as a whole or in part, provided that such
costs, had they been paid or incurred by the Company, would otherwise constitute a portion of the
Cost of Construction.



Depositary:




“Depositary” shall mean The Depository Trust Company or any successor thereto as a securities
repository for the Bonds.


 


4









 





Facilities:




“Facilities” shall mean the real and personal properties, machinery and equipment currently
existing, under construction and to be constructed which are described in Exhibit A to the Loan
Agreement, as revised from time to time to reflect any changes therein, additions thereto,
substitutions therefor and deletions therefrom permitted by the terms of the Loan Agreement,
subject, however, to the provisions of Section 7.01 of the Loan Agreement.



Government Obligations:





“Government Obligations” shall mean:




(a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America entitled to the benefit of the
full faith and credit thereof; and




(b) certificates, depositary receipts or other instruments which evidence a direct
ownership interest in obligations described in clause (a) above or in any specific interest
or principal payments due in respect thereof; provided, however, that the custodian of such
obligations or specific interest or principal payments shall be a bank or trust company
organized under the laws of the United States of America or of any state or territory
thereof or of the District of Columbia, with a combined capital stock surplus and undivided
profits of at least $50,000,000; and provided, further, that except as may be otherwise
required by law, such custodian shall be obligated to pay to the holders of such
certificates, depositary receipts or other instruments the full amount received by such
custodian in respect of such obligations or specific payments and shall not be permitted to
make any deduction therefrom.



Indenture:




“Indenture” shall mean this Indenture of Trust, dated as of October 1, 2010, between the
Authority and the Trustee, and any and all modifications, alterations, amendments and supplements
thereto.



Investment Securities:




“Investment Securities” shall mean any of the following obligations or securities on which
neither the Company nor any of its subsidiaries is the obligor: (a) Government Obligations; (b)
interest bearing deposit accounts (which may be represented by certificates of deposit) in
national, state or foreign banks having a combined capital and surplus of not less than
$100,000,000; (c) bankers’ acceptances drawn on and accepted by commercial banks having a
combined capital and surplus of not less than $100,000,000; (d) (i) direct obligations of,
(ii) obligations the principal of and interest on which are unconditionally guaranteed by, and
(iii) any other obligations the interest on which is exempt from federal income taxation issued by,
any state of the United States of America, the District of Columbia or the Commonwealth of Puerto
Rico, or any political subdivision, agency, authority or other instrumentality of any of the
foregoing, which, in any case, are rated by a nationally recognized rating agency in any of its
three highest rating categories; (e) obligations of any agency or instrumentality of the United
States of America; (f) commercial or finance company paper which is rated by a nationally
recognized rating agency in any of its three highest rating categories; (g) corporate debt
securities issued by corporations having debt securities rated by a nationally recognized rating
agency in any of its three highest rating categories; (h) repurchase agreements with banking or
financial institutions having a combined capital and surplus of not less than $100,000,000 with
respect to any of the foregoing obligations or securities; (i) shares or interests in registered
investment companies whose assets consist of obligations or securities which are described in any
other clause of this sentence; and (j) any other obligations which may lawfully be purchased by the
Trustee. The commercial banks and banking institutions referred to above may include the entities
acting as Trustee hereunder if such entity shall otherwise satisfy the requirements set forth
above.


 


5









 





Loan Agreement:




“Loan Agreement” shall mean the Loan Agreement, dated as of October 1, 2010, between the
Authority and the Company relating to the Bonds, and any and all modifications, alterations,
amendments and supplements thereto.



Loan Payments:




“Loan Payments” shall mean the payments required to be made by the Company pursuant to Section
5.01 of the Loan Agreement.



Notice by Mail or Electronic Means:




“Notice by Mail or Electronic Means” or “notice” of any action or condition “by Mail or
Electronic Means” shall mean a written notice meeting the requirements of this Indenture mailed by
first class mail to the Owners of specified registered Bonds at the addresses shown in the
registration books maintained pursuant to Section 2.08 hereof or notice delivered by electronic
means including, without limitation, email in PDF format.



Outstanding:




“Outstanding”, when used in reference to the Bonds, shall mean, as at any particular date, the
aggregate of all Bonds authenticated and delivered under this Indenture except:




(a) those canceled by the Trustee at or prior to such date or delivered to or acquired
by the Trustee at or prior to such date for cancellation;




(b) those deemed to be paid in accordance with ARTICLE VIII hereof; and




(c) those in lieu of or in exchange or substitution for which other Bonds shall have
been authenticated and delivered pursuant to this Indenture, unless proof satisfactory to
the Trustee and the Company is presented that such Bonds are held by a bona fide holder in
due course.



Owner:




“Owner” shall mean the person in whose name any Bond is registered upon the registration books
maintained pursuant to Section 2.08 hereof. The Company may be an Owner.


 


6









 





Person:




“Person” means (i) any corporation, limited liability company, partnership, joint venture,
association, joint-stock company, business trust, or unincorporated organization, in each case
formed or organized under the laws of the United States of America, any state thereof or the
District of Columbia, or (ii) the United States of America or any state thereof, or any political
subdivision of either thereof, or any agency, authority or other instrumentality of any of the
foregoing.



Rebate Fund:





“Rebate Fund” shall mean the fund created by Section 7.08 hereof.



Receipts and Revenues of the Authority from the Loan Agreement:




“Receipts and Revenues of the Authority from the Loan Agreement” shall mean all moneys paid or
payable to the Trustee for the account of the Authority by the Company in respect of the Loan
Payments and payments pursuant to Section 9.01 of the Loan Agreement and all receipts of the
Trustee which, under the provisions of this Indenture, reduce the amount of such payments.



Record Date:




“Record Date” shall mean the close of business on the fifteenth (15th) day of the calendar
month immediately preceding each regularly scheduled interest payment date.



Supplemental Indenture:




“Supplemental Indenture” shall mean any indenture of the Authority modifying, altering,
amending, supplementing or confirming this Indenture for any purpose, in accordance with the terms
hereof.



Supplemental Loan Agreement:



“Supplemental Loan Agreement” shall mean any agreement between the Authority and the Company
modifying, altering, amending or supplementing the Loan Agreement, in accordance with the terms
thereof and hereof.



Tax Agreement:




“Tax Agreement” shall mean that tax certificate and agreement, dated the date of the initial
authentication and delivery of the Bonds, between the Authority and the Company, relating to the
requirements of the Code, and any and all modifications, alterations, amendments and supplements
thereto.


 


7









 





Trust Estate:




“Trust Estate” shall mean at any particular time all right, title and interest of the
Authority in and to the Loan Agreement (except its rights under Sections 5.03, 5.04, 6.03 and 8.05
thereof and any rights of the Authority to receive notices, certificates, requests, requisitions
and other communications thereunder), including without limitation, the Receipts and Revenues of
the Authority from the Loan Agreement, the Bond Fund and the Construction Fund and all moneys and
Investment Securities from time to time on deposit therein (excluding, however, any moneys or
Investment Securities held in the Rebate Fund), any and all other moneys and obligations (other
than Bonds) which at such time are deposited or are required to be deposited with, or are held or
are required to be held by or on behalf of, the Trustee, in trust under any of the provisions of
this Indenture and all other rights, titles and interests which at such time are subject to the
lien of this Indenture; provided, however, that in no event shall there be included in the Trust
Estate (a) moneys or obligations deposited with or held by the Trustee in the Rebate Fund pursuant
to Section 7.08 hereof or (b) moneys or obligations deposited with or paid to the Trustee for the
redemption or payment of Bonds which are deemed to have been paid in accordance with ARTICLE VIII
hereof or moneys held pursuant to Section 4.06 hereof.



Trustee; Principal Office thereof:




“Trustee” shall mean U.S. Bank Trust National Association, as trustee under this Indenture,
its successors in trust and their assigns. “Principal Office” of the Trustee shall mean the
principal corporate trust office of the Trustee, which office at the date of acceptance by the
Trustee of the duties and obligations imposed on the Trustee by this Indenture is located at the
address specified in Section 13.08 hereof.



ARTICLE II




THE BONDS




Section 2.01 Creation of Bonds. There is hereby authorized and created under this Indenture,
for the purpose of providing moneys to pay a part of the Cost of Construction, an issue of Bonds,
entitled to the benefit, protection and security of this Indenture, in the aggregate principal
amount of ONE HUNDRED MILLION DOLLARS ($100,000,000). Each of the
Bonds shall be designated by the title “The Industrial Development Authority of the County of
Pima Industrial Development Revenue Bond, 2010 Series A (Tucson Electric Power Company Project)”.
The Bonds shall mature, subject to prior redemption upon the terms and conditions hereinafter set
forth, on October 1, 2040 and shall bear interest from the date thereof until payment of the
principal or redemption price thereof shall have been made or provided for in accordance with the
provisions hereof, whether at maturity, upon redemption or otherwise, at the rate of FIVE POINT TWO
FIVE PER CENTUM (5.25%) per annum, with interest thereon payable semi-annually on each April 1 and
October 1, commencing April 1, 2011. Interest shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months.


 


8









 





Section 2.02 Form of Bonds. Bonds shall be authenticated and delivered hereunder solely as
fully registered bonds without coupons in the denomination of $5,000 or integral multiples thereof.
Bonds shall be numbered as determined by the Trustee. Bonds authenticated prior to the first
interest payment date shall be dated their date of original issuance. Bonds authenticated on or
subsequent to the first interest payment date shall be dated the interest payment date next
preceding the date of authentication thereof, unless such date of authentication shall be an
interest payment date to which interest on the Bonds has been paid in full or duly provided for, in
which case they shall be dated such date of authentication; provided, however, that if, as shown by
the records of the Trustee, interest on the Bonds shall be in default, Bonds issued in exchange for
Bonds surrendered for transfer or exchange shall be dated the date to which interest has been paid
in full on the Bonds surrendered.



Principal of the Bonds shall be payable to the Owners of such Bonds upon presentation and
surrender of such Bonds at the Principal Office of the Trustee. Interest on the Bonds shall be
paid by check drawn upon the Trustee and mailed to the Owners of such Bonds as of the close of
business on the Record Date with respect to each interest payment date at the registered addresses
of such Owners as they shall appear as of the close of business on such Record Date on the
registration books maintained pursuant to Section 2.08 hereof notwithstanding the cancellation of
any such Bond upon any exchange or registration of transfer subsequent to such Record Date, except
that if and to the extent that there should be a default on the payment of interest on any Bond,
such defaulted interest shall be paid to the Owners in whose name such Bond (or any Bond or Bonds
issued upon any exchange or registration of transfer thereof) is registered as of the close of
business on a date selected by the Trustee in its discretion, but not more than fifteen (15) days
or less than ten (10) days prior to the date of payment of such defaulted interest; notwithstanding
the foregoing, upon request to the Trustee by an Owner of not less than $1,000,000 in aggregate
principal amount of Bonds, interest on such Bonds and, after presentation and surrender of such
Bonds, the principal thereof shall be paid to such Owner by wire transfer to the account maintained
within the continental United States specified by such Owner or, if such Owner maintains an account
with the entity acting as Trustee, by deposit into such account. Payment as aforesaid shall be
made in such coin or currency of the United States of America as, at the respective times of
payment, shall be legal tender for the payment of public and private debts.



The Bonds and the form for registration of transfer and the form of certificate of
authentication to be printed on the Bonds are to be in substantially the forms thereof set forth in
Exhibits A, B and C hereto, respectively, with necessary or appropriate variations, omissions
and insertions as permitted or required by this Indenture.



Section 2.03 Execution of Bonds. The Bonds shall be executed on behalf of the Authority by
the President or a Vice President of the Authority and shall be attested by the Secretary or an
Assistant Secretary of the Authority. Each of the foregoing officers may execute or cause to be
executed with a facsimile signature in lieu of a manual signature the Bonds, provided the signature
of either the President or a Vice President of the Authority or the Secretary or Assistant
Secretary of the Authority shall, if required by applicable laws, be manually subscribed.



In case any officer of the Authority whose signature or a facsimile of whose signature shall
appear on the Bonds shall cease to be such officer before the authentication by the Trustee and
delivery of such Bonds, such signature or such facsimile shall nevertheless be valid and sufficient
for all purposes, the same as if such officer had remained in office until delivery; and any Bond
may be signed on behalf of the Authority by such persons as, at the time of execution of such Bond,
shall be the proper officers of the Authority, even though at the date of such Bond or of the
execution and delivery of this Indenture any such person was not such officer.


 


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Section 2.04 Authentication of Bonds. Only such Bonds as shall have endorsed thereon a
certificate of authentication substantially in the form set forth in Exhibit C hereto duly executed
by the Trustee shall be entitled to any right or benefit under this Indenture. No Bond shall be
valid or obligatory for any purpose unless and until such certificate of authentication shall have
been duly executed by the Trustee, and such executed certificate of authentication of the Trustee
upon any such Bonds shall be conclusive evidence that such Bond has been authenticated and
delivered under this Indenture. The Trustee’s certificate of authentication on any Bond shall be
deemed to have been executed by it if signed with an authorized signature of the Trustee, but it
shall not be necessary that the same person sign the certificate of authentication on all of the
Bonds issued hereunder. This Section 2.04 is subject to the provisions of Section 10.17 hereof.



Section 2.05 Bonds Not General Obligations. Neither Pima County, Arizona nor the State of
Arizona shall in any event be liable for the payment of the principal of or premium, if any, or
interest on the Bonds, and neither the Bonds nor the premium, if any, or the interest thereon,
shall be construed to constitute an indebtedness of Pima County, Arizona or the State of Arizona
within the meaning of any constitutional or statutory provisions whatsoever. The Bonds and the
premium, if any, and the interest thereon shall be limited obligations of the Authority payable
solely from the Receipts and Revenues of the Authority from the Loan Agreement and the other moneys
pledged therefor under this Indenture, and such fact shall be plainly stated on each Bond.



Section 2.06 Prerequisites to Authentication of Bonds. The Authority shall execute and
deliver to the Trustee and the Trustee shall authenticate the Bonds and deliver said Bonds to the
initial purchasers thereof as may be directed hereinafter in this Section 2.06.



Prior to the delivery on original issuance by the Trustee of any authenticated Bonds, there
shall be or have been delivered to the Trustee:




(a) a duly certified copy of a resolution of the Board of Directors of the Authority
authorizing the execution and delivery of this Indenture and the Loan Agreement and the
issuance of the Bonds;




(b) an original duly executed counterpart or a duly certified copy of the Loan
Agreement;




(c) a request and authorization to the Trustee on behalf of the Authority, signed by
any duly authorized officer of the Authority, to authenticate and deliver the Bonds in the
aggregate principal amount determined by this Indenture to the purchaser or purchasers
therein identified upon payment to the Trustee, but for the account of the Authority, of a
sum specified in such request and authorization; and



(b) a written statement on behalf of the Company, executed by the President, any Vice
President or the Treasurer, (i) approving the issuance and delivery of the Bonds and (ii)
consenting to each and every provision of this Indenture.


 


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Section 2.07 Lost or Destroyed Bonds or Bonds Canceled in Error. If any Bond, whether in
temporary or definitive form, is lost (whether by reason of theft or otherwise), destroyed (whether
by mutilation, damage, in whole or in part, or otherwise) or canceled in error, the Authority may
execute and the Trustee may authenticate a new Bond of like date and denomination and bearing a
number not contemporaneously outstanding; provided that (a) in the case of any mutilated Bond, such
mutilated Bond shall first be surrendered to the Trustee and (b) in the case of any lost Bond or
Bond destroyed in whole, there shall be first furnished to the Authority, the Trustee and the
Company evidence of such loss or destruction. In every case, the applicant for a substitute Bond
shall furnish the Authority, the Trustee and the Company such security or indemnity as may be
required by any of them. In the event any lost or destroyed Bond or a Bond canceled in error shall
have matured or is about to mature, or has been called for redemption, instead of issuing a
substitute Bond the Trustee may, in its discretion, pay the same without surrender thereof if there
shall be first furnished to the Authority, the Trustee and the Company evidence of such loss,
destruction or cancellation, together with indemnity, satisfactory to them. Upon the issuance of
any substitute Bond, the Authority and the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation thereto. The Trustee
may charge the Owner of any such Bond with the Trustee’s reasonable fees and expenses in connection
with any transaction described in this Section 2.07.



Every substitute Bond issued pursuant to the provisions of this Section 2.07 by virtue of the
fact that any Bond is lost, destroyed or canceled in error shall constitute an additional
contractual obligation of the Authority, whether or not the Bond so lost, destroyed or canceled
shall be at any time enforceable, and shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Bonds duly issued hereunder. All Bonds shall be
held
and owned upon the express condition that, to the extent permitted by law, the foregoing
provisions are exclusive with respect to the replacement or payment of lost, destroyed or
improperly canceled Bonds, notwithstanding any law or statute now existing or hereafter enacted.



Section 2.08 Transfer, Registration and Exchange of Bonds. The Trustee shall maintain and
keep, at its Principal Office, books for the registration and registration of transfer of Bonds,
which, at all reasonable times, shall be open for inspection by the Authority and the Company; and,
upon presentation for such purpose of any Bond entitled to registration or registration of transfer
at the Principal Office of the Trustee, the Trustee shall register or register the transfer in such
books, under such reasonable regulations as the Trustee may prescribe. The Trustee shall make all
necessary provisions to permit the exchange or registration of transfer of Bonds at its Principal
Office.



The transfer of any Bond shall be registered upon the registration books of the Trustee at the
written request of the Owner thereof or his attorney duly authorized in writing, upon surrender
thereof at the Principal Office of the Trustee, together with a written instrument of transfer
satisfactory to the Trustee duly executed by the Owner or his duly authorized attorney. Upon the
registration of transfer of any such Bond or Bonds, the Authority shall issue in the name of the
transferee, in authorized denominations, a new Bond or Bonds in the same aggregate principal amount
as the surrendered Bond or Bonds.


 


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The Authority and the Trustee may deem and treat the Owner of any Bond as the absolute owner
of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of,
or on account of, the principal of and, except as provided in Section 2.02 hereof, interest on,
such Bond and for all other purposes, and neither the Authority nor the Trustee shall be affected
by any notice to the contrary. All such payments so made to any such Owner or upon his order shall
be valid and effective to satisfy and discharge the liability upon such Bond to the extent of the
sum or sums so paid.



Bonds, upon surrender thereof at the Principal Office of the Trustee may, at the option of the
Owner thereof, be exchanged for an equal aggregate principal amount of Bonds of any authorized
denomination.



In all cases in which the privilege of exchanging Bonds or registering the transfer of Bonds
is exercised, the Authority shall execute and the Trustee shall authenticate and deliver Bonds in
accordance with the provisions of this Indenture. For every such exchange or registration of
transfer of Bonds, whether temporary or definitive, the Authority or the Trustee may make a charge
sufficient to reimburse it for any tax or other governmental charge required to be paid with
respect to such exchange or registration of transfer, which sum or sums shall be paid by the person
requesting such exchange or registration of transfer as a condition precedent to the exercise of
the privilege of making such exchange or registration of transfer. The Trustee shall not be
obligated (a) to make any such exchange or registration of transfer of Bonds during the fifteen
(15) days next preceding the date on which notice of any proposed redemption of
Bonds is given or (b) to make any exchange or registration of transfer of any Bonds called for
redemption.



The Bonds are to be initially registered in the name of Cede & Co., as nominee for the
Depositary. Such Bonds shall not be transferable or exchangeable, nor shall any purported transfer
be registered, except as follows:




(a) such Bonds may be transferred in whole, and appropriate registration of transfer
effected, if such transfer is by such nominee to the Depositary, or by the Depositary to
another nominee thereof, or by any nominee of the Depositary to any other nominee thereof,
or by the Depositary or any nominee thereof to any successor securities depositary or any
nominee thereof; and




(b) such Bond may be exchanged for definitive Bonds registered in the respective names
of the beneficial holders thereof, and thereafter shall be transferable without restriction,
if:




(i) the Depositary shall have notified the Company and the Trustee that it is unwilling
or unable to continue to act as securities depositary with respect to such Bonds and the
Trustee shall not have been notified by the Company within ninety (90) days of the identity
of a successor securities depositary with respect to such Bonds;




(ii) the Company shall have delivered to the Trustee a written instrument to the effect
that such Bonds shall be so exchangeable on and after a date specified therein; or


 


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(iii) (1) an Event of Default shall have occurred and be continuing, (2) the Trustee
shall have given notice of such Event of Default pursuant to Section 10.19 hereof and (3)
there shall have been delivered to the Authority, the Company and the Trustee an opinion of
counsel to the effect that the interests of the beneficial owners of such Bonds in respect
thereof will be materially impaired unless such owners become owners of definitive Bonds.



The Bonds delivered to the Depositary may contain a legend reflecting the foregoing
restrictions on registration of transfer and exchange.



Section 2.09 Other Obligations. The Authority expressly reserves the right to issue, to the
extent permitted by law, but shall not be obligated to issue, obligations under another indenture
or indentures to provide additional funds to pay the Cost of Construction of the Facilities or to
refund all or any principal amount of the Bonds, or any combination thereof.



Section 2.10 Temporary Bonds. Pending the preparation of definitive Bonds, the Authority may
execute and the Trustee shall authenticate and deliver temporary Bonds. Temporary Bonds shall be
issuable as registered Bonds without coupons, of any authorized denomination, and substantially in
the form of the definitive Bonds but with such omissions, insertions and variations as may be
appropriate for temporary Bonds, all as may be determined
by the Authority. Temporary Bonds may contain such reference to any provisions of this
Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and be
authenticated by the Trustee upon the same conditions and in substantially the same manner, and
with like effect, as the definitive Bonds. As promptly as practicable the Authority shall execute
and shall furnish definitive Bonds and thereupon temporary Bonds may be surrendered in exchange
therefor without charge at the Principal Office of the Trustee, and the Trustee shall authenticate
and deliver in exchange for such temporary Bonds a like aggregate principal amount of definitive
Bonds of authorized denominations. Until so exchanged the temporary Bonds shall be entitled to the
same benefits under this Indenture as definitive Bonds.



Section 2.11 Cancellation of Bonds. All Bonds which shall have been surrendered to the
Trustee for payment or redemption, and all Bonds which shall have been surrendered to the Trustee
for exchange or registration of transfer, shall be delivered to the Trustee for cancellation. All
Bonds delivered to or acquired by the Trustee for cancellation shall be canceled and destroyed by
the Trustee. The Trustee shall furnish to the Authority and the Company counterparts of
certificates evidencing such cancellation and destruction and specifying such Bonds by number.



Section 2.12 Payment of Principal and Interest. For the payment of interest on the Bonds, the
Authority shall cause to be deposited in the Bond Fund, on each interest payment date, solely out
of the Receipts and Revenues of the Authority from the Loan Agreement and other moneys pledged
therefor, an amount sufficient to pay the interest to become due on such interest payment date.
The obligation of the Authority to cause any such deposit to be made hereunder shall be reduced by
the amount of moneys in the Bond Fund available on such interest payment date for the payment of
interest on the Bonds.


 


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For the payment of the principal of the Bonds upon maturity, the Authority shall cause to be
deposited in the Bond Fund, on the stated or accelerated date of maturity, solely out of the
Receipts and Revenues of the Authority from the Loan Agreement and other moneys pledged therefor,
an amount sufficient to pay the principal of the Bonds. The obligation of the Authority to cause
any such deposit to be made hereunder shall be reduced by the amount of moneys in the Bond Fund
available on the maturity date for the payment of the principal of the Bonds.



Section 2.13 Applicability of Book-Entry Provisions. Anything in this Indenture to the
contrary notwithstanding, (a) the provisions of the Blanket Issuer Letter of Representations, dated
February 26, 1996, between the Authority and The Depository Trust Company relating to the manner of
and procedures for payment and redemption of Bonds and related matters shall apply so long as such
Depositary shall be the Owner of all Outstanding Bonds and (b) the Authority and the Trustee, as
applicable, may enter into a similar agreement, on terms satisfactory to the Company, with any
subsequent Depositary and the provisions thereof shall apply so long as such Depositary shall be
the Owner of all Outstanding Bonds.



ARTICLE III




REDEMPTION OF BONDS




Section 3.01 Redemption Provisions. (a) The Bonds shall be subject to redemption by the
Authority, at the direction of the Company, on any date on or after October 1, 2020 in whole at any
time or in part from time to time, at 100% of the principal amount thereof plus accrued interest,
if any, to the redemption date.



(b) The Bonds shall be subject to redemption by the Authority, at the direction of the
Company, in whole at any time at 100% of the principal amount thereof plus accrued interest, if
any, to the redemption date, if:




(i) the Company shall have determined that the continued operation of the Facilities is
impracticable, uneconomical or undesirable for any reason;




(ii) all or substantially all of the Facilities shall have been condemned or taken by
eminent domain; or




(iii) the operation of the Facilities shall have been enjoined or shall have otherwise
been prohibited by, or shall conflict with, any order, decree, rule or regulation of any
court or of any federal, state or local regulatory body, administrative agency or other
governmental body.



(c) The Bonds shall be subject to mandatory redemption by the Authority, at 100% of the
principal amount thereof plus accrued interest to the redemption date, on the 180th day (or such
earlier date as may be designated by the Company) after a final determination by a court of
competent jurisdiction or an administrative agency, to the effect that, as a result of a failure by
the Company to perform or observe any covenant, agreement or representation contained in the Loan
Agreement, the interest payable on the Bonds is included for federal income tax purposes in the
gross income of the owners thereof, other than any owner of a Bond who



 


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is a “substantial user” of
the Facilities or a “related person” within the meaning of Section 147(a) of the Code. No determination by any court or administrative agency shall be considered final for the purposes of
this Section 3.01(c) unless the Company shall have been given timely notice of the proceeding which
resulted in such determination and an opportunity to participate in such proceeding, either
directly or through an owner of a Bond, and until the conclusion of any appellate review sought by
any party to such proceeding or the expiration of the time for seeking such review. The Bonds shall
be redeemed either in whole or in part in such principal amount that, in the opinion of Bond
Counsel, the interest payable on the Bonds, including the Bonds remaining outstanding after such
redemption, would not be included in the gross income of any owner thereof, other than an owner of
a Bond who is a “substantial user” of the Facilities or a “related person” within the meaning of
Section 147(a) of the Code.



(d) In the event that the aggregate of the amounts deposited pursuant to Section 5.02 hereof
into the Bond Fund, together with any income or other gain from the investment thereof, shall at
any time, or from time to time, be equal to or greater than $5,000, but only to the extent that
such amounts are required under Section 4.04(b) hereof to be applied to the redemption of Bonds,
the Authority shall redeem Bonds, at the principal amount thereof plus accrued interest to the
redemption date, in the largest aggregate principal amount which does not exceed the amount
of such deposit or deposits, together with such income or gain, on the next interest payment
date on which a redemption may be made in accordance with the provisions of Section 3.03(a) or
Section 3.03(b) hereof and on which Bonds, in such amount, are otherwise redeemable at the
principal amount thereof under subsection (a) or (b) of this Section 3.01.



Section 3.02 Selection of Bonds to be Redeemed. If less than all the Bonds shall be called
for redemption under any provision of this Indenture permitting such partial redemption, the
particular Bonds or portions of Bonds to be redeemed shall be selected by the Trustee, in such
manner as the Trustee in its discretion may deem proper, in the aggregate principal amount
designated to the Trustee by the Company or otherwise as required by this Indenture; provided,
however, that if, as indicated in a certificate of an Authorized Company Representative delivered
to the Trustee, the Company shall have offered to purchase all Bonds then Outstanding and less than
all such Bonds have been tendered to the Company for such purchase, the Trustee, at the direction
of an Authorized Company Representative, shall select for redemption all such Bonds which shall not
have been so tendered; and provided, further, that the portion of any Bond to be redeemed shall be
in the principal amount of $5,000 or some integral multiple thereof and that, in selecting Bonds
for redemption, the Trustee shall treat each Bond as representing that number of Bonds which is
obtained by dividing the principal amount of such Bond by $5,000. If it is determined that one or
more, but not all, of the $5,000 units of principal amount represented by any such Bond is to be
called for redemption, then, upon notice of intention to redeem such $5,000 unit or units, the
Owner of such Bond shall forthwith surrender such Bond to the Trustee for (y) payment to such Owner
of the redemption price (including the redemption premium, if any, and accrued interest to the date
fixed for redemption) of the $5,000 unit or units of principal amount called for redemption and (z)
delivery to such Owner of a new Bond or Bonds in the aggregate principal amount of the unredeemed
balance of the principal amount of any such Bond. Bonds representing the unredeemed balance of the
principal amount of any such Bond shall be delivered to the Owner thereof, without charge therefor.
If the Owner of any such Bond of a denomination greater than $5,000 shall fail to present such
Bond to the Trustee for payment and exchange as aforesaid, such Bond shall, nevertheless, become
due and payable on the date fixed for redemption to the extent of the $5,000 unit or units of
principal amount called for redemption (and to that extent only).


 


15









 





Section 3.03 Procedure for Redemption. (a) In the event any of the Bonds are called for
redemption, the Trustee shall give notice, in the name of the Authority, of the redemption of such
Bonds, which notice shall (i) specify the Bonds to be redeemed, the redemption date, the redemption
price, and the place or places where amounts due upon such redemption will be payable (which shall
be the Principal Office of the Trustee) and, if less than all of the Bonds are to be redeemed, the
numbers assigned to the Bonds to be redeemed, if any, and the portion of the principal amount of
any Bond to be redeemed in part, (ii) state any condition to such redemption and (iii) state that
on the redemption date, and upon the satisfaction of any such condition, the Bonds or portions
thereof to be redeemed shall cease to bear interest. Such notice may set forth any additional
information relating to such redemption. Such notice shall be given by Mail or Electronic Means at
least twenty (20) days prior to the date fixed for redemption to the Owners of the Bonds to be
redeemed; provided, however, that failure duly to give such Notice by Mail or Electronic Means, or
any defect therein, shall not affect the validity of any proceedings for the
redemption of Bonds as to which there shall have been no such failure or defect. If a notice
of redemption shall be unconditional, or if the conditions of a conditional notice or redemption
shall have been satisfied, then upon presentation and surrender of Bonds so called for redemption
at the place or places of payment, such Bonds shall be redeemed. The Trustee shall promptly
deliver to the Company a copy of each such notice of redemption.



(b) With respect to any notice of redemption of Bonds in accordance with subsection (a) or (b)
of Section 3.01 hereof, unless, upon the giving of such notice, such Bonds shall be deemed to have
been paid within the meaning of ARTICLE VIII hereof, such notice shall state that such redemption
shall be conditional upon the receipt, by the Trustee at or prior to the opening of business on the
date fixed for such redemption, of moneys sufficient to pay the principal of and interest on such
Bonds to be redeemed, and that if such moneys shall not have been so received said notice shall be
of no force and effect and the Authority shall not be required to redeem such Bonds and such
failure to redeem shall not constitute an event of default hereunder. In the event that such
notice of redemption contains such a condition and such moneys are not so received or any other
condition specified in the notice of redemption shall not have been met, the redemption shall not
be made and the Trustee shall within a reasonable time thereafter give notice, in the manner in
which the notice of redemption was given, that such moneys were not so received.



(c) Any Bonds and portions of Bonds which have been duly selected for redemption shall cease
to bear interest on the specified redemption date provided that moneys sufficient to pay the
principal of and interest on such Bonds shall be on deposit with the Trustee on the date fixed for
redemption so that such Bonds will be deemed to be paid in accordance with ARTICLE VIII hereof.



(d) Any notice of redemption delivered pursuant to Section 3.01(a) hereof may be revoked by
the Company by written notice delivered to the Trustee by the Company not less than two (2)
business days prior to the redemption date.


 


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Section 3.04 Payment of Redemption Price. For the redemption of any of the Bonds, the
Authority shall cause to be deposited in the Bond Fund, on the redemption date, solely out of the
Receipts and Revenues of the Authority from the Loan Agreement, an amount sufficient to pay the
principal of and interest to become due on such redemption date. The obligation of the Authority
to cause any such deposit to be made hereunder shall be reduced by the amount of moneys in the Bond
Fund available on such redemption date for payment of the principal of and accrued interest on the
Bonds to be redeemed.



Section 3.05 No Partial Redemption After Default. Anything in this Indenture to the contrary
notwithstanding, if there shall have occurred and be continuing an Event of Default defined in
clause (a) or (b) of the first paragraph of Section 9.01 hereof, there shall be no redemption of
less than all of the Bonds at the time Outstanding other than a partial redemption in connection
with an offer by the Company to purchase all Bonds Outstanding as contemplated in the first proviso
to the first sentence of Section 3.02 hereof.



ARTICLE IV




THE BOND FUND




Section 4.01 Creation of Bond Fund. There is hereby created and established with the Trustee
a trust fund in the name of the Authority to be designated “The Industrial Development Authority of
The County of Pima Industrial Development Revenue Bonds, 2010 Series A (Tucson Electric Power
Company Project) Bond Fund.” The Trustee shall establish and maintain within the Bond Fund such
segregated subaccounts as may be requested by an Authorized Company Representative. The Bond Fund,
and all moneys and certificated securities therein, shall be kept in the possession of the Trustee.



Section 4.02 Liens. The Authority shall not create any lien upon the Bond Fund or upon the
Receipts and Revenues of the Authority from the Loan Agreement other than the lien hereby created.




Section 4.03 Deposits into Bond Fund. (a) There shall be deposited into the Bond Fund:




(i) all amounts required to be deposited into the Bond Fund by Section 5.02 hereof;




(ii) all amounts required to be deposited into the Bond Fund by Section 5.03 and
Section 5.04 hereof;




(iii) all Loan Payments; and




(iv) all other moneys received by the Trustee under and pursuant to any provision of
the Loan Agreement, other than Sections 5.03, 5.04 and 8.05 thereof, or from any other
source when accompanied by directions by the Company that such moneys are to be paid into
the Bond Fund, such moneys to be deposited into the account specified by such provision of
the Loan Agreement or by such directions, or, if no specification is made, into the General
Account.


 


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(b) All income or other gain from the investment of moneys in the Bond Fund shall be retained
therein.




Section 4.04 Use of Moneys in Bond Fund.



(a) Except as otherwise provided in Section 4.06, Section 9.01 and Section 10.04, all moneys
in the Bond Fund constituting part of the Trust Estate shall be used solely for the payment of the
principal of and interest on the Bonds as the same shall become due and payable at maturity, upon
redemption or otherwise.



(b) Moneys deposited pursuant to Section 5.02 hereof, and any income or other gain from the
investment thereof, shall be applied by the Trustee (i) in whole or in part (A) to the
purchase of Bonds in such amounts, at such prices, at such times and otherwise as directed by
an Authorized Company Representative, or to the redemption, at the direction of the Company, of
Bonds pursuant to subsection (a) or, if applicable, (b) or (d) of Section 3.01 hereof or (B) in any
other manner directed by an Authorized Company Representative which, as indicated in an opinion of
Bond Counsel furnished by the Company to the Authority and the Trustee, will not, in and of itself,
impair the validity under the Act of the Bonds or the exclusion of the interest on the Bonds from
gross income for federal income tax purposes, or, in the absence of any such purchase, redemption
or direction on or prior to the forty-fifth (45th) day prior to the first interest payment date
specified in Section 3.01(d) hereof, (ii) to the payment of principal upon the redemption, from
time to time, of Bonds pursuant to Section 3.01(d) hereof, any moneys which are not so applied to
be retained and applied by the Trustee to the payment of principal of Bonds either at maturity or
upon the redemption of all or any portion of the Bonds, whichever occurs first. Pending the
application of moneys deposited into the Bond Fund pursuant to Section 5.02 hereof, such moneys may
be invested in Investment Securities in the manner permitted by Section 6.01 hereof and in
accordance with the provisions of the Tax Agreement.



Section 4.05 Custody of Bond Fund; Withdrawal of Moneys. The Bond Fund shall be in the
custody of the Trustee but in the name of the Authority and the Authority hereby authorizes and
directs the Trustee to withdraw from the Bond Fund funds constituting part of the Trust Estate
sufficient to pay the principal of and interest on the Bonds as the same shall become due and
payable, and to withdraw from the Bond Fund funds sufficient to pay any other amounts payable
therefrom as the same shall become due and payable.



Section 4.06 Bonds Not Presented for Payment. In the event any Bonds shall not be presented
for payment when the principal thereof becomes due, either at maturity or at the date fixed for
redemption thereof or otherwise, if moneys sufficient to pay such Bonds are held by the Trustee for
the benefit of the Owners thereof, the Trustee shall segregate and hold such moneys in trust,
without liability for interest thereon, for the benefit of the Owners of such Bonds, who shall,
except as provided in the following paragraph, thereafter be restricted exclusively to such fund or
funds for the satisfaction of any claim of whatever nature on their part under this Indenture or
relating to said Bonds.


 


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Any moneys which the Trustee shall segregate and hold in trust for the payment of the
principal of or interest on any Bond and remaining unclaimed for one (1) year after such principal
or interest has become due and payable shall be paid to the Company; provided, however, that before
the Trustee shall be required to make any such repayment, the Trustee shall, at the expense of the
Company, cause notice to be given by Mail or Electronic Means to the effect that such money remains
unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days
from the date of such notice by Mail or Electronic Means, any unclaimed balance of such moneys then
remaining will be paid to the Company. After the payment of such unclaimed moneys to the Company,
the Owner of such Bond shall thereafter look only to the Company for the payment thereof, and all
liability of the Authority and the Trustee with respect to such moneys shall thereupon cease.



Section 4.07 Moneys Held in Trust. All moneys and Investment Securities held by the Trustee
in the Bond Fund, and all moneys required to be deposited with or paid to the Trustee for deposit
into the Bond Fund, and all moneys withdrawn from the Bond Fund and held by the Trustee, shall be
held by the Trustee, in trust, and such moneys and Investment Securities (other than moneys held
pursuant to Section 4.06 hereof and moneys or Investment Securities held in the Rebate Fund
established in furtherance of the obligations of the Company under clause (b) of Section 6.04 of
the Loan Agreement), while so held or so required to be deposited or paid, shall constitute part of
the Trust Estate and be subject to the lien and security interest created hereby in favor of the
Trustee, for the benefit of the Owners from time to time of the Bonds. The Company shall have no
right, title or interest in the Bond Fund, except such rights as may arise after the right, title
and interest of the Trustee in and to the Trust Estate and all covenants, agreements and other
obligations of the Authority under this Indenture shall have ceased, terminated and become void and
shall have been satisfied and discharged in accordance with ARTICLE VIII hereof.



ARTICLE V




THE CONSTRUCTION FUND





Section 5.01 Creation of, and Disbursements from, Construction Fund.



(a) There is hereby created and established with the Trustee a trust fund in the name of the
Authority to be designated “The Industrial Development Authority of the County of Pima Industrial
Development Revenue Bonds, 2010 Series A (Tucson Electric Power Company Project) Construction
Fund”. The Trustee shall establish and maintain any subaccount within the Construction Fund which
may be requested by an Authorized Company Representative. The Construction Fund, and all moneys
and certificated securities therein, shall be kept in the possession of the Trustee. The Authority
shall not create any lien upon the Construction Fund other than the lien hereby created.



(b) The proceeds from the issuance and sale of the Bonds shall be deposited into the
Construction Fund. All income or other gain from the investment of moneys in the Construction Fund
shall be retained in the Construction Fund.


 


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(c) The Trustee is hereby authorized and directed to disburse moneys in the Construction Fund
to or upon the order of the Company from time to time upon receipt by the Trustee of requisitions
substantially in the form of Exhibit D attached hereto executed by, or communications by e-mail in
PDF format or facsimile transmission from, an Authorized Company Representative, which requisitions
or communications shall state with respect to each payment to be made: (i) the requisition number,
(ii) the name and address of the person, firm or corporation to whom payment is due or has been
made (or, in the case of payments to the Bond Fund, instructions to make such payments thereto),
(iii) the amount paid or to be paid, (iv) (A) that each obligation, item of cost or expense with
respect to which such requisition is being made has been properly incurred and has been paid or is
then due and payable as an item of the Cost of Construction, is a proper charge against the
Construction Fund, and has not been the basis of any
previous final payment therefrom or from the proceeds of any other obligations issued by the
Authority or (B) in the event that a portion of the Bonds shall have been paid, redeemed or deemed
to have been paid within the meaning of ARTICLE VIII hereof by reason of the application of the
proceeds of the sale of any obligations issued under an indenture other than this Indenture and if
the payment of such requisition is to be made into the construction, acquisition or other similar
fund created under such other indenture, that upon disbursement from such construction, acquisition
or other similar fund, each obligation, item of cost or expense mentioned in the requisition for
such disbursement shall have been properly incurred and shall have been paid or will then be due
and payable as an item of the Cost of Construction, (v) that the payment of such requisition will
not result in a breach of any of the covenants of the Company contained in Section 4.04 (c) or (d)
of the Loan Agreement and (vi) that, to the best of the knowledge of such Authorized Company
Representative, there shall not have occurred and be continuing any event of default under the Loan
Agreement. In Section 4.04 of the Loan Agreement the Company has agreed that any such
communication by e-mail or facsimile transmission shall be promptly confirmed by a requisition,
substantially in the form of Exhibit D hereto, executed by an Authorized Company Representative.



(d) In paying any requisition under this Section 5.01, the Trustee shall be entitled to
conclusively rely as to the completeness and accuracy of all statements in such requisition upon
the approval of such requisition by an Authorized Company Representative, execution thereof to be
conclusive evidence of such approval, and the Company has by the provisions of the Loan Agreement
covenanted and agreed to indemnify and save harmless the Trustee from any liability incurred in
connection with the payment of any requisition so executed by an Authorized Company Representative.



The Trustee shall keep and maintain adequate records pertaining to the Construction Fund and
all disbursements therefrom and, upon receipt of a certificate furnished pursuant to Section 3.05
or Section 3.09(b) of the Loan Agreement, the Trustee shall, if requested in writing by the
Authority or the Company, file an accounting thereof with the Authority and with the Company.



Section 5.02 Completion of Facilities; Termination of Construction. Upon receipt by the
Trustee of a certificate furnished pursuant to Section 3.05 or Section 3.09(b) of the Loan
Agreement, any balance remaining in the Construction Fund (other than amounts retained by the
Trustee at the direction of the Company pursuant to Section 3.05 or 3.09 of the Loan Agreement or
in furtherance of the covenant of the Company contained in clause (b) of Section 6.04 of the Loan
Agreement) shall (a) be applied in whole or in part (i) to the purchase of Bonds in such amounts,
at such prices, at such times and otherwise as directed by an Authorized Company Representative, or
(ii) in any other manner directed by the Company which, as indicated in an opinion of Bond Counsel




 


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furnished by the Company to the Authority and the Trustee, will not impair the validity under the
Act of the Bonds or the exclusion of the interest on the Bonds from gross income for federal income
tax purposes or (b) in the absence of any such purchase or direction within sixty (60) days of the
receipt by the Trustee of such certificate (or such shorter period as the Company shall direct), be
deposited by the Trustee into the Bond Fund. From time to time as the proper disposition of the
amounts retained by the Trustee in the Construction Fund
as aforesaid shall be determined, to the extent that such amounts are not paid out in full by
the Trustee pursuant to Section 5.01 or Section 6.01 hereof, the Company shall so notify the
Trustee and the Authority by one or more certificates as aforesaid and any amounts from time to
time no longer to be so retained by the Trustee shall be applied as aforesaid. Pending the
application of any moneys remaining in the Construction Fund following the receipt of the aforesaid
certificate, such moneys may be invested in Investment Securities in the manner permitted by
Section 6.01 hereof and in accordance with the provisions of the Tax Agreement.



Section 5.03 Redemption of All Outstanding Bonds. Except as set forth in Section 5.05 hereof,
in the event that all Outstanding Bonds are to be redeemed, the Trustee shall, without further
authorization, deposit into the Bond Fund all amounts remaining in the Construction Fund
constituting part of the Trust Estate, with advice to the Authority and the Company of such action,
such deposit to be made on the date fixed for such redemption.



Section 5.04 Acceleration of Bonds. In the event that the principal of the Bonds shall have
become due and payable pursuant to Section 9.01 hereof, the Trustee shall, without further
authorization, deposit into the Bond Fund all amounts constituting part of the Trust Estate
remaining in the Construction Fund, with advice to the Authority and the Company of such action,
such deposit to be made on the date fixed for such acceleration.



Section 5.05 Refunding of Bonds. In the event that all Outstanding Bonds are paid, redeemed
or deemed to have been paid within the meaning of ARTICLE VIII hereof by reason of the application
of the proceeds of the sale of any obligations the interest on which is exempt from federal income
taxation, under an indenture other than this Indenture, the Trustee shall, without further
authorization, withdraw all amounts constituting part of the Trust Estate remaining in the
Construction Fund and deposit such amounts into corresponding accounts in the construction,
acquisition or other similar fund created under the indenture under which such obligations are
issued, with advice to the Authority and the Company of such action, such withdrawals and deposits
to be made, in accordance with the provisions of such indenture, on the date on which such Bonds
are so paid, redeemed or deemed to have been paid; provided, however, that if Bonds shall have been
paid, redeemed or deemed to have been paid within the meaning of ARTICLE VIII hereof by reason of
the application of the proceeds of the sale of more than one issue of obligations the interest on
which is excluded from gross income for federal income tax purposes under indentures other than
this Indenture, the Trustee shall, if directed by an Authorized Company Representative, withdraw
all amounts remaining in the Construction Fund and such amounts shall be allocated among, and
deposited into, as directed by such Authorized Company Representative, corresponding accounts in
the construction, acquisition or other similar funds created under the indentures under which such
obligations are issued, with advice to the Authority and the Company of such action, such
withdrawals and deposits to be made, in accordance with the provisions of such indentures, on the
date on which all Bonds are so paid, redeemed or deemed to have been paid.




 


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Section 5.06 Moneys Held in Trust. All moneys and Investment Securities held by the Trustee
in the Construction Fund, shall be held by the Trustee, in trust and such moneys and Investment
Securities (other than any moneys or Investment Securities held in the Construction Fund
established in furtherance of the obligations of the Company under Section 6.04(b) of the Loan
Agreement) while so held or so required to be deposited or paid, shall constitute part of the Trust
Estate and be subject to the lien and security interest created hereby in favor of the Trustee for
the benefit of the Owners from time to time of the Bonds. The Company shall have no right, title
or interest in the Construction Fund, except that, to the extent not required to be applied in
another manner by any provision hereof, moneys held by the Trustee in the Construction Fund shall
be disbursed by the Trustee to the Company upon and to the extent of, but solely upon and to the
extent of, satisfaction of the conditions set forth in Section 5.01(c) hereof.



ARTICLE VI




INVESTMENTS




Section 6.01 Investments. The moneys in the Construction Fund and in the Bond Fund shall, at
the written direction of the Company, be invested and reinvested in Investment Securities. Any
Investment Securities may be purchased subject to options or other rights in third parties to
acquire the same. In addition, the Trustee shall, at the written direction of the Company, enter
into (i) reverse repurchase agreements and option agreements with respect to any Investment
Securities held by it and (ii) transactions for the purchase or sale of financial futures contracts
in obligations which constitute Investment Securities or options on financial futures contracts in
obligations which constitute Investment Securities. Subject to the further provisions of this
Section 6.01, such investments shall be made by the Trustee as directed and designated by the
Company in a certificate of, or telephonic advice promptly confirmed by a certificate of, an
Authorized Company Representative. As and when any amounts thus invested may be needed for
disbursements from the Construction Fund or the Bond Fund, the Trustee shall request the Company to
designate such investments to be sold or otherwise converted into cash to the credit of such fund
as shall be sufficient to meet such disbursement requirements and shall then follow any directions
in respect thereto of an Authorized Company Representative. As long as no Event of Default (as
defined in Section 9.01 hereof) shall have occurred and be continuing, the Company shall have the
right to designate the investments to be sold and to otherwise direct the Trustee in the sale or
conversion to cash of the investments made with the moneys in the Construction Fund and in the Bond
Fund, provided that the Trustee shall be entitled to conclusively assume the absence of any such
Event of Default unless it has notice thereof within the meaning of Section 10.05 hereof.



ARTICLE VII




GENERAL COVENANTS




Section 7.01 No General Obligations. Each and every covenant herein made, including all
covenants made in the various sections of this ARTICLE VII, is predicated upon the condition that
neither Pima County, Arizona nor the State of Arizona shall in any event be liable for the payment
of the principal of, or premium, if any, or interest on the Bonds or for the performance of any
pledge, mortgage, obligation or agreement created by or arising out of this
Indenture or the issuance of the Bonds, and further that neither the Bonds, nor the premium,
if any, or interest thereon, nor any such obligation or agreement of the Authority shall be
construed to constitute an indebtedness of Pima County, Arizona or the State of Arizona within the
meaning of any constitutional or statutory provisions whatsoever. The Bonds and the interest and
premium, if any, thereon shall be limited obligations of the Authority payable solely from the
Receipts and Revenues of the Authority from the Loan Agreement and the other moneys pledged
therefor.



 


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The Authority shall promptly cause to be paid, solely from the sources stated herein, the
principal of and premium, if any, and interest on every Bond issued under this Indenture at the
place, on the dates and in the manner provided herein and in said Bonds according to the true
intent and meaning thereof.



Section 7.02 Performance of Covenants of the Authority; Representations. The Authority shall
faithfully perform at all times any and all covenants, undertakings, stipulations and provisions
contained in this Indenture, in any and every Bond executed, authenticated and delivered hereunder,
and in all proceedings pertaining thereto. The Authority represents that it is duly authorized
under the Constitution and laws of the State of Arizona to issue the Bonds authorized hereby, to
enter into the Loan Agreement and this Indenture, and to pledge and assign to the Trustee the Trust
Estate, and that the Bonds in the hands of the Owners thereof are and will be valid and binding
limited obligations of the Authority.



Section 7.03 Maintenance of Rights and Powers; Compliance with Laws. The Authority shall at
all times use its best efforts to maintain its corporate existence or assure the assumption of its
obligations under this Indenture by any public body succeeding to its powers under the Act; and it
shall at all times use its best efforts to comply with all valid acts, rules, regulations, orders
and directions of any legislative, executive, administrative or judicial body known to it to be
applicable to the Loan Agreement and this Indenture.



Section 7.04 Enforcement of Obligations of the Company; Amendments. Upon receipt of written
notification from the Trustee, the Authority shall cooperate with the Trustee in enforcing the
obligation of the Company to pay or cause to be paid all the payments and other costs and charges
payable by the Company under the Loan Agreement. The Authority shall not enter into any agreement
with the Company amending the Loan Agreement without the prior written consent of the Trustee and
compliance with Section 12.06 and Section 12.07 of this Indenture (a revision to Exhibit A to the
Loan Agreement not being deemed an amendment for purposes of this Section).



Section 7.05 Further Instruments. The Authority shall, upon the reasonable request of the
Trustee, from time to time execute and deliver such further instruments and take such further
action as may be reasonable and as may be required to carry out the purposes of this Indenture;
provided, however, that no such instruments or actions shall pledge the credit or taxing power of
the State of Arizona, Pima County, the Authority or any other political subdivision of said State.



Section 7.06 No Disposition of Trust Estate. Except as permitted by this Indenture, the
Authority shall not sell, lease, pledge, assign or otherwise dispose of or encumber its interest in
the Trust Estate and will promptly pay or cause to be discharged or make adequate provision to
discharge any lien or charge on any part thereof not permitted hereby.



 


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Section 7.07 Financing Statements. The Authority and the Trustee shall cooperate with the
Company in causing appropriate financing statements naming, the Trustee as pledgee of the Receipts
and Revenues of the Authority from the Loan Agreement and of the other moneys pledged under the
Indenture for the payment of the principal of and interest on the Bonds, and as pledgee and
assignee of the balance of the Trust Estate, and the Authority shall cooperate with the Trustee and
the Company in causing appropriate continuation statements to be duly filed and recorded in the
appropriate state and county offices as required by the provisions of the Uniform Commercial Code
or other similar law as adopted in the State of Arizona and any other applicable jurisdiction, as
from time to time amended, in order to perfect and maintain the security interests created by this
Indenture.



Section 7.08 Tax Covenants; Rebate Fund. (a) The Authority covenants for the benefit of all
Owners from time to time of the Bonds that it will not directly or indirectly use or (to the extent
within its control), permit the use of, the proceeds of any of the Bonds or any other funds of the
Authority, or take or omit to take any other action, if and to the extent that such use, or the
taking or omission to take such action, would cause any of the Bonds to be “arbitrage bonds” within
the meaning of Section 148 of the Code or otherwise subject to federal income taxation by reason of
failing to qualify under Section 103 and Sections 141 through 150 of the Code and any applicable
regulations promulgated thereunder. To that end the Authority covenants to comply with all
covenants set forth in the Tax Agreement, which is hereby incorporated herein by reference as
though fully set forth herein.



(b) The Trustee shall establish and maintain a fund separate from any other fund established
and maintained hereunder designated “The Industrial Development Authority of the County of Pima
Industrial Development Revenue Bonds, 2010 Series A (Tucson Electric Power Company Project) Rebate
Fund” (herein called the “Rebate Fund”) in accordance with the provisions of the Tax Agreement.
Within the Rebate Fund, the Trustee shall maintain such accounts as shall be directed by the
Company in order for the Authority and the Company to comply with the provisions of the Tax
Agreement. Subject to the transfer provisions provided in paragraph (c) below, all money at any
time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to
satisfy the Rebate Requirement (as defined in the Tax Agreement), for payment to the United States
of America, and neither the Company, the Authority or the Owners shall have any rights in or claim
to such moneys. All amounts deposited into or on deposit in the Rebate Fund shall be governed by
this Section 7.08, by Section 6.04 of the Loan Agreement and by the Tax Agreement. The Trustee
shall conclusively be deemed to have complied with such provisions if it follows the directions of
the Company, including supplying all necessary information in the manner set forth in the Tax
Agreement, and shall not be required to take any actions thereunder in the absence of written
directions from the Company.



(c) Upon receipt of the Company’s written instructions, the Trustee shall remit part or all of
the balances in the Rebate Fund to the United States of America, as so directed. In addition, if
the Company so directs, the Trustee shall deposit moneys into or transfer moneys out of the Rebate
Fund from or into such accounts or funds as directed by the Company’s written
directions. Any funds remaining in the Rebate Fund after all of the Bonds shall have been
paid and any Rebate Requirement shall have been satisfied, or provision therefor reasonably
satisfactory to the Trustee shall have been made, shall be withdrawn and remitted to the Company.



 


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(d) Notwithstanding any provision of this Indenture, the obligation to remit the Rebate
Requirement to the United States of America and to comply with all other requirements of this
Section 7.08, Section 6.04 of the Loan Agreement and the Tax Agreement shall survive the payment of
the Bonds and the satisfaction and discharge of this Indenture.



ARTICLE VIII




DEFEASANCE




Section 8.01 Defeasance. If the Authority shall pay or cause to be paid to the Owner of any
Bond secured hereby the principal of and interest due and payable, and thereafter to become due and
payable, upon such Bond or any portion of such Bond in the principal amount of $5,000 or any
integral multiple thereof, such Bond or portion thereof shall cease to be entitled to any lien,
benefit or security under this Indenture. If the Authority shall pay or cause to be paid to the
Owners of all the Bonds secured hereby the principal of and interest due and payable, and
thereafter to become due and payable, thereon, and shall pay or cause to be paid all other sums
payable hereunder including, without limitation, amounts payable pursuant to Section 10.04 hereof,
then, and in that case, the right, title and interest of the Trustee in and to the Trust Estate
shall thereupon cease, terminate and become void. In such event, the Trustee shall assign,
transfer and turn over to the Company the Trust Estate, including, without limitation, any surplus
in the Bond Fund and any balance remaining in any other fund created under this Indenture.



All or any portion of Outstanding Bonds or portions of Bonds in principal amounts of $5,000 or
any integral multiple thereof, shall prior to the maturity or redemption date thereof be deemed to
have been paid within the meaning and with the effect expressed in this ARTICLE VIII, and the
entire indebtedness of the Authority with respect thereof shall be satisfied and discharged, when:




(a) in the event said Bonds or portions thereof have been selected for redemption in
accordance with Section 3.02 hereof, the Trustee shall have given, or the Company shall have
given to the Trustee in form satisfactory to it irrevocable instructions to give, on a date
in accordance with the provisions of Section 3.03 hereof, notice of redemption of such Bonds
or portions thereof,




(b) there shall have been deposited with the Trustee either moneys in an amount which
shall be sufficient, or Government Obligations which shall not contain provisions permitting
the redemption thereof at the option of the issuer, the principal of and the interest on
which, when due, and without regard to any reinvestment thereof, will provide moneys which,
together with the moneys, if any, deposited with or held by the Trustee, shall be
sufficient, to pay when due the principal of and interest due and to become due on said
Bonds or portions thereof on and prior to the redemption date or maturity date thereof, as
the case may be, and


 


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(c) in the event said Bonds or portions thereof do not mature and are not to be
redeemed within the next succeeding sixty (60) days, the Company shall have given the
Trustee in form satisfactory to it irrevocable instructions to give, as soon as practicable
in the same manner as a notice of redemption is given pursuant to Section 3.03 hereof, a
notice to the Owners of said Bonds or portions thereof that the deposit required by clause
(b) above has been made with the Trustee and that said Bonds or portions thereof are deemed
to have been paid in accordance with this ARTICLE VIII and stating the maturity or
redemption date upon which moneys are to be available for the payment of the principal of
and interest on said Bonds or portions thereof.



Neither the Government Obligations nor moneys deposited with the Trustee pursuant to this
ARTICLE VIII nor principal or interest payments on any such Government Obligations shall be
withdrawn or used for any purpose other than, and such Government Obligations, moneys and principal
or interest payments shall be held in trust for, the payment of the principal of and interest on
said Bonds or portions thereof; provided, that any cash received from such principal or interest
payments on such Government Obligations deposited with the Trustee, if not then needed for such
purposes, shall, to the extent practicable, be invested in Government Obligations of the type
described in clause (b) of the preceding paragraph maturing at times and in amounts sufficient to
pay when due the principal of and interest to become due on said Bonds or portions thereof on and
prior to such redemption date or maturity date thereof, as the case may be, and interest earned
from such reinvestments shall be paid over to the Company, as received by the Trustee, free and
clear of any trust, lien or pledge hereunder. If payment of less than all the Bonds is to be
provided for in the manner and with the effect provided in this ARTICLE VIII, the Trustee shall
select such Bonds or portions of Bonds in the manner specified by Section 3.02 hereof for selection
for redemption of less than all Bonds in the principal amount designated to the Trustee by the
Company. At or prior to the time of the deposit of any Government Obligations with the Trustee
pursuant to this Section 8.01, the Company shall provide the Trustee with a certificate of an
accountant or an accounting firm as to the sufficiency of such Government Obligations to pay when
due the principal of and interest due and to become due as set forth in clause (b) of the preceding
paragraph.



ARTICLE IX




DEFAULTS AND REMEDIES




Section 9.01 Events of Default. Each of the following events shall constitute and is referred
to in this Indenture as an “Event of Default”:




(a) a failure to pay the principal of any of the Bonds when the same shall become due
and payable at maturity, upon redemption or otherwise;




(b) a failure to pay an installment of interest on any of the Bonds after such interest
shall have become due and payable for a period of thirty (30) days;



 


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(c) a failure by the Authority to observe and perform any covenant, condition,
agreement or provision (other than as specified in clauses (a) and (b) of this Section 9.01)
contained in the Bonds or in this Indenture on the part of the Authority to be observed or
performed, which failure shall continue for a period of sixty (60) days after written
notice, specifying such failure and requesting that it be remedied, shall have been given to
the Authority and the Company by the Trustee, which may give such notice in its discretion
and which shall give such notice at the written request of Owners of not less than a
majority of the principal amount of the Bonds then Outstanding, unless the Trustee, or the
Trustee and Owners of a principal amount of Bonds not less than the principal amount of
Bonds the Owners of which requested that such notice be given, as the case may be, shall
agree in writing to an extension of such period prior to its expiration; provided, however,
that the Trustee, or the Trustee and the Owners of such principal amount of Bonds, as the
case may be, shall be deemed to have agreed to an extension of such period if corrective
action is initiated by the Authority, or the Company on behalf of the Authority, within such
period and is being diligently pursued.



Upon the occurrence and continuance of any Event of Default described in clause (a) or (b) of
the preceding paragraph, the Trustee may, and at the written request of Owners of not less than a
majority of the principal amount of Bonds then Outstanding shall, by written notice to the
Authority and the Company, declare the Bonds to be immediately due and payable, whereupon they
shall, without further action, become and be immediately due and payable, anything in this
Indenture or in the Bonds to the contrary notwithstanding, and the Trustee shall give notice
thereof by Mail or Electronic Means to all Owners of Outstanding Bonds.



The provisions of the preceding paragraph, however, are subject to the condition that if,
after the principal of the Bonds shall have been so declared to be due and payable, and before any
judgment or decree for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, the Authority shall cause to be deposited with the Trustee a sum sufficient
to pay all matured installments of interest upon all Bonds and the principal of any and all Bonds
which shall have become due otherwise than by reason of such declaration (with interest upon such
principal and, to the extent permissible by law, on overdue installments of interest, at the rate
per annum borne by the Bonds) and such amounts as shall be sufficient to cover reasonable
compensation and reimbursement of expenses payable to the Trustee and any predecessor Trustee, and
all Events of Default hereunder other than nonpayment of the principal of Bonds which shall have
become due by said declaration shall have been remedied, then, in every such case, such Event of
Default shall be deemed waived and such declaration and its consequences rescinded and annulled,
and the Trustee shall promptly give written notice of such waiver, rescission and annulment to the
Authority and the Company, and, if notice of the acceleration of the Bonds shall have been given to
the Owners of the Bonds, shall give notice thereof by Mail or Electronic Means to all Owners of
Outstanding Bonds; but no such waiver, rescission and annulment shall extend to or affect any
subsequent Event of Default or impair any right or remedy consequent thereon.



Section 9.02 Remedies. Upon the occurrence and continuance of any Event of Default, then and
in every such case the Trustee in its discretion may, and upon the written request of Owners of not
less than a majority in principal amount of the Bonds then Outstanding and receipt of indemnity to
its satisfaction shall, in its own name and as the Trustee of an express trust:




(a) by mandamus, or other suit, action or proceeding at law or in equity, enforce all
rights of the Owners of the Bonds, and require the Authority or the Company
to carry out any agreements with or for the benefit of such Owners and to perform its
or their duties under the Act, the Loan Agreement and this Indenture;



 


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(b) bring suit upon the Bonds; or




(c) by action or suit in equity enjoin any acts or things which may be unlawful or in
violation of the rights of the Owners of the Bonds.



Section 9.03 Restoration to Former Position. In the event that any proceeding taken by the
Trustee to enforce any right under this Indenture shall have been discontinued or abandoned for any
reason, or shall have been determined adversely to the Trustee, then the Authority, the Trustee and
the Owners shall be restored, subject to any determination in such proceeding, to their former
positions and rights hereunder, respectively, and all rights, remedies and powers of the Trustee
shall continue as though no such proceeding had been taken.



Section 9.04 Owners’ Right to Direct Proceedings. Anything in this Indenture to the contrary
notwithstanding, the Owners of a majority in principal amount of the Bonds then Outstanding
hereunder shall have the right, by an instrument in writing executed and delivered to the Trustee,
to direct the time, method and place of conducting all remedial proceedings available to the
Trustee under this Indenture or exercising any trust or power conferred on the Trustee by this
Indenture; provided, however, that such direction shall not be otherwise than in accordance with
law and the provisions of this Indenture and that the Trustee shall have the right (but not the
obligation) to decline to follow any such direction if the Trustee, being advised by counsel, shall
determine that the action or proceeding so directed may not lawfully be taken, or if the Trustee in
good faith shall determine that the action or proceedings so directed would involve the Trustee in
personal liability or if the Trustee in good faith shall so determine that the actions or
forbearances specified in or pursuant to such direction would be unduly prejudicial to the
interests of Owners not joining in the giving of said direction, it being understood that the
Trustee shall have no duty to ascertain whether or not such actions or forbearances are unduly
prejudicial to such Owners.



Section 9.05 Limitation on Owners’ Right to Institute Proceedings. No Owner of Bonds shall
have any right to institute any suit, action or proceeding in equity or at law for the execution of
any trust or power hereunder, or any other remedy hereunder or on said Bonds, unless such Owner
previously shall have given to the Trustee written notice of an Event of Default as hereinabove
provided and unless the Owners of not less than a majority in principal amount of the Bonds then
Outstanding shall have made written request of the Trustee so to do, after the right to institute
said suit, action or proceeding shall have accrued, and shall have afforded the Trustee a
reasonable opportunity to proceed to institute the same in either its or their name, and unless
there also shall have been offered to the Trustee security and indemnity satisfactory to it against
the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee shall not
have complied with such request within a reasonable time; and such notification, request and offer
of indemnity are hereby declared in every such case, at the option of the Trustee, to be conditions
precedent to the institution of said suit, action or proceeding; it being understood and intended
that no one or more of the Owners of the Bonds shall have any right in any manner whatever by his
or their action to affect, disturb or prejudice the security of this Indenture, or to enforce any
right hereunder or under the Bonds, except in the manner herein
provided, and that all suits, actions and proceedings at law or in equity shall be instituted,
had and maintained in the manner herein provided and for the equal benefit of all Owners of the
Bonds.



 


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Section 9.06 No Impairment of Right to Enforce Payment. Notwithstanding any other provision
in this Indenture, the right of any Owner of a Bond to receive payment of the principal of and
interest on such Bond, on or after the respective due dates expressed therein, or to institute suit
for the enforcement of any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Owner.



Section 9.07 Proceedings by Trustee without Possession of Bonds. All rights of action under
this Indenture or under any of the Bonds secured hereby which are enforceable by the Trustee may be
enforced by it without the possession of any of the Bonds, or the production thereof on the trial
or other proceedings relative thereto, and any such suit, action or proceeding instituted by the
Trustee shall be brought in its name for the equal and ratable benefit of the Owners of the Bonds,
subject to the provisions of this Indenture.



Section 9.08 No Remedy Exclusive. No remedy herein conferred upon or reserved to the Trustee
or to the Owners of the Bonds is intended to be exclusive of any other remedy or remedies, and each
and every such remedy shall be cumulative, and shall be in addition to every other remedy given
hereunder or under the Loan Agreement, now or hereafter existing at law or in equity or by statute.



Section 9.09 No Waiver of Remedies. No delay or omission of the Trustee or of any Owner of a
Bond to exercise any right or power accruing upon any default shall impair any such right or power
or shall be construed to be a waiver of any such default, or an acquiescence therein; and every
power and remedy given by this ARTICLE IX to the Trustee and to the Owners of the Bonds,
respectively, may be exercised from time to time and as often as may be deemed expedient.



Section 9.10 Application of Moneys. Any moneys received by the Trustee, by any receiver or by
any Owner of a Bond pursuant to any right given or action taken under the provisions of this
ARTICLE IX, after payment of the costs and expenses of the proceedings resulting in the collection
of such moneys and of all amounts due to the Trustee and any predecessor Trustee under Section
10.04 hereof, shall be deposited in the Bond Fund and all moneys so deposited in the Bond Fund
during the continuance of an Event of Default (other than moneys for the payment of Bonds which had
matured or otherwise become payable prior to such Event of Default or for the payment of interest
due prior to such Event of Default) shall be applied as follows:




(a) Unless the principal of all the Bonds shall have become due and payable, all such
moneys shall be applied (i) first, to the payment to the persons entitled thereto of all
installments of interest then due on the Bonds, with interest on overdue installments, if
lawful, at the rate per annum borne by the Bonds, in the order of maturity of the
installments of such interest and, if the amount available shall not be sufficient to pay in
full any particular installment of interest, then to the payment ratably, according to the
amounts due on such installment, and (ii) second, to the payment to the persons entitled
thereto of the unpaid principal of any of the Bonds which shall have become due (other
than Bonds called for redemption for the payment of which money is held pursuant to the
provisions of this Indenture), with interest on such Bonds at their rate from the respective
dates upon which they became due and, if the amount available shall not be sufficient to pay
in full Bonds due on any particular date, together with such interest, then to the payment
ratably, according to the amount of principal and interest due on such date, in each case to
the persons entitled thereto, without any discrimination or privilege.



 


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(b) If the principal of all the Bonds shall have become due and payable, all such
moneys shall be applied to the payment of the principal and interest then due and unpaid
upon the Bonds, with interest on overdue interest and principal, as aforesaid, without
preference or priority of principal over interest or of interest over principal, or of any
installment of interest over any other installment of interest, or of any Bond over any
other Bond, ratably, according to the amounts due respectively for principal and interest,
to the persons entitled thereto without any discrimination or privilege.




(c) If the principal of all the Bonds shall have become due and payable, and if
acceleration of the maturity of the Bonds by reason of such Event of Default shall
thereafter have been rescinded and annulled under the provisions of this ARTICLE IX, then,
subject to the provisions of clause (b) of this Section 9.10 which shall be applicable in
the event that the principal of all the Bonds shall later become due and payable, the moneys
shall be applied in accordance with the provisions of clause (a) of this Section 9.10.



Section 9.11 Severability of Remedies. It is the purpose and intention of this ARTICLE IX to
provide rights and remedies to the Trustee and the Owners which may be lawfully granted under the
provisions of the Act, but should any right or remedy herein granted be held to be unlawful, the
Trustee and the Owners shall be entitled, as above set forth, to every other right and remedy
provided in this Indenture and by law.



ARTICLE X




TRUSTEE




Section 10.01 Acceptance of Trusts. The Trustee hereby accepts and agrees to execute the
trusts hereby created, but only upon the additional terms set forth in this ARTICLE X, to all of
which the Authority agrees and the respective Owners agree by their acceptance of delivery of any
of the Bonds.



Section 10.02 No Responsibility for Recitals. The recitals, statements and representations
contained in this Indenture or in the Bonds, save only the Trustee’s authentication upon the Bonds,
are not made by the Trustee, and the Trustee does not assume, and shall not have, any
responsibility or obligation for the correctness of any thereof. The Trustee makes no
representation as to the validity or sufficiency of this Indenture or the Bonds.



Section 10.03 Limitations on Liability. The Trustee may execute any of the trusts or powers
hereof and perform the duties required of it hereunder by or through attorneys, agents,
receivers, or employees, and shall be entitled to advice of counsel concerning all matters of
trust and its duty hereunder, and the Trustee shall not be answerable for the default or misconduct
of any such attorney, agent, receiver, or employee selected by it with reasonable care. The
Trustee shall not be answerable for the exercise of any discretion or power under this Indenture or
for anything whatsoever in connection with the trust created hereby, except only for its own
negligence or willful misconduct.



 


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Anything in this Indenture to the contrary notwithstanding, the Trustee shall in no event be
required to expend or risk its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights or powers, if there shall
be reasonable grounds for believing that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.



Section 10.04 Compensation, Expenses and Advances. The Trustee under this Indenture shall be
entitled to reasonable compensation for its services rendered hereunder (not limited by any
provision of law regarding the compensation of the trustee of an express trust) and to
reimbursement for its actual out of pocket expenses (including counsel fees) reasonably incurred in
connection therewith except as a result of its negligence or willful misconduct, including, without
limitation, compensation for any services rendered, and reimbursement for any expenses incurred, at
and subsequent to the time the Bonds are deemed to have been paid in accordance with ARTICLE VIII
hereof. In Section 5.03 of the Loan Agreement, the Company has agreed that it will pay to the
Trustee (including any predecessor Trustee) such compensation and reimbursement of expenses and
advances, but the Company may, without creating a default hereunder, contest in good faith the
reasonableness of any such services, expenses and advances. If the Company shall have failed to
make any payment to the Trustee or any predecessor Trustee under Section 5.03 of the Loan Agreement
and such failure shall have resulted in an Event of Default under the Loan Agreement, the Trustee,
and any predecessor Trustee, shall have, in addition to any other rights hereunder, a claim, prior
to the claim of the Owners, for the payment of its compensation and the reimbursement of its
expenses and any advances made by it, as provided in this Section 10.04, upon the moneys and
obligations in the Bond Fund; provided, however, that neither the Trustee nor any predecessor
Trustee shall have any such claim upon moneys or obligations deposited with or paid to the Trustee
for the redemption or payment of Bonds which are deemed to have been paid in accordance with
ARTICLE VIII hereof.



In Section 5.04 of the Loan Agreement, the Company has agreed to indemnify the Trustee and any
predecessor Trustee to the extent provided therein.



Section 10.05 Notice of Events of Default. The Trustee shall not be required to take notice,
or be deemed to have notice, of any default or Event of Default under this Indenture other than an
Event of Default under clause (a) or (b) of the first paragraph of Section 9.01 hereof, unless an
officer assigned by the Trustee to administer its corporate trust business has been specifically
notified in writing of such default or Event of Default by Owners of at least a majority of the
principal amount of the Bonds then Outstanding. The Trustee may, however, at any time, in its
discretion, require of the Authority and the Company full information and advice as to the
performance of any of the covenants, conditions and agreements contained herein.


 


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Section 10.06 Action by Trustee. The Trustee shall be under no obligation to take any action
in respect of any default or Event of Default hereunder or toward the execution or enforcement of
any of the trusts hereby created, or to institute, appear in or defend any suit or other proceeding
in connection therewith, unless requested in writing so to do by Owners of at least a majority in
principal amount of the Bonds then Outstanding, and, if in its opinion such action may tend to
involve it in expense or liability, unless furnished, from time to time as often as it may require,
with security and indemnity satisfactory to it. The foregoing provisions are intended only for the
protection of the Trustee, and shall not affect any discretion or power given by any provisions of
this Indenture to the Trustee to take action in respect of any default or Event of Default without
such notice or request from the Owners of the Bonds, or without such security or indemnity.



Section 10.07 Good Faith Reliance. The Trustee shall be protected and shall incur no
liability in acting or proceeding in good faith upon any resolution, notice, telegram, e-mail,
facsimile transmission, request, consent, waiver, certificate, statement, affidavit, voucher, bond,
requisition or other paper or document which it shall in good faith believe to be genuine and to
have been passed or signed by the proper board, body or person or to have been prepared and
furnished pursuant to any of the provisions of this Indenture or the Loan Agreement, or upon the
written opinion of any attorney, engineer, accountant or other expert believed by the Trustee to be
qualified in relation to the subject matter, and the Trustee shall be under no duty to make any
investigation or inquiry as to any statements contained or matters referred to in any such
instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy
of such statements. The Trustee shall not be bound to recognize any person as an Owner of a Bond
or to take any action at his request unless the ownership of such Bond is proved as contemplated in
Section 11.01 hereof.



Section 10.08 Dealings in Bonds and with the Authority and the Company. The Trustee, in its
individual or any other capacity, may in good faith buy, sell, own, hold and deal in any of the
Bonds issued hereunder, and may join in any action which any Owner of a Bond may be entitled to
take with like effect as if it did not act in any capacity hereunder. The Trustee, in its
individual or any other capacity, either as principal or agent, may also engage in or be interested
in any financial or other transaction with the Authority or the Company, and may act as depositary,
trustee, or agent for any committee or body of Owners of Bonds secured hereby or other obligations
of the Authority as freely as if it did not act in any capacity hereunder.



Section 10.09 Allowance of Interest. The Trustee may, but shall not be obligated to, allow
and credit interest upon any moneys which it may at any time receive under any of the provisions of
this Indenture, at such rate, if any, as it customarily allows upon similar funds of similar size
and under similar conditions. All interest allowed on any such moneys shall be credited as
provided in ARTICLE IV and ARTICLE V with respect to interest on investments.



Section 10.10 Construction of Indenture. The Trustee may construe any of the provisions of
this Indenture insofar as the same may appear to be ambiguous or inconsistent with any other
provision hereof, and any construction of any such provisions hereof by the Trustee in good faith
shall be binding upon the Owners of the Bonds.


 


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Section 10.11 Resignation of Trustee. The Trustee may resign and be discharged of the trusts
created by this Indenture by executing an instrument in writing resigning such trust and specifying
the date when such resignation shall take effect, and filing the same with the President of the
Authority and with the Company, not less than forty-five (45) days before the date specified in
such instrument when such resignation shall take effect, and by giving notice of such resignation
by Mail or Electronic Means to all Owners of Bonds. Such resignation shall take effect on the
later to occur of (i) the day specified in such instrument and notice, unless previously a
successor Trustee shall have been appointed as hereinafter provided, in which event such
resignation shall take effect immediately upon the appointment of such successor Trustee and (ii)
the appointment of a successor Trustee.



So long as no event which is, or after notice or lapse of time, or both, would become, an
Event of Default shall have occurred and be continuing, if the Authority shall have delivered to
the Trustee (i) an instrument appointing a successor Trustee, effective as of a date specified
therein and (ii) an instrument of acceptance of such appointment, effective as of such date, by
such successor Trustee in accordance with Section 10.16, the Trustee shall be deemed to have
resigned as contemplated in this Section, the successor Trustee shall be deemed to have been
appointed pursuant to subsection (b) of Section 10.13 and such appointment shall be deemed to have
been accepted as contemplated in Section 10.16, all as of such date, and all other provisions of
this ARTICLE X shall be applicable to such resignation, appointment and acceptance except to the
extent inconsistent with this paragraph. The Authority shall deliver any such instrument of
appointment at the direction of the Company.



Section 10.12 Removal of Trustee. The Trustee may be removed at any time by filing with the
Trustee so removed, and with the Authority and the Company, an instrument or instruments in
writing, appointing a successor, or an instrument or instruments in writing, consenting to the
appointment by the Authority (at the direction of the Company) of a successor and accompanied by an
instrument of appointment by the Authority (at the direction of the Company) of such successor, and
in any event executed by Owners of not less than a majority in principal amount of the Bonds then
Outstanding, such filing to be made by any Owner of a Bond or his duly authorized attorney.



Section 10.13 Appointment of Successor Trustee. (a) In case at any time the Trustee shall be
removed, or be dissolved, or if its property or affairs shall be taken under the control of any
state or federal court or administrative body because of insolvency or bankruptcy, or for any other
reason, then a vacancy shall forthwith and ipso facto exist and a successor may be appointed, and
in case at any time the Trustee shall resign or be deemed to have resigned, then a successor may be
appointed, by filing with the Authority and the Company an instrument in writing appointing such
successor Trustee executed by Owners of not less than a majority in principal amount of Bonds then
Outstanding. Copies of such instrument shall be promptly delivered by the Authority to the
predecessor Trustee, to the Trustee so appointed and the Company.



(b) Until a successor Trustee shall be appointed by the Owners of the Bonds as herein
authorized, the Authority, shall appoint a successor Trustee as directed by the Company. After any
appointment by the Authority, it shall cause notice of such appointment to be given by Mail or
Electronic Means to all Owners of Bonds. Any new Trustee so appointed by the Authority
shall immediately and without further act be superseded by a Trustee appointed by the Owners
of the Bonds in the manner above provided.



 


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(c) No resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this ARTICLE X shall become effective until the acceptance of appointment by the
successor Trustee.



Section 10.14 Qualifications of Successor Trustee. Every successor Trustee (a) shall be a
bank, national banking association or trust company duly organized under the laws of the United
States or any state or territory thereof authorized by law to perform all the duties imposed upon
it by this Indenture and (b) shall have (or the parent holding company of which shall have) a
combined capital stock, surplus and undivided profits of at least $100,000,000 if there can be
located, with reasonable effort, such an institution willing and able to accept the trust on
reasonable and customary terms.



Section 10.15 Judicial Appointment of Successor Trustee. In case at any time the Trustee
shall resign and no appointment of a successor Trustee shall be made pursuant to the foregoing
provisions of this ARTICLE X prior to the date specified in the notice of resignation as the date
when such resignation is to take effect, the retiring Trustee may forthwith apply to a court of
competent jurisdiction for the appointment of a successor Trustee. If no appointment of a
successor Trustee shall be made pursuant to the foregoing provisions of this ARTICLE X within six
(6) months after a vacancy shall have occurred in the office of Trustee, any Owner of a Bond may
apply to any court of competent jurisdiction to appoint a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor
Trustee.



Section 10.16 Acceptance of Trusts by Successor Trustee. Any successor Trustee appointed
hereunder shall execute, acknowledge and deliver to the Authority an instrument accepting such
appointment hereunder, and thereupon such successor Trustee, without any further act, deed or
conveyance, shall become duly vested with all the estates, property, rights, powers, trusts, duties
and obligations of its predecessor in the trust hereunder, with like effect as if originally named
Trustee herein. Upon request of such Trustee, such predecessor Trustee and the Authority shall
execute and deliver an instrument transferring to such successor Trustee all the estates, property,
rights, powers and trusts hereunder of such predecessor Trustee and, subject to the provisions of
Section 10.04 hereof, such predecessor Trustee shall pay over to the successor Trustee all moneys
and other assets at the time held by it hereunder.



Section 10.17 Successor by Merger or Consolidation. Any corporation or association into which
any Trustee hereunder may be merged or converted or with which it may be consolidated, or any
corporation or association resulting from any merger or consolidation to which any Trustee
hereunder shall be a party or any corporation or association succeeding to or acquiring the
corporate trust business of the Trustee, shall be the successor Trustee under this Indenture,
without the execution or filing of any paper or any further act on the part of the parties hereto,
anything in this Indenture to the contrary notwithstanding.



 


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If, at the time any such successor to the Trustee shall succeed to the trusts created by this
Indenture, any of the Bonds shall have been authenticated but not delivered, such successor
Trustee may adopt the certificate of authentication of any predecessor Trustee and deliver
such Bonds so authenticated; provided, however, that the right to adopt the certificate of
authentication of any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.



Section 10.18 Standard of Care. Notwithstanding any other provisions of this ARTICLE X, the
Trustee shall, during the existence of an Event of Default of which the Trustee has actual notice,
exercise such of the rights and powers vested in it by this Indenture and use the same degree of
skill and care in their exercise as a prudent person would use and exercise under the circumstances
in the conduct of his own affairs.



Section 10.19 Notice to Owners of Bonds of Event of Default. If an Event of Default occurs of
which the Trustee by Section 10.05 hereof is required to take notice and deemed to have notice, or
any other Event of Default occurs of which the Trustee has been specifically notified in accordance
with Section 10.05 hereof, and any such Event of Default shall continue for at least two days after
the Trustee acquires actual notice thereof, unless the Trustee shall have theretofore given a
notice of acceleration pursuant to Section 9.01 hereof, the Trustee shall give Notice by Mail or
Electronic Means to all Owners of Outstanding Bonds.



Section 10.20 Intervention in Litigation of the Authority. In any judicial proceeding to
which the Authority is a party and which in the opinion of the Trustee and its counsel has a
substantial bearing on the interests of the Owners of Bonds, the Trustee may intervene on behalf of
the Owners of the Bonds and shall, upon receipt of indemnity satisfactory to it, do so if requested
in writing by Owners of at least a majority in principal amount of the Bonds then Outstanding if
permitted by the court having jurisdiction in the premises.



Section 10.21 Notices of Trustee. The Trustee shall give notice to both the Authority and the
Company whenever it is required hereby to give notice to either and, additionally, shall furnish to
the Authority and the Company copies of any Notice by Mail or Electronic Means given by it pursuant
to any provision hereof.



ARTICLE XI




EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND

PROOF OF OWNERSHIP OF BONDS




Section 11.01 Execution of Instruments; Proof of Ownership. Any request, direction, consent
or other instrument in writing, whether or not required or permitted by this Indenture to be signed
or executed by Owners of the Bonds, may be in any number of concurrent instruments of similar tenor
and may be signed or executed by Owners of the Bonds or by an agent appointed by an instrument in
writing. Proof of the execution of any such instrument and of the ownership of Bonds shall be
sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee with
regard to any action taken by it under such instrument if made in the following manner:




(a) The fact and date of the execution by any person of any such instrument may be
proved by the certificate of any officer in any jurisdiction who, by the laws
thereof, has power to take acknowledgments within such jurisdiction, to the effect that
the person signing such instrument acknowledged before him the execution thereof, or by an
affidavit of a witness to such execution.



 


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(b) The ownership or former ownership of Bonds shall be proved by the registration
books kept under the provisions of Section 2.08 hereof.



Nothing contained in this ARTICLE XI shall be construed as limiting the Trustee to such proof,
it being intended that the Trustee may accept any other evidence of matters herein stated which it
may deem sufficient. Any request or consent of any Owner of a Bond shall bind every future Owner
of the same Bond or any Bond or Bonds issued in lieu thereof in respect of anything done by the
Trustee or the Authority in pursuance of such request or consent.



ARTICLE XII




MODIFICATION OF THIS INDENTURE AND THE LOAN AGREEMENT




Section 12.01 Limitations. Neither this Indenture nor the Loan Agreement shall be modified or
amended in any respect subsequent to the original issuance of the Bonds except as provided in and
in accordance with and subject to the provisions of this ARTICLE XII and Section 7.04 hereof.



The Trustee may, but shall not be obligated to, enter into any Supplemental Indenture which
affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.



Section 12.02 Supplemental Indentures without Owner Consent. The Authority and the Trustee
may, from time to time and at any time, without the consent of or notice to the Owners of the
Bonds, enter into Supplemental Indentures as follows:




(a) to cure any formal defect, omission, inconsistency or ambiguity in this Indenture,
provided, however, that such cure shall not materially and adversely affect the interests of
the Owners of the Bonds;




(b) to grant to or confer or impose upon the Trustee for the benefit of the Owners of
the Bonds any additional rights, remedies, powers, authority, security, liabilities or
duties which may lawfully be granted, conferred or imposed;




(c) to add to the covenants and agreements of, and limitations and restrictions upon,
the Authority in this Indenture other covenants, agreements, limitations and restrictions to
be observed by the Authority;




(d) to confirm, as further assurance, any pledge under, and the subjection to any
claim, lien or pledge created or to be created by, this Indenture, of the Receipts and
Revenues of the Authority from the Loan Agreement or of any other moneys, securities or
funds;




(e) to authorize a different denomination or denominations of the Bonds and to make
correlative amendments and modifications to this Indenture regarding exchange
ability of Bonds of different denominations, redemptions of portions of Bonds of
particular denominations and similar amendments and modifications of a technical nature;



 


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(f) to modify, alter, supplement or amend this Indenture in such manner as shall permit
the qualification hereof under the Trust Indenture Act of 1939, as from time to time
amended;




(g) to modify, alter, supplement or amend this Indenture in such manner as shall be
necessary, desirable or appropriate in order to provide for or eliminate the registration
and registration of transfer of the Bonds through a book entry or similar method, whether or
not the Bonds are evidenced by certificates;




(h) to modify, alter, amend or supplement this Indenture in any other respect which is
not materially adverse to the Owners and which does not involve a change described in clause
(i), (ii), (iii) or (iv) of Section 12.03(a) hereof; and




(i) to provide any additional procedures, covenants or agreements necessary or
desirable to maintain the tax-exempt status of interest on the Bonds.



Before the Authority and the Trustee shall enter into any Supplemental Indenture pursuant to
this Section 12.02, there shall have been delivered to the Trustee an opinion of Bond Counsel
stating that such Supplemental Indenture is authorized or permitted by this Indenture and the Act,
complies with their respective terms, will, upon the execution and delivery thereof, be valid and
binding upon the Authority in accordance with its terms and will not, in and of itself, adversely
affect the exclusion from gross income for federal tax purposes of the interest on the Bonds.



Section 12.03 Supplemental Indentures with Consent of Owners. (a) Except for any
Supplemental Indenture entered into pursuant to Section 12.02 hereof, subject to the terms and
provisions contained in this Section 12.03 and Section 12.05 hereof and not otherwise, Owners of
not less than a majority in aggregate principal amount of the Bonds then Outstanding which would be
adversely affected thereby shall have the right from time to time to consent to and approve the
execution and delivery by the Authority and the Trustee of any Supplemental Indenture deemed
necessary or desirable by the Authority for the purposes of modifying, altering, amending,
supplementing or rescinding, in any particular, any of the terms or provisions contained in this
Indenture; provided, however, that, unless approved in writing by the Owners of all the Bonds then
Outstanding which would be adversely affected thereby, nothing herein contained shall permit, or be
construed as permitting, (i) a change in the times, amounts or currency of payment of the principal
of or interest on any Outstanding Bond, a reduction in the principal amount or redemption price of
any Outstanding Bond or a change in the rate of interest thereon, or any impairment of the right of
any Owner to institute suit for the payment of any Bond owned by it, or (ii) the creation of a
claim or lien upon, or a pledge of, the Receipts and Revenues of the Authority from the Loan
Agreement ranking prior to or on a parity with the claim, lien or pledge created by this Indenture
(except as referred to in Section 10.04 hereof), or (iii) a preference or priority of any Bond or
Bonds over any other Bond or Bonds, or (iv) a reduction in the aggregate principal amount of Bonds
the consent of the Owners of which is
required for any such Supplemental Indenture or which is required, under Section 12.07 hereof,
for any modification, alteration, amendment or supplement to the Loan Agreement.



 


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(b) If at any time the Authority shall request the Trustee to enter into any Supplemental
Indenture for any of the purposes of this Section 12.03, the Trustee shall cause notice of the
proposed Supplemental Indenture to be given by Mail or Electronic Means to all Owners of
Outstanding Bonds. Such notice shall briefly set forth the nature of the proposed Supplemental
Indenture and shall state that a copy thereof is on file at the Principal Office of the Trustee for
inspection by all Owners of Bonds.



(c) Within two (2) years after the date of the first mailing of such notice, the Authority and
the Trustee may enter into such Supplemental Indenture in substantially the form described in such
notice only if there shall have first been delivered to the Trustee (i) the required consents, in
writing, of Owners of Bonds and (ii) an opinion of Bond Counsel stating that such Supplemental
Indenture is authorized or permitted by this Indenture and the Act, complies with their respective
terms and, upon the execution and delivery thereof, will be valid and binding upon the Authority in
accordance with its terms and will not, in and of itself, adversely affect the exclusion from gross
income for federal tax purposes of the interest on the Bonds.



(d) If Owners of not less than the percentage of Bonds required by this Section 12.03 shall
have consented to and approved the execution and delivery thereof as herein provided, no Owner
shall have any right to object to the execution and delivery of such Supplemental Indenture, or to
object to any of the terms and provisions contained therein or the operation thereof, or in any
manner to question the propriety of the execution and delivery thereof, or to enjoin or restrain
the Authority or the Trustee from executing and delivering the same or from taking any action
pursuant to the provisions thereof.



Section 12.04 Effect of Supplemental Indenture. Upon the execution and delivery of any
Supplemental Indenture pursuant to the provisions of this ARTICLE XII, this Indenture shall be, and
be deemed to be, modified, altered, amended or supplemented in accordance therewith, and the
respective rights, duties and obligations under this Indenture of the Authority, the Trustee and
Owners of all Bonds then Outstanding shall thereafter be determined, exercised and enforced under
this Indenture subject in all respects to such modifications, alterations, amendments and
supplements.



Section 12.05 Consent of the Company. Anything herein to the contrary notwithstanding, any
Supplemental Indenture under this ARTICLE XII which affects any rights, powers, agreements or
obligations of the Company under the Loan Agreement, or requires a revision of the Loan Agreement,
shall not become effective unless and until the Company shall have consented to such Supplemental
Indenture.



Section 12.06 Amendment of Loan Agreement without Consent of Owners. Without the consent of
or notice to the Owners of the Bonds, the Authority may enter into any Supplemental Loan Agreement,
and the Trustee may consent thereto, as may be required (a) by the provisions of the Loan Agreement
and this Indenture, (b) for the purpose of curing any formal defect, omission, inconsistency or
ambiguity therein, (c) to provide any additional procedures, covenants
or agreements necessary or desirable to maintain the tax-exempt status of interest on the
Bonds, or (d) in connection with any other change therein which is not materially adverse to the
Owners of the Bonds. A revision of Exhibit A to the Loan Agreement shall not be deemed a
Supplemental Loan Agreement for purposes of this Indenture.



 


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Before the Authority shall enter into, and the Trustee shall consent to, any Supplemental Loan
Agreement pursuant to this Section 12.06, there shall have been delivered to the Trustee an opinion
of Bond Counsel stating that such Supplemental Loan Agreement is authorized or permitted by this
Indenture and the Act, complies with their respective terms, will, upon the execution and delivery
thereof, be valid and binding upon the Authority and the Company in accordance with its terms and
will not, in and of itself, adversely affect the exclusion from gross income for federal tax
purposes of interest on the Bonds.



Section 12.07 Amendment of Loan Agreement with Consent of Owners. Except in the case of a
Supplemental Loan Agreement referred to in Section 12.06 hereof, the Authority shall not enter
into, and the Trustee shall not consent to, any Supplemental Loan Agreement without the written
approval or consent of the Owners of not less than a majority in aggregate principal amount of the
Bonds then Outstanding which would be adversely affected thereby, given and procured as provided in
Section 12.03 hereof; provided, however, that, unless approved in writing by the Owners of all
Bonds then Outstanding which would be adversely affected thereby, nothing herein contained shall
permit, or be construed as permitting, a change in the obligations of the Company under Section
5.01 of the Loan Agreement. If at any time the Authority or the Company shall request the consent
of the Trustee to any such proposed Supplemental Loan Agreement, the Trustee shall cause notice of
such proposed Supplemental Loan Agreement to be given in the same manner as provided by Section
12.03 hereof with respect to Supplemental Indentures. Such notice shall briefly set forth the
nature of such proposed Supplemental Loan Agreement and shall state that copies of the instrument
embodying the same are on file at the Principal Office of the Trustee for inspection by all Owners
of the Bonds. The Authority may enter into, and the Trustee may consent to, any such proposed
Supplemental Loan Agreement subject to the same conditions, and with the same effect, as provided
by Section 12.03 hereof with respect to Supplemental Indentures.



Section 12.08 Company as Owner. Anything herein to the contrary notwithstanding, for so long
as the Company holds all of Outstanding Bonds, any action that may be taken by the Owners of the
Bonds may be taken by the Company.



ARTICLE XIII




MISCELLANEOUS




Section 13.01 Successors of the Authority. In the event of the dissolution of the Authority,
all the covenants, stipulations, promises and agreements in this Indenture contained, by or on
behalf of, or for the benefit of, the Authority, shall bind or inure to the benefit of the
successors of the Authority from time to time and any entity, officer, board, commission, agency or
instrumentality to whom or to which any power or duty of the Authority shall be transferred.


 


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Section 13.02 Parties in Interest. Except as herein otherwise specifically provided, nothing
in this Indenture expressed or implied is intended or shall be construed to confer upon any person,
firm or corporation other than the Authority, the Company and the Trustee and their successors and
assigns and the Owners of the Bonds any right, remedy or claim under or by reason of this
Indenture, this Indenture being intended to be for the sole and exclusive benefit of the Authority,
the Company and the Trustee and their successors and assigns and the Owners of the Bonds.



Section 13.03 Severability. In case any one or more of the provisions of this Indenture or of
the Loan Agreement or of the Bonds shall, for any reason, be held to be illegal or invalid, such
illegality or invalidity shall not affect any other provisions of this Indenture or of the Loan
Agreement or of such Bonds, and this Indenture and the Loan Agreement and such Bonds shall be
construed and enforced as if such illegal or invalid provisions had not been contained herein or
therein.



Section 13.04 No Personal Liability of Authority Officials. No covenant or agreement
contained in the Bonds or in this Indenture shall be deemed to be the covenant or agreement of any
director, official, officer, agent, or employee of the Authority in his individual capacity, and
neither the members of the Board of Directors of the Authority nor any official executing the Bonds
shall be liable personally on the Bonds or be subject to any personal liability or accountability
by reason of the issuance thereof.



Section 13.05 Bonds Owned by the Authority or the Company. In determining whether Owners of
the requisite aggregate principal amount of the Bonds have concurred in any direction, consent or
waiver under this Indenture, Bonds which are owned by the Authority or the Company or by any person
directly or indirectly controlling or controlled by or under direct or indirect common control with
the Company (unless the Authority, the Company or such person owns all Bonds which are then
Outstanding, determined without regard to this Section 13.05) shall be disregarded and deemed not
to be Outstanding for the purpose of any such determination, except that, for the purpose of
determining whether the Trustee shall be protected in relying on any such direction, consent or
waiver, only Bonds which the Trustee knows are so owned shall be so disregarded. Upon the request
of the Trustee, the Company and the Authority shall furnish to the Trustee a certificate
identifying all Bonds, if any, actually known to either of them to be owned or held by or for the
account of any of the above described persons, and the Trustee shall be entitled to rely on such
certificate as conclusive evidence of the facts set forth therein and that all other Bonds are
Outstanding for the purposes of such determination. Bonds so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee
the pledgee’s right so to act with respect to such Bonds and that the pledgee is not the Authority
or the Company or any person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company. In case of a dispute as to such right, any decision by
the Trustee taken upon the advice of counsel shall be full protection to the Trustee.



Section 13.06 Counterparts. This Indenture may be executed in any number of counterparts,
each of which, when so executed and delivered, shall be an original; but such counterparts shall
together constitute but one and the same Indenture.


 


40









 





Section 13.07 Governing Law. The laws of the State of Arizona shall govern the construction
and enforcement of this Indenture and of all Bonds, except that the laws of the State of New York
shall govern the construction and enforcement of the rights and duties of the Trustee hereunder and
the construction of Section 13.09 hereof and the computation of any period of grace provided
herein.



Section 13.08 Notices. Except as otherwise provided in this Indenture, all notices,
certificates, requests requisitions or other communications by the Authority, the Company or the
Trustee pursuant to this Indenture shall be in writing and shall be sufficiently given and shall be
deemed given when mailed by registered mail, postage prepaid, addressed as follows: If to the
Authority, c/o Russo, Russo & Slania, P.C., 6700 North Oracle Road, Suite 100, Tucson, Arizona
85704; if to the Company, One South Church Avenue, Suite 100, Tucson, Arizona 85701, Attention:
Treasurer; and if to the Trustee, at 100 Wall Street, Suite 1600, New York, New York 10005,
Attention: Corporate Trust Services. Any of the foregoing may, by notice given hereunder to each
of the others, designate any further or different addresses to which subsequent notices,
certificates, requests or other communications shall be sent hereunder. Anything herein to the
contrary notwithstanding, any notice required to be delivered hereunder may also be delivered by
electronic means including, without limitation, email in PDF format.



Section 13.09 Holidays. If the date for making any payment or the last date for performance
of any act or the exercising of any right, as provided in this Indenture, shall be a Saturday,
Sunday or a public holiday in the city in which is located the Principal Office of the Trustee,
such payment may be made or act performed or right exercised on the next succeeding business day,
with the same force and effect as if done on the nominal date provided in this Indenture, and no
interest shall accrue for the period after such nominal date. If the last day of any period of
grace, as provided in this Indenture, shall be a Saturday, Sunday or a public holiday in the city
in which is located the Principal Office of the Trustee, the last day of such period of grace shall
be deemed to be the next succeeding business day.



Section 13.10 Statutory Notice Regarding Cancellation of Contracts. As required by the
provisions of Section 38-511, Arizona Revised Statutes, as amended, notice is hereby given that
political subdivisions of the State of Arizona or any of their departments or agencies may, within
three (3) years of its execution, cancel any contract, without penalty or further obligation, made
by the political subdivisions or any of their departments or agencies on or after September 30,
1988, if any person significantly involved in initiating, negotiating, securing, drafting or
creating the contract on behalf of the political subdivisions or any of their departments or
agencies is, at any time while the contract or any extension of the contact is in effect, an
employee or agent of any other party to the contract in any capacity or a consultant to any other
party of the contract with respect to the subject matter of the contract.



The Trustee covenants and agrees not to employ as an employee, agent or, with respect to the
subject matter of this Indenture, a consultant, any person actually known by the Trustee to be
significantly involved in initiating, negotiating, securing, drafting or creating such Indenture on
behalf of the Authority within three (3) years from the execution hereof, unless a waiver is
provided by the Authority.


 


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IN WITNESS WHEREOF, The Industrial Development Authority of the County of Pima has caused this
Indenture to be executed by its President and U.S. Bank Trust National Association has caused this
Indenture to be executed on its behalf by its Vice President, all as of the day and year first
above written.



	 	 	 	 	 
	 	THE INDUSTRIAL DEVELOPMENT AUTHORITY

OF THE COUNTY OF PIMA

 	 
	 	By:  	/s/ Stanley Lehman
 	 
	 	 	Name:  	Stanley Lehman 	 
	 	 	Title:  	President 	 
	 



	 	 	 	 	 
	 	U.S. BANK TRUST NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Patrick J. Crowley
 	 
	 	 	Name:  	Patrick J. Crowley 	 
	 	 	Title:  	Vice President 	 



 


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EXHIBIT A




(FORM OF BOND)





No.



THE INDUSTRIAL DEVELOPMENT AUTHORITY




OF THE COUNTY OF PIMA




INDUSTRIAL DEVELOPMENT REVENUE BOND,




2010 SERIES A




(TUCSON ELECTRIC POWER COMPANY PROJECT)




	 	 	 
	INTEREST RATE (PER ANNUM):
	 	 
	MATURITY DATE:

	 	DATED:
	CUSIP:
	 	 
	REGISTERED OWNER:
	 	 
	PRINCIPAL AMOUNT:

	 	DOLLARS






The Industrial Development Authority of the County of Pima, an Arizona nonprofit corporation
designated by law as a political subdivision of the State of Arizona (the “Authority”), for value
received, hereby promises to pay (but only out of the Receipts and Revenues of the Authority from
the Loan Agreement, as hereinafter defined, and other moneys pledged therefor) to the Registered
Owner identified above or registered assigns, on the Maturity Date set forth above, upon the
presentation and surrender hereof, the Principal Amount set forth above and to pay (but only out of
the Receipts and Revenues of the Authority from the Loan Agreement and other moneys pledged
therefor), interest on said Principal Amount until payment of said Principal Amount has been made
or duly provided for, from the date hereof, at the Interest Rate set forth above, semi-annually on
the first day of April and October in each year, commencing April 1, 2011. Interest will be
calculated on the basis of a 360-day year of twelve 30-day months. All capitalized terms used and
not otherwise defined herein shall have the meanings assigned to such terms in the hereinafter
defined Indenture.



The principal of this Bond is payable at the principal office of U.S. Bank Trust National
Association, as trustee. Interest on this Bond is payable by check drawn upon the Trustee and
mailed to the Registered Owner of this Bond as of the close of business on the Record Date at the
registered address of such Registered Owner; notwithstanding the foregoing, upon request to the
Trustee by a Registered Owner of not less than $1,000,000 in aggregate principal amount of Bonds,
interest on such Bonds and, after presentation and surrender of such Bonds, the principal thereof
shall be paid to such Registered Owner by wire transfer to the account maintained within the
continental United States specified by such Registered Owner or, if such Registered Owner maintains
an account with the entity acting as Trustee, by deposit into such account. Payment of the
principal of and interest on, this Bond shall be in any coin or currency of the United States of
America as, at the respective times of payment, shall be legal tender for the payment of public and
private debts.


 


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This Bond is one of the duly authorized The Industrial Development Authority of the County of
Pima Industrial Development Revenue Bonds, 2010 Series A (Tucson Electric Power Company Project)
(the “Bonds”) of the Authority, aggregating ONE HUNDRED MILLION DOLLARS ($100,000,000) in principal
amount, issued under and pursuant to the Constitution and laws of the State of Arizona,
particularly Title 35, Chapter 5, Arizona Revised Statutes, as amended (the “Act”), and the
Indenture of Trust, dated as of October 1, 2010 (the “Indenture”), between the Authority and U.S.
Bank Trust National Association, as trustee (together with any successor thereto, the “Trustee”).
Pursuant to the Loan Agreement, dated as of October 1, 2010 (the “Loan Agreement”), between the
Authority and Tucson Electric Power Company, a corporation organized and existing under the laws of
the State of Arizona (the “Company”), the proceeds of the Bonds will be loaned to the Company and
will be applied to finance a portion of the costs of the acquisition, construction, improvement and
equipping of the Facilities.



Neither Pima County, Arizona nor the State of Arizona shall in any event be liable for the
payment of the principal of or premium, if any, or interest on the Bonds, and neither the Bonds,
nor the premium, if any, or the interest thereon, shall be construed to constitute an indebtedness
of Pima County, Arizona or the State of Arizona within the meaning of any constitutional or
statutory provisions whatsoever. The Bonds and the premium, if any, and the interest thereon are
limited obligations of the Authority payable solely from the Receipts and Revenues of the Authority
from the Loan Agreement and other moneys pledged therefor under the Indenture.



The Bonds are equally and ratably secured, to the extent provided in the Indenture, by the
pledge thereunder of the “Receipts and Revenues of the Authority from the Loan Agreement”, which
term is used herein as defined in the Indenture and which as therein defined means all moneys paid
or payable to the Trustee for the account of the Authority by the Company in respect of the loan
payments, including all receipts of the Trustee which, under the provisions of the Indenture,
reduce the amounts of such payments. The Authority has also pledged and assigned to the Trustee as
security for the Bonds all other rights and interests of the Authority under the Loan Agreement
(other than its rights to indemnification and its administrative expenses and certain other
rights).



The transfer of this Bond shall be registered upon the registration books kept at the
principal office of the Trustee, at the written request of the Registered Owner hereof or his
attorney duly authorized in writing, upon surrender of this Bond at said office, together with a
written instrument of transfer satisfactory to the Trustee duly executed by the Registered Owner or
his duly authorized attorney.



In the manner and with the effect provided in the Indenture, each of the Bonds may be redeemed
prior to maturity, as follows:




(a) The Bonds shall be subject to redemption by the Authority, at the direction of the
Company, on any date on or after October 1, 2020 in whole at any time or in part from time
to time, at 100% of the principal amount thereof plus accrued interest, if any, to the
redemption date.


 


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(b) The Bonds shall be subject to redemption by the Authority, at the direction of the
Company, in whole at any time at 100% of the principal amount thereof plus accrued interest,
if any, to the redemption date, if:




(i) the Company shall have determined that the continued operation of the Facilities is
impracticable, uneconomical or undesirable for any reason;




(ii) all or substantially all of the Facilities shall have been condemned or taken by
eminent domain; or




(iii) the operation of the Facilities shall have been enjoined or shall have otherwise
been prohibited by, or shall conflict with, any order, decree, rule or regulation of any
court or of any federal, state or local regulatory body, administrative agency or other
governmental body.




(c) The Bonds shall be subject to mandatory redemption by the Authority, at 100% of the
principal amount thereof plus accrued interest to the redemption date, on the 180th day (or
such earlier date as may be designated by the Company) after a final determination by a
court of competent jurisdiction or an administrative agency, to the effect that, as a result
of a failure by the Company to perform or observe any covenant, agreement or representation
contained in the Loan Agreement, the interest payable on the Bonds is included for federal
income tax purposes in the gross income of the owners thereof, other than any owner of a
Bond who is a “substantial user” of the Facilities or a “related person” within the meaning
of Section 147(a) of the Internal Revenue Code of 1986 (the “Code”). No determination by
any court or administrative agency shall be considered final for the purposes of this
paragraph (c) unless the Company shall have been given timely notice of the proceeding which
resulted in such determination and an opportunity to participate in such proceeding, either
directly or through an owner of a Bond, and until the conclusion of any appellate review
sought by any party to such proceeding or the expiration of the time for seeking such
review. The Bonds shall be redeemed either in whole or in part in such principal amount
that, in the opinion of Bond Counsel, the interest payable on the Bonds, including the Bonds
remaining outstanding after such redemption, would not be included in the gross income of
any owner thereof, other than an owner of a Bond who is a “substantial user” of the
Facilities or a “related person” within the meaning of Section 147(a) of the Code.




(d) In the event that the aggregate of the amounts, if any, of the proceeds of the
Bonds remaining unexpended upon the completion of the Facilities or upon the termination of
the acquisition and construction thereof, together with any income or other gain from the
investment thereof, shall at any time, or from time to time, be equal to or greater than
$5,000, the Authority shall redeem the Bonds, at the principal amount thereof plus accrued
interest to the redemption date, in the largest aggregate principal amount which does not
exceed the amount of such proceeds together with income or other gain on an interest payment
date determined as set forth in, and otherwise in accordance with the provisions of, the
Indenture; provided, however, that the Company may direct that such proceeds and income be
applied to the purchase of the Bonds or in any other manner which will not impair the validity of the Bonds or the exemption from
gross income for federal tax purposes of the interest thereon.


 


A-3









 





If less than all of the Bonds at the time outstanding are to be called for redemption, the
particular Bonds or portions of Bonds to be redeemed shall be selected by the Trustee, in such
manner as the Trustee in its discretion may deem proper, in the principal amounts designated to the
Trustee by the Company or otherwise as required by the Indenture.



In the event any of the Bonds are called for redemption, the Trustee shall give notice, in the
name of the Authority, of the redemption of such Bonds. Such notice shall be given by electronic
means or by mailing a copy of the redemption notice by first class mail at least twenty (20) days
prior to the date fixed for redemption to the Registered Owners of the Bonds to be redeemed at the
addresses shown on the registration books; provided, however, that failure duly to give such
notice, or any defect therein, shall not affect the validity of any proceedings for the redemption
of the Bonds as to which there shall be no such failure or defect.



With respect to any notice of redemption of Bonds in accordance with the redemption provisions
lettered (a) or (b) above, unless, upon the giving of such notice, such Bonds shall be deemed to
have been paid within the meaning of the Indenture, such notice shall state that such redemption,
shall be conditional upon the receipt, by the Trustee on or prior to the opening of business on the
date fixed for such redemption of moneys sufficient to pay the principal of and interest on such
Bonds to be redeemed, and that if such moneys shall not have been so received said notice shall be
of no force and effect and the Authority shall not be required to redeem such Bonds. In the event
that such notice of redemption contains such a condition and such moneys are not so received, the
redemption shall not be made and the Trustee shall within a reasonable time thereafter give notice,
in the manner in which the notice of redemption was given, that such moneys were not so received.
Any notice of redemption may also contain such other conditions as the Company shall specify and
may be rescinded by the Company in accordance with the provisions of the Indenture.



If a notice of redemption shall be unconditional, or if the conditions of a conditional notice
of redemption shall have been satisfied, then upon presentation and surrender of Bonds so called
for redemption at the place or places of payment, such Bonds shall be redeemed.



Any Bonds and portions of Bonds which have been duly selected for redemption shall cease to
bear interest on the specified redemption date provided that moneys sufficient to pay the principal
of and interest on such Bonds shall be on deposit with the Trustee on the date fixed for redemption
so that such Bonds will be deemed to be paid in accordance with the Indenture and such Bonds shall
thereafter cease to be entitled to any lien, benefit or security under the Indenture.



The Registered Owner of this Bond shall have no right to enforce the provisions of the
Indenture, or to institute action to enforce the covenants therein, or to take any action with
respect to any default under the Indenture, or to institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the Indenture.


 


A-4









 





With certain exceptions as provided therein, the Indenture and the Loan Agreement may be
modified or amended only with the consent of the Registered Owners of a majority in aggregate
principal amount of all Bonds outstanding under the Indenture which would be adversely affected
thereby.



Reference is hereby made to the Indenture and the Loan Agreement, copies of which are on file
with the Trustee, for the provisions, among others, with respect to the nature and extent of the
rights, duties and obligations of the Authority, the Company, the Trustee and the Registered Owners
of the Bonds. The Registered Owner of this Bond, by the acceptance hereof, is deemed to have
agreed and consented to the terms and provisions of the Indenture and the Loan Agreement.



Among other things, as provided in the Indenture and subject to certain limitations therein
set forth, this Bond or any portion of the principal amount hereof will be deemed to have been paid
within the meaning and with the effect expressed in the Indenture, and the entire indebtedness of
the Authority in respect thereof shall be satisfied and discharged, if there has been irrevocably
deposited with the Trustee, in trust, money in an amount which will be sufficient and/or Government
Obligations, the principal of and interest on which, when due, without regard to any reinvestment
thereof, will provide moneys which, together with moneys deposited with or held by the Trustee,
will be sufficient, to pay when due the principal of and interest on this Bond or such portion of
the principal amount hereof when due.



Among other things, the Loan Agreement contains terms, provisions and conditions relating to
the consolidation or merger of the Company with or into, and the sale, transfer or other
disposition of assets to, another Person, to the assumption by such other Person, in certain
circumstances, of all of the obligations of the Company under the Loan Agreement and to the release
and discharge of the Company, in certain circumstances, from such obligations.



The Authority and the Trustee may deem and treat the person in whose name this Bond is
registered as the absolute owner hereof for all purposes, whether or not this Bond is overdue, and
neither the Authority nor the Trustee shall be affected by any notice to the contrary; provided
that if the Company is the sole Owner of this Bond, the Authority and the Trustee may deem and
treat the Company as the absolute owner for all purposes.



It is hereby certified, recited and declared that all acts, conditions and things required by
the Constitution and laws of the State of Arizona to exist, to have happened and to have been
performed, precedent to and in the execution and delivery of the Indenture and the issuance of this
Bond, do exist, have happened and have been performed in regular and due form as required by law.



No covenant or agreement contained in this Bond or the Indenture shall be deemed to be a
covenant or agreement of any official, officer, agent or employee of the Authority in his
individual capacity, and neither the members of the Board of Directors of the Authority, nor any
official executing this Bond, shall be liable personally on this Bond or be subject to any personal
liability or accountability by reason of the issuance or sale of this Bond.



This Bond shall not be entitled to any right or benefit under the Indenture, or be valid or
become obligatory for any purpose, until this Bond shall have been authenticated by the execution
by the Trustee of the certificate of authentication inscribed hereon.


 


A-5









 





IN WITNESS WHEREOF, The Industrial Development Authority of The County of Pima has caused this
Bond to be executed with the manual or facsimile signature of its President or Vice President and
attested with the manual or facsimile signature of its Secretary or Assistant Secretary.



	 	 	 	 	 
	 	THE INDUSTRIAL DEVELOPMENT

AUTHORITY OF THE COUNTY OF PIMA

 	 
	 	By:  	 	 
	 	 	President 	 
	 	 	 	 
	 



	 	 	 
	ATTEST:
	 	 
	 
	 	 
	 

Secretary

	 	 







 


A-6









 







EXHIBIT B




(FORM FOR ORDINARY REGISTRATION OF TRANSFER)




COMPLETE AND SIGN THIS FORM FOR ORDINARY

REGISTRATION OF TRANSFER




FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto




Please Insert Social Security Or Other Identifying Number of Assignee




                                                                  
              



                                                                   
             



Please print or typewrite name and address including postal zip code of assignee




                                                                  
              




this bond and all rights thereunder, hereby irrevocably constituting and appointing
                     attorney to register such transfer on the registration books in the
principal office of the Trustee, with full power of substitution in the premises.



	 	 	 
	Dated:                                          

	 	 
	 	 	NOTE: The signature on this assignment must correspond with the
name as written on the face of this Bond in every particular,
without alteration, enlargement or any change whatsoever.







 


B-1









 







EXHIBIT C




(FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION)



CERTIFICATE OF AUTHENTICATION




This is to certify that this Bond is one of the Bonds described in the within-mentioned
Indenture.



	 	 	 	 	 
	 	U.S. BANK TRUST NATIONAL 
ASSOCIATION,
as Trustee

 	 
	 	By:  	 	 
	 	 	Authorized Officer 	 
	 	 	 	 
	 




Date of Authentication:                                              


 


C-1









 





EXHIBIT D




REQUISITION NO. ___

The Industrial Development Authority of the County of Pima Industrial Development

Revenue Bonds, 2010 Series A (Tucson Electric Power Company Project)

Construction Fund





The undersigned,                     , hereby certifies as follows:



1. I am the                      of Tucson Electric Power Company, a corporation organized and
existing under the laws of the State of Arizona (the “Company”).



2. Pursuant to the provisions of that certain Indenture of Trust, dated as of October 1, 2010
(the “Indenture”), between The Industrial Development Authority of the County of Pima (the
“Authority”) and U.S. Bank Trust National Association, as trustee (the “Trustee”), I am an
Authorized Company Representative (as such term is defined in the Indenture) and I am delivering
this Requisition on behalf of the Company.



3. The undersigned, acting on behalf of the Company, does hereby request disbursement of funds
from The Industrial Development Authority of the County of Pima Industrial Development Revenue
Bonds, 2010 Series A (Tucson Electric Power Company Project) Construction Fund (the “Construction
Fund”) created and established pursuant to Section 5.01 of the Indenture.




TOTAL DISBURSEMENT AMOUNT REQUESTED: $                    .



4. The undersigned, acting on behalf of the Company, hereby certifies: (a) that each
obligation, item of cost or expense with respect to which this Requisition is being made has been
properly incurred and has been paid or is now due and payable as an item of the Cost of
Construction (as such term is defined in the Indenture), is a proper charge against the
Construction Fund, and has not been the basis of any previous final payment from the Construction
Fund or from the proceeds of any other obligations issued by the Authority; (b) that the payment of
this Requisition will not result in a breach of any of the covenants of the Company contained in
Section 4.04 (c) or (d) of the Loan Agreement, dated as of October 1, 2010 (the “Loan Agreement”),
between the Authority and the Company; and (c) that, to the best of the knowledge of such
Authorized Company Representative, there shall not have occurred and be continuing any event of
default under the Loan Agreement.


 


D-1









 






5. Payment should be made in accordance with the instructions set forth on Schedule I hereto.




Dated:                                         .



	 	 	 	 	 
	 	Tucson Electric Power Company

 	 
	 	By:  	 	 
	 	 	Authorized Company Representative 	 
	 	 	 	 
	 




 


D-2









 







SCHEDULE I




The Industrial Development Authority of the County of Pima Industrial Development

Revenue Bonds, 2010 Series A (Tucson Electric Power Company Project)

Construction Fund




	 	 	 	 	 	 	 
	Name and Address of

	 	
	 	
	 	
	Party To

	 	Payment
	 	Nature of
	 	Payment
	Be Paid

	 	Amount
	 	Expenditure
	 	Instructions
	
	 	 	 	 	 	 







 


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