Document:

Document

Exhibit 4.1

TUCSON ELECTRIC POWER COMPANY
OFFICER’S CERTIFICATE
Martha B. Pritz, the Treasurer of Tucson Electric Power Company, an Arizona corporation (the “Company”), pursuant to the authority granted in the Board Resolutions of the Company dated February 8, 2022, and Sections 102, 201 and 301 of the Indenture defined herein, does hereby certify to U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee (the “Trustee”) under the Indenture (For Unsecured Debt Securities) of the Company dated as of November 1, 2011 (the “Indenture”) that:
1.The Securities of the ninth series to be issued under the Indenture shall be designated “3.25% Senior Notes due 2032” (the “Notes”).  All capitalized terms used in this certificate which are not defined herein shall have the meanings set forth in Exhibit A hereto; all capitalized terms used in this certificate which are not defined herein or in Exhibit A hereto shall have the meanings set forth in the Indenture.
2.The Notes shall be issued by the Company in the initial aggregate principal amount of $325,000,000.  As contemplated by the last paragraph of Section 301 of the Indenture, additional Notes, without limitation as to amount, having the same terms as the Outstanding Notes (except a different issue date and bearing interest from the last Interest Payment Date to which interest has been paid or duly provided for on the Outstanding Notes, and, if no interest has been paid, from February 17, 2022), may also be issued by the Company pursuant to the Indenture without the consent of the existing Holders of the Notes.  Such additional Notes shall be part of the same series as the Outstanding Notes.
3.The Notes shall mature and the principal thereof shall be due and payable together with all accrued and unpaid interest thereon on May 15, 2032.
4.The Notes shall bear interest as provided in the form thereof set forth in Exhibit A hereto.  
5.The principal of and premium, if any, and each installment of interest on the Notes shall be payable upon presentation of the Notes at the office or agency of the Company in the City of New York; provided that payment of principal, premium, if any, and each installment of interest may be made at the option of the Company by check mailed to the address of the persons entitled thereto or by wire transfer to an account designated by the person entitled thereto; and provided further that after payment of the Notes in full, the Holders thereof shall promptly surrender such Notes at the office or agency of the Company in the City of New York.  Notices and demands to or upon the Company in respect of the Notes and the Indenture may be served at the office or agency of the Company in the City of New York.  The Corporate Trust Office of the Trustee will initially be the agency of the Company for such payment and service of notices and demands and the Company hereby appoints U.S. Bank Trust Company, National Association as its agent for all such purposes; provided, however, that the Company reserves the right to change, by one or more Officer’s Certificates, any such office or agency and such agent.  The registration and registration of transfers and exchanges in 
			
	

respect of the Notes may be effected at the Corporate Trust Office of the Trustee.  The Trustee will initially be the Security Registrar and the Paying Agent for the Notes.
6.The Notes will be redeemable at the option of the Company prior to the Stated Maturity of the principal thereof on not less than 10 nor more than 60 days’ notice prior to the date fixed for redemption as provided in the form thereof set forth in Exhibit A hereto.
7.No service charge shall be made for the registration of transfer or exchange of the Notes; provided, however, that the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the exchange or transfer.
8.If the Company shall make any deposit of money and/or Eligible Obligations with respect to any Notes, or any portion of the principal amount thereof, as contemplated by Section 701 of the Indenture, the Company shall not deliver an Officer’s Certificate described in clause (z) in the first paragraph of said Section 701 unless the Company shall also deliver to the Trustee, together with such Officer’s Certificate, either:
(A)an instrument wherein the Company, notwithstanding the satisfaction and discharge of its indebtedness in respect of the Notes, shall assume the obligation (which shall be absolute and unconditional) to irrevocably deposit with the Trustee or Paying Agent such additional sums of money, if any, or additional Eligible Obligations (meeting the requirements of Section 701), if any, or any combination thereof, at such time or times, as shall be necessary, together with the money and/or Eligible Obligations theretofore so deposited, to pay when due the principal of and premium, if any, and interest due and to become due on such Notes or portions thereof, all in accordance with and subject to the provisions of said Section 701; provided, however, that such instrument may state that the obligation of the Company to make additional deposits as aforesaid shall be subject to the delivery to the Company by the Trustee of a notice asserting the deficiency accompanied by an opinion of an independent public accountant of nationally recognized standing, selected by the Trustee, showing the calculation thereof; or
(B)an Opinion of Counsel to the effect that, as a result of a change in law occurring after the date of this certificate, the Holders of such Notes, or portions of the principal amount thereof, will not recognize income, gain or loss for United States federal income tax purposes as a result of the satisfaction and discharge of the Company’s indebtedness in respect thereof and will be subject to United States federal income tax on the same amounts, at the same times and in the same manner as if such satisfaction and discharge had not been effected.
9.The Eligible Obligations with respect to the Notes will be Government Obligations.
10.The Notes will be Benefitted Securities and shall have the benefit of the covenant contained in Section 605 of the Indenture.
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11.The Notes shall have such other terms and provisions as are provided in the form thereof set forth in Exhibit A hereto, and shall be issued in substantially such form.
12.Each initial and future holder of the Notes, by its acquisition of an interest in such Notes, irrevocably (a) consents to the amendment of the Indenture to restate the definition of “Capital Lease Obligations” contained in Section 605 of the Indenture to read substantially as set forth below without any other or further action by any such holder of such Notes, and (b) designates the Trustee, and its successors, as its proxy with irrevocable instructions to vote and deliver a written consent on behalf of such holder in favor of such amendment at any noteholder meeting or, in lieu of any noteholder meeting, in any consent solicitation or otherwise:
“Capital Lease Obligations” means (i) obligations required to be recognized as lease liabilities on the Company’s consolidated balance sheet in respect of any lease agreement (including any lease intended as security) of the Company of a character that, under generally accepted accounting principles, is required to be classified as a finance lease (or similar classification), but not as an operating lease (or similar classification), and (ii) without duplication, the Existing Capital Lease Obligations however any related lease is so required to be classified.
13.The Notes will be initially issued in global form registered in the name of Cede & Co., as registered owner and as nominee for DTC, the initial securities depository for the Notes; provided, that the Company reserves the right to provide for another depository, registered as a clearing agency under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to act as depository for the global Notes (DTC and any such successor depository, the “Depository”); beneficial interests in Notes issued in global form may not be exchanged in whole or in part for individual certificated Notes in definitive form, and no transfer of a global Note in whole or in part may be registered in the name of any Person other than the Depository or its nominee except that (i) if the Depository (A) has notified the Company that it is unwilling or unable to continue as depository for the global Notes or (B) has ceased to be a clearing agency registered under the Exchange Act or other applicable statute or regulation and, in either case, a successor depository for such global Notes has not been appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, (ii) if the Company, in its sole discretion, determines that the Notes will no longer be represented by Notes in global form or (iii) if an Event of Default with respect to the Notes has occurred and is continuing, the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Notes, will authenticate and deliver Notes in definitive certificated form in an aggregate principal amount equal to the principal amount of the global Notes representing such Notes in exchange for such global Notes, such definitive Notes to be registered in the names provided by the Depository to the Trustee; each global Note (i) shall represent and shall be denominated in an amount equal to the aggregate principal amount of the Outstanding Notes to be represented by such global Note, (ii) shall be registered in the name of the Depository or its nominee, (iii) shall be delivered by the Trustee to the Depository, its nominee, any 
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custodian for the Depository or otherwise pursuant to the Depository’s instructions and (iv) shall bear a legend restricting the transfer of such global Note to any person other than the Depository or its nominee; none of the Company, the Trustee, any Paying Agent or any Authenticating Agent will have any responsibility or liability for any aspect of the records relating to, payments made on account of, or transfers in respect of, beneficial ownership interests in a global Note (all of which will be conducted pursuant to the customary procedures of the Depository) or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
14.(a)    The undersigned has read all of the covenants and conditions contained in the Indenture, and the definitions in the Indenture relating thereto, relating to the issuance, authentication and delivery of the Notes and in respect of compliance with which this certificate is made;
(b)The statements contained in this certificate are based upon the familiarity of the undersigned with the Indenture, the documents accompanying this certificate, and upon discussions by the undersigned with officers and employees of the Company familiar with the matters set forth herein;
(c)In the opinion of the undersigned, she has made such examination or investigation as is necessary to enable her to express an informed opinion as to whether or not such covenants and conditions have been complied with; and
(d)In the opinion of the undersigned, such conditions and covenants and conditions precedent provided for in the Indenture (including any covenants compliance with which constitutes a condition precedent) relating to the authentication and delivery of the Notes requested in the accompanying Company Order No. 9, have been complied with.
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IN WITNESS WHEREOF, I have executed this Officer’s Certificate this 17th day of February, 2022.

/s/ Martha B. Pritz            
Martha B. Pritz
Treasurer

			
	

EXHIBIT A
[Unless this certificate is presented by an authorized representative of The Depository Trust Company, a limited-purpose trust company organized under the New York Banking Law (“DTC”), to Tucson Electric Power Company or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.]
						
	No. R-	CUSIP: 898813 AU4
		

[FORM OF FACE OF NOTE]
TUCSON ELECTRIC POWER COMPANY
3.25% SENIOR NOTE DUE 2032
Tucson Electric Power Company, a corporation duly organized and existing under the laws of the State of Arizona (herein referred to as the “Company,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _____________________, or registered assigns, the principal sum of ___________________________ Dollars ($_____________) on May 15, 2032, and to pay interest on said principal sum semi-annually on May 15 and November 15 of each year commencing May 15, 2022 (each an Interest Payment Date) at the rate of 3.25% per annum, until the principal hereof is paid or made available for payment and to pay interest on any overdue principal and, to the extent permitted by law, interest, at the rate then borne by the Securities of this series.  Interest on the Securities of this series will accrue from, and include, February 17, 2022, to the first Interest Payment Date, and thereafter will accrue from the last Interest Payment Date to which interest has been paid or duly provided for. In the event that any Interest Payment Date is not a Business Day, then payment of interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of such delay) with the same force and effect, and in the same amount, as if made on the Interest Payment Date.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the close of business on (i) the Business Day next preceding such Interest Payment Date so long as the Securities are held by a securities depository in book-entry form, or (ii) if the Securities are not held by a securities depository in book-entry form, the 15th calendar day next preceding such Interest Payment Date, provided, however, that interest payable at Maturity will be paid to the Person to whom principal is paid.  Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name 
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this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.
Payment of the principal of and premium, if any, and interest on this Security will be made upon presentation at the office or agency of the Company maintained for that purpose in the City of New York, the State of New York in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, provided, however, that, at the option of the Company, the principal of and premium, if any, and interest on this Security may be paid by check mailed to the address of the person entitled thereto, as such address shall appear on the Security Register or by wire transfer to an account designated by the person entitled thereto; and provided, further, that, after payment in full of this Security the Holder shall promptly surrender this Security at the office or agency of the Company in the City of New York, the State of New York.
Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.  Any capitalized term which is used herein and not otherwise defined shall have the meaning ascribed to such term in the Indenture.
Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

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IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

TUCSON ELECTRIC POWER COMPANY

By:  ________________________________
        
        
        
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION 
This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.
Dated: 

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee

By:    ________________________________
Authorized Signatory

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[FORM OF REVERSE OF NOTE]
General.

    This Security is one of a duly authorized issue of securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under an Indenture (For Unsecured Debt Securities), dated as of November 1, 2011 (herein, together with any amendments thereto, called the “Indenture,” which term shall have the meaning assigned to it in such instrument), between the Company and U.S. Bank Trust Company, National Association (successor to U.S. Bank National Association), as Trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture, including the Board Resolutions and Officer’s Certificate filed with the Trustee on February 17, 2022 creating the series designated on the face hereof, for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.

Optional Redemption.

Prior to February 15, 2032 (three months prior to their Stated Maturity) (the “Par Call Date”), the Securities of this series will be redeemable at the option of the Company, in whole or in part, on not less than 10 nor more than 60 days’ notice prior to the date fixed for redemption (each a “Redemption Date”), at any time and from time to time, at a redemption price (a “Redemption Price”) equal to the greater of:

(1) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the Redemption Date (assuming the Securities of this series matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 20 basis points less (b) interest accrued to the Redemption Date, and
(2) 100% of the principal amount of the Securities of this series being redeemed,
plus, in either case, accrued and unpaid interest on the Securities of this series being redeemed to the Redemption Date.
On or after the Par Call Date, the Securities of this series will be redeemable at the option of the Company, in whole or in part, on not less than 10 nor more than 60 days’ notice, at any time and from time to time, at a Redemption Price equal to 100% of the principal amount of the Securities of this series being redeemed plus accrued and unpaid interest thereon to the Redemption Date.
“Treasury Rate” means, with respect to any Redemption Date, the yield determined by the Company in accordance with the following two paragraphs.
The Treasury Rate shall be determined by the Company after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted daily by the 
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Board of Governors of the Federal Reserve System), on the third Business Day preceding the Redemption Date based upon the yield or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily) - H.15” (or any successor designation or publication) (“H.15”) under the caption “U.S. government securities–Treasury constant maturities–Nominal” (or any successor caption or heading). In determining the Treasury Rate, the Company shall select, as applicable: 
(1) the yield for the Treasury constant maturity on H.15 exactly equal to the period from the Redemption Date to the Par Call Date (the “Remaining Life”); or 
(2) if there is no such Treasury constant maturity on H.15 exactly equal to the Remaining Life, the two yields – one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than and one yield corresponding to the Treasury constant maturity on H.15 immediately longer than the Remaining Life – and shall interpolate to the Par Call Date on a straight-line basis (using the actual number of days) using such yields and rounding the result to three decimal places; or 
(3) if there is no such Treasury constant maturity on H.15 shorter than or longer than the Remaining Life, the yield for the single Treasury constant maturity on H.15 closest to the Remaining Life. 
For purposes of this paragraph, the applicable Treasury constant maturity or maturities on H.15 shall be deemed to have a maturity date equal to the relevant number of months or years, as applicable, of such Treasury constant maturity from the Redemption Date.
If on the third Business Day preceding the Redemption Date H.15 is no longer published, or, if published, no longer contains the yields for Treasury constant maturities, the Company shall calculate the Treasury Rate based on the rate per annum equal to the semi-annual equivalent yield to maturity at 11:00 a.m., New York City time, on the second Business Day preceding such Redemption Date as follows:
(1) the Company shall select (a) the United States Treasury security maturing on the Par Call Date, subject to clause (3) below, or (b) if there is no United States Treasury security maturing on the Par Call Date, then the United States Treasury security with the maturity date that is closest to the Par Call Date, subject to clauses (2) and (3) below, as applicable; or  
(2) if there is no United States Treasury security described in clause (1), but there are two or more United States Treasury securities with maturity dates equally distant from the Par Call Date, one or more with maturity dates preceding the Par Call Date and one or more with maturity dates following the Par Call Date, the Company shall select the United States Treasury security with a maturity date preceding and closest to the Par Call Date, subject to clause (3) below; or 
(3) if there are two or more United States Treasury securities meeting the criteria of the preceding clauses (1) or (2), the Company shall select from among these two or more United States Treasury securities the United States Treasury security that is trading 
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closest to par based upon the average of the bid and asked prices for such United States Treasury securities at 11:00 a.m., New York City time.  

In determining the Treasury Rate in accordance with the terms of this paragraph, the semi-annual yield to maturity of the applicable United States Treasury security shall be based upon the average of the bid and asked prices of such United States Treasury security (expressed as a percentage of principal amount and rounded to three decimal places) at 11:00 a.m., New York City time.

The Company shall deliver to the Trustee before any Redemption Date for the Securities of this series its calculation of the Redemption Price applicable to such redemption. The Company’s actions and determinations in determining the Redemption Price shall be conclusive and binding for all purposes, absent manifest error. The Trustee shall be under no duty to inquire into, may presume the correctness of, and shall be fully protected in acting upon the Company’s calculation of any Redemption Price of the Securities of this series.
In lieu of stating the Redemption Price, notices of redemption of the Securities of this series pursuant to the first paragraph under “Optional Redemption” shall state substantially the following:  “The Redemption Price of the Securities of this series to be redeemed shall equal the greater of (i) (a) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the Redemption Date (assuming the Securities of this series matured on the Par Call Date) on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 20 basis points less (b) interest accrued to the Redemption Date and (ii) 100% of the principal amount of the Securities of this series being redeemed plus, in either case, accrued and unpaid interest on the Securities of this series being redeemed to the Redemption Date.”
If less than all of the Securities of this series are to be redeemed consistent with the terms hereof, the particular Securities to be redeemed shall be selected by the Trustee from the Outstanding Securities of such series in a manner it deems fair and appropriate.
If at the time notice of redemption is given, the redemption moneys are not on deposit with the Trustee, then the redemption shall be subject to their receipt on or before the Redemption Date and such notice shall be of no effect unless such moneys are received.
On and after the Redemption Date, interest will cease to accrue on the Securities of this series or portions thereof called for redemption; provided that payment of the Redemption Price shall have been made on or before the Redemption Date.
The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security upon compliance with certain conditions set forth in the Indenture including the Officer’s Certificate described above.

Events of Default.

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If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.
Governing Law.
This Security shall be governed by and construed in accordance with the laws of the State of New York (including without limitation Section 5-1401 of the New York General Obligations Law or any successor statute), except to the extent that the law of any other jurisdiction shall be mandatorily applicable.

Modification and Waivers.

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of all series to be affected.  The Indenture contains provisions permitting the Holders of a majority in aggregate principal amount of the Securities of all series then Outstanding to waive compliance by the Company with certain provisions of the Indenture.  The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of a majority in aggregate principal amount of the Securities of all series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with such request, and the Trustee shall not have received from the Holders of a majority in aggregate principal amount of Securities of all series at the time Outstanding in respect of which an Event of Default shall have occurred and be continuing a direction inconsistent with such request, and shall have failed to institute any such proceeding, for 60 days after receipt of such notice, request and offer of indemnity.  The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.
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No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed.

Authorized Denominations.

The Securities of this series are issuable only in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof.  As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor and of authorized denominations, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

Owners.

The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the absolute owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.

Consent.

Each initial and future holder of this Security, by its acquisition of an interest in this Security, irrevocably (a) consents to the amendment of the Indenture set forth in Paragraph 12 of the Officer’s Certificate establishing the terms of the Securities of this series without any other or further action by any such holder of this Security, and (b) designates the Trustee, and its successors, as its proxy with irrevocable instructions to vote and to deliver a written consent on behalf of such holder in favor of such amendment at any noteholder meeting or, in lieu of any noteholder meeting, in any consent solicitation or otherwise.

Defined Terms.

All terms used in this Security which are defined in Indenture shall have the meanings assigned to them in the Indenture and in the Officer’s Certificate establishing the terms of the Securities of this series.

8cgnx-20211231xexhibit10l

Exhibit 10L    1    PERFORMANCE RESTRICTED STOCK UNIT AWARD AGREEMENT      Pursuant to the Cognex Corporation 2007 Stock Option and Incentive Plan as amended through  the date hereof (the “Plan”) and this Performance Restricted Stock Unit Award Agreement (the  “Agreement”), Cognex Corporation (the “Company”) hereby grants an award of the target number  of Restricted Stock Units listed below assuming target performance (“Award”) to the individual  named below (“Grantee”), and Grantee hereby accepts such Award subject to all of the terms and  conditions herein.      Each Restricted Stock Unit shall relate to one share of Common Stock, par value $0.002 per share  (the “Stock”) of the Company.    Name of Grantee:    Grant Date:    Target Number of Restricted Stock Units:   (“Target Award”)    Performance Measurement Period:  to               1. Restrictions on Transfer of Award and on Transfer of Stock/Vesting.  The Restricted Stock Units  granted pursuant to this Award may not be sold, transferred, pledged, assigned or otherwise  encumbered or disposed of by the Grantee, and any shares of Stock issuable with respect to the  Award may not be sold, transferred, pledged, assigned or otherwise encumbered or disposed of  until all of the following conditions have been met:     1.1 The Restricted Stock Units shall have been earned and vested as provided and determined  in accordance with Exhibit A.  1.2 The Grantee has been a full-time employee of the Company or a subsidiary of the Company  each day of the Performance Measurement Period through the Vesting Date. Or, Grantee  has been a consultant to the company during each day of the Performance Measurement  Period through the Vesting Date.  Or, the Grantee has been a director of the Company during  each day of the Performance Measurement Period through the Vesting Date.    1.3 The Grantee and the Company have duly executed all of the agreements required at the time  of the granting of the Award by the Company, 1) including, but not limited to, the Company's  Employee, Invention, Non-Disclosure and Non-Competition Agreement, if Grantee is an  employee of the Company, or 2) including, but not limited to, the Company's Consultant  Agreement, if Grantee is a consultant to the Company, or 3) including, but not limited to, the  Company's Confidentiality and Non-Competition Agreement, if the Grantee is a director of the  Company.    1.4 Shares of Stock have been issued to the Grantee in accordance with the terms of the Plan  and this Agreement.    2. Termination of Employment, Consultancy or Directorship.  If the Grantee’s employment,  consultancy or directorship with the Company or its Subsidiaries terminates for any reason  (including death or disability) prior to the Vesting Date, any Restricted Stock Units that have not  

 

  2    vested as of such date shall automatically and without notice terminate and be forfeited, and  neither the Grantee nor any of his or her successors, heirs, assigns, or personal representatives  will thereafter have any further rights or interests in such unvested Restricted Stock Units.  3. Issuance of Shares of Stock.  As soon as practicable following the Vesting Date (but in no event  later than two and one-half months after the end of the year in which the Vesting Date occurs),  the Company shall issue to the Grantee the number of shares of Stock equal to the aggregate  number of Restricted Stock Units that have been earned and vested in accordance with Exhibit A  (subject to Paragraph 2) of this Agreement on such date and the Grantee shall thereafter have all  the rights of a stockholder of the Company with respect to such shares.   4. Incorporation of Plan.  Notwithstanding anything to the contrary herein, this Agreement shall be  subject to and governed by all the terms and conditions of the Plan, including the powers of the  Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this Agreement shall have  the meaning specified in the Plan, unless a different meaning is specified herein.   5. Tax Withholding.   The Grantee shall, not later than the date as of which the receipt of this Award  or the vesting of any portion of this Award becomes a taxable event for Federal income tax  purposes, pay to the Company or make arrangements satisfactory to the Administrator for  payment of any Federal, state, and local taxes required by law to be withheld on account of such  taxable event.  Such withholding shall be satisfied by the Company withholding from shares of  Stock to be issued to the Grantee a number of shares with an aggregate Fair Market Value that  would satisfy the withholding amount due.  Alternatively, or in addition, the Company may decide  in its sole and absolute discretion to satisfy Grantee’s obligation for tax-related items by one or a  combination of the following: (i) withholding from proceeds of the sale of shares of Stock acquired  upon vesting/settlement of the Restricted Stock Units either through a voluntary sale or through a  mandatory sale arranged by the Company (on Grantee’s behalf pursuant to this authorization); or  (ii) in any other manner permitted by the Plan.  6. Section 409A of the Code.  This Agreement shall be interpreted in such a manner that all  provisions relating to the settlement of the Award are exempt from the requirements of Section  409A of the Code as “short-term deferrals” as described in Section 409A of the Code.   7. No Obligation to Continue Employment, Consultancy or Directorship.  Neither the Company nor  any subsidiary of the Company is obligated by or as a result of the Plan or this Agreement to  continue the employment, consultancy or directorship of the Grantee, and neither the Plan nor  this Agreement shall interfere in any way with the right of the Company or any subsidiary of the  Company to terminate the employment, consultancy or directorship of the Grantee at any time.  8. Integration/Severability.  This Agreement constitutes the entire agreement between the parties  with respect to this Award and supersedes all prior agreements and discussions between the  parties concerning such subject matter.  Each provision of this Agreement shall be treated as a  separate and independent clause, and the unenforceability of any one clause shall in no way  impair the enforceability of any of the other clauses herein. In the event that any provision hereof  is found invalid or unenforceable, the provision shall be deemed and construed to extend only to  the maximum permitted by law, and the remainder of this Agreement shall remain valid and  enforceable according to its terms.  9. Data Privacy Consent.  In order to administer the Plan and this Agreement and to implement or  structure future equity grants, the Company, its subsidiaries and affiliates and certain agents  thereof (together, the “Relevant Companies”) may process any and all personal or professional  data, including but not limited to Social Security or other identification number, home address and  telephone number, date of birth and other information that is necessary or desirable for the  administration of the Plan and/or this Agreement (the “Relevant Information”).  By entering into  this Agreement, the Grantee (i) authorizes the Company to collect, process, register and transfer  

 

  3    to the Relevant Companies all Relevant Information; (ii) waives any privacy rights the Grantee  may have with respect to the Relevant Information; (iii) authorizes the Relevant Companies to  store and transmit such information in electronic form; and (iv) authorizes the transfer of the  Relevant Information to any jurisdiction in which the Relevant Companies consider appropriate.   The Grantee shall have access to, and the right to change, the Relevant Information.  Relevant  Information will only be used in accordance with applicable law.  10. Notices.  Notices hereunder shall be mailed or delivered to the Company at its principal place of  business and shall be mailed or delivered to the Grantee at the address on file with the Company  or, in either case, at such other address as one party may subsequently furnish to the other party  in writing.  11. Restrictive Covenants.  The Grantee reaffirms his/her promise to be bound by the restrictive  covenants set forth in the Employee Invention, Non-Disclosure and Non-Competition Agreement,  if Grantee is an employee of the company, or in the Consultant Agreement, if Grantee is a  consultant to the Company, or in the Confidentiality and Non-Competition Agreement, if the  Grantee is a director of the Company, entered into between the Grantee and the Company.  The  Grantee agrees that any pre-tax gains realized by the Grantee pursuant to the vesting of this  Award (along with other good and valuable consideration including, but not limited to employment  by the Company, salary and other Company-provided benefits, if Grantee is an employee of the  Company, or consulting fees or director’s fees if Grantee is a consultant or director of the  Company) are additional and sufficient consideration for the Grantee’s performance of Grantee’s   obligations as stated in the applicable agreement(s) executed between Grantee and the  Company. To the extent permitted by applicable law, Grantee agrees that if Grantee breaches  any such agreement then Grantee shall pay damages to the Company, including, but not limited  to an amount equal to the sum of: (a) the total of all pre-tax gains realized by Grantee as a result  of vesting of any portion of this Award, and (b) the total of all pre-tax gains realized by Grantee as  a result of the sale of any shares acquired by Grantee through the vesting of any portion of this  Award.  The determination of the existence of breach of any such applicable agreement shall be  made by the Company in good faith, which determination shall be conclusive for purposes of this  Agreement.  

 

  4        COGNEX CORPORATION      By:     Title:        I, the Grantee, have carefully read, and I understand all of the terms and conditions of this Agreement,  and I hereby agree to abide by them.      Electronic acceptance of this Agreement pursuant to the Company’s instructions to the Grantee (including  through an online acceptance process) is acceptable.      Dated:      Grantee’s Signature    Grantee’s name and address:                 

 

  5    EXHIBIT A      [Performance Criteria and Vesting]

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