Document:

Filed by Bowne Pure Compliance

Exhibit 4(y)(3)

[EXECUTION COPY]

AMENDMENT NO. 2

TO

LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

This AMENDMENT NO. 2, dated as of September 16, 2008 (this “Amendment”), is made by and among
TUCSON ELECTRIC POWER COMPANY, an Arizona corporation (the “Borrower”), the lenders listed on the
signature pages of this Amendment as “Lenders” (such lenders, together with their respective
permitted assignees from time to time, being referred to herein, collectively, as the “Lenders”),
and JPMORGAN CHASE BANK, N.A., as administrative agent for the Issuing Bank (as defined in the
Reimbursement Agreement referred to below) and the Lenders (in such capacity, the “Administrative
Agent”).

PRELIMINARY STATEMENT:

The Borrower, the Lenders, JPMorgan Chase Bank, N.A., as Issuing Bank, Union Bank of
California, N.A., as Syndication Agent, ABN AMRO Bank N.V., SunTrust Bank and Wells Fargo Bank,
National Association, as Co-Documentation Agents, and the Administrative Agent previously entered
into that certain Letter of Credit and Reimbursement Agreement, dated as of April 30, 2008, as
amended by Amendment No. 1 thereto, dated as of May 30, 2008 (as so amended, the “Existing
Agreement”, as amended by this Amendment, the “Amended Agreement”, and as the Amended Agreement may
hereafter be amended, supplemented or otherwise modified from time to time, the “Reimbursement
Agreement”). The Borrower desires to amend Section 6.07 (Leverage Test) of the Existing Agreement
in certain particulars. Each of the Borrower, the Required Lenders and the Administrative Agent
has agreed to such amendment, on the terms and conditions set forth herein. The parties therefore
agree as follows (capitalized terms used but not defined herein having the meanings assigned such
terms in the Existing Agreement):

SECTION 1. Amendment to Existing Agreement. The Existing Agreement is, effective as of the
date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2
hereof, hereby amended as follows:

(a) Leverage Test. Section 6.07 of the Existing Agreement is hereby amended and restated in
its entirety to read as follows:

SECTION 6.07. Leverage Test. The Borrower will not permit the ratio of (a)
Consolidated Total Indebtedness at the end of any fiscal quarter to (b) Consolidated
EBITDA for the twelve-month period ended
on such date to be greater than the amount specified in the chart below for the
period in which such date shall occur:

	 	 	 	 	 
	Period	 	Maximum Ratio	 
	From the Effective Date through and including June 30, 2008
	 	 	4.00	 
	From July 1, 2008 through and including September 30, 2008
	 	 	4.50	 
	From October 1, 2008 through and including December 31, 2008
	 	 	4.75	 
	From January 1, 2009 through and including June 30, 2009
	 	 	4.50	 
	From and after July 1, 2009
	 	 	4.00	 

 

 

 

SECTION 2. Conditions of Effectiveness of Amendment. The amendment to the Existing Agreement
set forth in Section 1 hereof shall become effective as of the date hereof when, and only when, the
Administrative Agent shall have received (a) counterparts of this Amendment executed by the
Borrower, the Required Lenders and the Administrative Agent and (b) for the account of each Lender
that delivers an executed counterpart of this Amendment on or before September 16, 2008, a
non-refundable amendment fee of 0.10% of such Lender’s Revenue Bond Commitment, in immediately
available funds.

SECTION 3. Representations and Warranties of the Borrower. The Borrower represents and
warrants as follows:

(a) The execution and delivery by the Borrower of this Amendment, and the performance by the
Borrower of this Amendment and the Amended Agreement, are within the Borrower’s organizational
powers and have been duly authorized by all necessary corporate and, if required, stockholder
action, and do not and will not (i) violate any Requirement of Law, (ii) violate or result in a
default under any indenture, agreement or other instrument binding upon the Borrower or any of its
Consolidated Subsidiaries or its assets, or give rise to a right thereunder to require any payment
to be made by the Borrower or any of its Consolidated Subsidiaries, or (iii) result in the creation
or imposition of any Lien on any asset of the Borrower or any of its Consolidated Subsidiaries,
except Liens created under the Loan Documents or under the Mortgage Indenture. This Amendment has
been duly executed and delivered by the Borrower.

(b) The execution and delivery by the Borrower of this Amendment, and the performance by the
Borrower of this Amendment and the Amended Agreement, do not require any consent or approval of,
registration or filing with,
or any other action by, any Governmental Authority, except as set forth in Section 3.03(a) of
the Existing Agreement.

(c) Each of this Amendment and the Amended Agreement constitutes a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether considered in a
proceeding in equity or at law.

(d) No Default or Event of Default has occurred and is continuing.

 

2

 

SECTION 4. Reference to and Effect on the Existing Agreement. (a) Upon the effectiveness of
this Amendment: (i) each reference in the Existing Agreement to “this Agreement”, “hereunder”,
“hereof” or words of like import referring to the Existing Agreement shall mean and be a reference
to the Reimbursement Agreement; and (ii) each reference in any other Loan Document to “the
Reimbursement Agreement”, “thereunder”, “thereof” or words of like import referring to the Existing
Agreement shall mean and be a reference to the Reimbursement Agreement.

(b) Except as specifically amended or waived above, the Existing Agreement shall continue to
be in full force and effect and is hereby in all respects ratified and confirmed. Without limiting
the generality of the foregoing, the Security Documents (when executed and delivered by the
Borrower pursuant to the Reimbursement Agreement) and all of the Collateral described therein do
and shall continue to secure the payment of all Obligations.

(c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of the Lenders, the Issuing Bank
or the Administrative Agent under the Existing Agreement or any other Loan Document, nor constitute
a waiver of any provision of the Existing Agreement or any other Loan Document.

SECTION 5. Costs and Expenses. The Borrower agrees to pay on demand all reasonable
out-of-pocket expenses of the Administrative Agent in connection with the preparation, negotiation,
syndication, execution and delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including, without limitation, the reasonable fees, charges and disbursements
of counsel to the Administrative Agent with respect thereto and with respect to advising the
Administrative Agent as to its rights and responsibilities hereunder and thereunder, and all
out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender
(including, without limitation, the fees, charges and disbursements of any counsel for the
Administrative Agent, the Issuing Bank or any Lender) in connection with the enforcement (whether
through negotiations, legal proceedings or otherwise) of this Amendment.

 

3

 

SECTION 6. Execution in Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument. In furtherance of the foregoing, it is understood and
agreed that signatures hereto submitted by facsimile or other electronic transmission shall be
deemed to be, and shall constitute, original signatures.

SECTION 7. Governing Law. This Amendment shall be governed by, and construed in accordance
with, the laws of the State of the New York.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

4

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective officers thereunto duly authorized, as of the date first above written.

	 	 	 	 	 
	 	TUCSON ELECTRIC POWER COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	JPMORGAN CHASE BANK, N.A., 

as Administrative Agent and a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Signature Page to Amendment No. 2 to Tucson Electric Letter of Credit and Reimbursement Agreement

 

S-1

 

	 	 	 	 	 
	 	UNION BANK OF CALIFORNIA, N.A., as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Signature Page to Amendment No. 2 to Tucson Electric Letter of Credit and Reimbursement Agreement

 

S-2

 

	 	 	 	 	 
	 	ABN AMRO BANK N.V., as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Signature Page to Amendment No. 2 to Tucson Electric Letter of Credit and Reimbursement Agreement

 

S-3

 

	 	 	 	 	 
	 	SUNTRUST BANK, as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Signature Page to Amendment No. 2 to Tucson Electric Letter of Credit and Reimbursement Agreement

 

S-4

 

	 	 	 	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Signature Page to Amendment No. 2 to Tucson Electric Letter of Credit and Reimbursement Agreement

 

S-5

 

	 	 	 	 	 
	 	COMMERZBANK AG, NEW YORK AND GRAND
 CAYMAN BRANCHES, as
a Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Signature Page to Amendment No. 2 to Tucson Electric Letter of Credit and Reimbursement Agreement

 

S-6

 

	 	 	 	 	 
	 	COMPASS BANK, an Alabama banking corporation,
 as a
Lender

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

Signature Page to Amendment No. 2 to Tucson Electric Letter of Credit and Reimbursement Agreement

 

S-7Filed by Bowne Pure Compliance

Exhibit 10.1

AGREEMENT

RECITALS

WHEREAS, Kolorfusion International, Inc. (“Kolorfusion”) filed a civil lawsuit against Stephen
R. Nagel (“Nagel”) in Arapahoe County District Court, Case No. 2009CV463, State of Colorado, (“the
Litigation”) on February 23, 2009. The Litigation relates to disputes over the management of
Kolorfusion.

WHEREAS, Nagel wishes to avoid the costs of further litigation, without admission of liability
or wrongdoing, and to settle and finally resolve this dispute on the terms and conditions set forth
herein.

NOW THEREFORE, Stephen R. Nagel, in consideration for the dismissal, without prejudice, of the
Litigation brought by Kolorfusion International, Inc. (“Kolorfusion”), agrees as follows:

TERMS OF AGREEMENT

1. In return for the dismissal of the Litigation without prejudice, Nagel agrees that:

	 	a.	 	The February 13, 2009 special meeting of the board of directors
of Kolorfusion was properly noticed and held.
	 
	 	b.	 	Nagel no longer is president or any other officer of
Kolorfusion.
	 
	 	c.	 	Nagel no longer is an employee of Kolorfusion.
	 
	 	d.	 	Nagel will not enter the premises of Kolorfusion except upon
the express invitation of the board of directors.
	 
	 	e.	 	The February 11, 2009 attempted removal of Thomas Gerschman as
a director of Kolorfusion was ineffective.
	 
	 	f.	 	The February 12, 2009 attempted appointment of Arnold Tinter as
a director of Kolorfusion was ineffective.
	 
	 	g.	 	Within twenty-four hours of signing this agreement, Nagel will
notify all banks with whom Kolorfusion currently has bank accounts that Nagel
no longer is a signatory on those accounts. Nagel will provide evidence of
notification to Kolorfusion’s counsel within two hours of making such
notification.

 

Page 1 of 3

 

	 	h.	 	As long as Nagel remains a director of Kolorfusion, Nagel will
agree to act in accordance with the standard of care required by federal and
state statutes.
	 
	 	i.	 	Subject to the provisions of section 5 below, Nagel will comply
with the actions mandated to him by the February 13, 2009, Resolutions of
Kolorfusion’s directors, as set forth in the Minutes of Meeting of Board of
Directors of Kolorfusion International, Inc., which are attached hereto and
incorporated herein by reference.

2. Dismissal of Litigation. Upon the Parties’ execution of this Agreement,
Kolorfusion shall dismiss the Litigation, without prejudice, each party to bear his or its own
attorney fees and costs.

3. Limited Waivers.

A. Kolorfusion hereby waives any claims it may have, if any, against Nagel, for:

i. continuing to hold himself out as president of Kolorfusion from February 13,
2009, to the point in time Nagel signs this Agreement;

ii. the ineffective removal of Thomas Gerschman as director of Kolorfusion and
the related form 8K filing with the United States Securities and Exchange
Commission; and

iii. the ineffective appointment of Arnold Tinter as director of Kolorfusion
and the related form 8K filing with the United States Securities and Exchange
Commission.

However, nothing in this Limited Waiver shall be construed as a waiver or release of any
claims Kolorfusion may have against Nagel for any acts or omissions by Mr. Nagel before or after
February 13, 2009, except as expressly set forth in this Limited Waiver provision.

B. Nagel hereby waives any claims he may have, if any, against Kolorfusion or its officers or
directors, that the February 13, 2009, meeting of directors was not a duly called and held meeting
held in accordance with the company’s governing documents and the Colorado Business Corporation
Act.

4. Nagel hereby represents that, since February 13, 2009, he has not entered into any
agreements with any third parties which will bind Kolorfusion in the future.

5. No Release. Except as provided in Paragraph 3 of this Agreement (Limited Waivers),
no Party to this Agreement releases any other Party from past, present and future claims, damages,
or causes of action of any kind.

 

Page 2 of 3

 

6. Consultation with an Attorney. Nagel acknowledges that this Agreement has
important legal consequences and also acknowledges that he has been advised to consult an attorney
before signing this Agreement.

7. Entire Agreement. This Agreement, together with any other instruments or
agreements referred to herein, constitutes the entire agreement with respect to the subject matter
hereof, and there are no other representations, warranties, or agreements, except as provided
herein.

8. Governing Law. This Agreement shall be governed by the laws of the State of
Colorado.

9. Attorney Fees. In the event any judicial or other adversarial proceeding
concerning this Agreement, the substantially prevailing party shall be entitled to recover all of
its reasonable attorney fees and other costs, in addition to any other relief to which it may be
entitled.

10. Venue. The Parties agree that any action to enforce this Agreement shall be
brought in the District Court for Arapahoe County, Colorado, with all Parties hereto hereby
agreeing and stipulating that such Court has jurisdiction over them and over such an action.

Dated this 26th day of February, 2009.

	 	 	 
	STEPHEN R. NAGEL
	 	 
	 
	 	 
	/s/
 

	 	 
	 
	 	 
	Date: February 25, 2009                                 
	 	 
	 
	 	 

	 	 	 	 	 
	KOLORFUSION INTERNATIONAL, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/
 

Name:Thomas Gerschman
	 	 
	 

	 	Title: CEO	 	 
	 
	 	 	 	 
	 

	 	Date: February 25, 2009                         	 	 

 

Page 3 of 3

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