Document:

exh10-1_promissory.htm

     

    
      

      

    

     

     

     

     

     

     

     

     

     

     

     

    EXHIBIT 10.1

     

    PROMISSORY NOTE DATED MARCH 18, 2008

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    PROMISSORY
NOTE

     

    March 18,
2008

     

    FOR VALUE RECEIVED, PetroHunter Energy
Corporation (the “Maker”), hereby
promises to pay to the order of the Bruner Family Trust or its assigns (the
“Holder”), in
lawful money of the United States at the address of Holder set forth below, the
principal amount of One Hundred Thousand Dollars (US $100,000.00), together with
interest (as hereinafter defined).

    

     

    This
Promissory Note (the “Note”) has been executed by the Maker on the date set
forth above (the “Effective
Date”).

     

    1.           Interest.  Interest
shall accrue on this Note, commencing on the above date, at the Interest Rate,
as defined below, and shall be payable when the principal amount is due and
payable.

     

                                 
1.1          “Interest Rate” shall
mean, at the time of determination thereof, a variable rate of interest equal to
the rate described as the “London Interbank Offered Rate” for three months in
the Money Rates section of the Wall Street Journal, plus three
percent.

     

    1.2           Adjustments.  Adjustments
to the Interest Rate shall be made on the first day of each calendar quarter
based on the Interest Rate in effect on the first business day of such calendar
quarter.

     

    1.3           Default Interest
Rate. Upon the occurrence of an Event of Default and for so long as such
Event of Default continues, interest shall accrue on the outstanding principal
amount of this Note at the rate per annum of the lower of 12% or the maximum
rate of interest permissible under any applicable law at any time.

     

    2.           Maturity.  The
entire balance of principal and accrued interest and other amounts then
outstanding on this Note are due and payable five (5) days after the Maker
receives the Holder’s written demand for payment; provided, however, that Holder
may not make such written demand for payment prior to twelve months from the
Effective Date (such date being referred to herein as the “Maturity
Date”).  Upon the occurrence of an Event of Default (as
hereinafter defined), all unpaid principal and accrued interest on this Note
shall immediately become due.

     

    3.           Application of
Payments.

     

    3.1           Except
as otherwise expressly provided herein, each payment of outstanding principal
amount and interest on this Note shall be applied (i) first to the repayment of
any sums incurred by the Holder for the payment of any expenses in enforcing the
terms of this Note, (ii) then to the payment of interest, and (iii) then to the
reduction of the principal.

     

    3.2           Upon
payment in full of the principal of, and accrued and unpaid interest on, this
Note, this Note shall be marked "Paid in Full" and returned to the
Maker.

     

    4.           Prepayment.  This
Note may be prepaid in part or in full at any time.

     

    5.           Events of
Default. 
The occurrence of any of the following events (each an “Event of Default”)
shall constitute an Event of Default of the Maker: (i) the Maker defaults in the
payment of interest or principal on the Note; (ii) the application for the
appointment of a receiver or custodian for the Maker or the property of the
Maker; (iii) the entry of an order for relief or the filing of a petition by or
against the Maker under the provisions of any bankruptcy or insolvency law; (iv)
any assignment for 

     

    1

    
      
         

      

      
         

        
          

        

      

      
         

      

       

      the
benefit of creditors by or against the Maker; (v) the Maker becomes insolvent;
(vi) the Maker fails or refuses to execute any document or instrument required
pursuant to this Note, or violates any provision of such document or
instrument.

    

     

    6.           Miscellaneous.

     

    6.1           Successors and
Assigns.  Subject to the exceptions specifically set forth in
this Note, the terms and conditions of this Note shall inure to the benefit of
and be binding upon the respective executors, administrators, heirs, successors
and assigns of the parties.

     

    6.2           Titles and
Subtitles.  The titles and subtitles of the Sections of this
Note are used for convenience only and shall not be considered in construing or
interpreting this agreement.

     

    6.3           Notices.  Any
notice, request or other communication required or permitted hereunder shall be
in writing and shall be delivered personally or by facsimile (receipt confirmed
electronically) or shall be sent by a reputable express delivery service or by
certified mail, postage prepaid with return receipt requested, addressed as
follows:

     

    If to the
Holder
to:                                                                                     If
to the Maker to:

     

    Marc E.
Bruner                                                                                          
PetroHunter Energy Corporation

    Trustee
of the Bruner Family
Trust                                                          Attn:
Mr. David Brody

    16878 E.
Lake
Drive                                                                                  1600
Stout Street, Suite 2000

    Centennial,
Colorado  80016                                                                    Denver,
Colorado  80202

    Phone:
303-373-5725                                                                               Phone:
303-572-8900

                                                             Fax:
720-889-8371

    and

    

    Cynthia
L. Gausvik

    Trustee
of the Bruner Family Trust

    c/o
Patton Boggs LLP

    8484
Westpark Drive, Ninth Floor

    McLean,
Virginia  22102

    Phone:
703-744-8040

    Facsimile:
703-744-8001

    

    Either
party hereto may change the above-specified recipient or mailing address by
notice to the other party given in the manner herein prescribed.  All
notices shall be deemed given on the day when actually delivered as provided
above (if delivered personally or by facsimile, provided that any such facsimile
is received during regular business hours at the recipient's location) or on the
day shown on the return receipt (if delivered by mail or delivery
service).

     

    6.4           Governing
Law.  The terms of this Note shall be construed in accordance
with the laws of the State of Colorado.  Jurisdiction and venue shall
be exclusively in a state or federal court located in Denver,
Colorado.

     

    6.5           Waiver and
Amendment.  Any term of this Note may be amended, waived or
modified with the written consent of the Maker and the Holder of this
Note.

     

    6.6           Remedies; Attorneys
Fees.  No delay or omission by the Holder in exercising any of
his rights, remedies, powers or privileges hereunder or at law or in equity and
no course of dealing between the Holder and the Maker or any other person shall
be deemed a waiver by the 

     

    2

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Holder of
any such rights, remedies, powers or privileges, even if such delay or omission
is continuous or repeated, nor shall any single or partial exercise of any
right, remedy, power or privilege preclude any other or further exercise thereof
by the Holder or the exercise of any other right, remedy, power or privilege by
the Holder.  The rights and remedies of the Holder described herein
shall be cumulative and not restrictive of any other rights or remedies
available under any other instrument, at law or in equity.  If an
Event of Default occurs, the Maker agrees to pay, in addition to the principal
and interest payable hereunder, reasonable attorneys’ fees and any other costs
incurred by the Holder in connection with his pursuit of his remedies under this
Note.

     

    IN
WITNESS WHEREOF, the Maker has caused this Note to be signed in its name as of
the Effective Date.

     

    

    MAKER:

    

    PETROHUNTER
ENERGY CORPORATION

    

    

    

    By:   /s/ David E.
Brody                                          

    David E. Brody, Vice President
and

    General Counsel

     

     

     

     

    3indenture.htm

    
      
         

        Exhibit
4(a)

         

      

    

    
      
        

        

      

      
 

    

    INDENTURE
OF TRUST

    (2008
SERIES A)

    

    

    BETWEEN

    

    

    THE
INDUSTRIAL DEVELOPMENT AUTHORITY

    OF THE
COUNTY OF PIMA

    

    AND

    

    U.S. BANK
TRUST NATIONAL ASSOCIATION

    
 

    

    --------

    

    

    DATED AS
OF MARCH 1, 2008

    

    

    --------

    

    

    Authorizing

    

    Industrial
Development Revenue Bonds,

    2008
Series A

    
      (Tucson
Electric Power Company Project)

       

       

       

      
        

        

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    TABLE OF CONTENTS*

     

    Page

     

    
      	
              ARTICLE
      I

            
	 
      	 
      	 
      
	
              DEFINITIONS

            
	 
      	 
      	 
      
	
              Section
      1.01.

            	
              Definitions

            	
              3

            
	 
      	 
      	 
      
	
              ARTICLE
      II

            
	 
      	 
      	 
      
	
              THE
      BONDS

            
	 
      	 
      	 
      
	
              Section
      2.01.

            	
              Creation
      of Bonds

            	
              9

            
	
              Section
      2.02.

            	
              Form
      of Bonds

            	
              9

            
	
              Section
      2.03.

            	
              Execution
      of Bonds

            	
              10

            
	
              Section
      2.04.

            	
              Authentication
      of Bonds

            	
              10

            
	
              Section
      2.05.

            	
              Bonds
      Not General Obligations

            	
              10

            
	
              Section
      2.06.

            	
              Prerequisites
      to Authentication of Bonds

            	
              11

            
	
              Section
      2.07.

            	
              Lost
      or Destroyed Bonds or Bonds Canceled in Error

            	
              11

            
	
              Section
      2.08.

            	
              Transfer,
      Registration and Exchange of Bonds

            	
              12

            
	
              Section
      2.09.

            	
              Other
      Obligations

            	
              13

            
	
              Section
      2.10.

            	
              Temporary
      Bonds

            	
              13

            
	
              Section
      2.11.

            	
              Cancellation
      of Bonds

            	
              14

            
	
              Section
      2.12.

            	
              Payment
      of Principal and Interest

            	
              14

            
	
              Section
      2.13.

            	
              Applicability
      of Book-Entry Provisions

            	
              14

            
	 
      	 
      	 
      
	
              ARTICLE
      III

            
	 
      	 
      	 
      
	
              REDEMPTION
      OF BONDS

            
	 
      	 
      	 
      
	
              Section
      3.01.

            	
              Redemption
      Provisions

            	
              15

            
	
              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

            
	 
      	 
      	 
      
	
              Section
      4.01.

            	
              Creation
      of Bond Fund

            	
              17

            
	
              Section
      4.02.

            	
              Liens

            	
              17

            

    

     

    
      ____________________

      
        	
                *

              	
                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.

              

      

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      	
              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

            	
              18

            
	 
      	 
      	 
      
	
              ARTICLE
      V

            
	 
      	 
      	 
      
	
              DISPOSITION
      OF PROCEEDS

            
	 
      	 
      	 
      
	
              Section
      5.01.

            	
              Disposition
      of Proceeds

            	
              19

            
	 
      	 
      	 
      
	
              ARTICLE
      VI

            
	 
      	 
      	 
      
	
              INVESTMENTS

            
	 
      	 
      	 
      
	
              Section
      6.01.

            	
              Investments

            	
              19

            
	 
      	 
      	 
      
	
              ARTICLE
      VII

            
	 
      	 
      	 
      
	
              GENERAL
      COVENANTS

            
	 
      	 
      	 
      
	
              Section
      7.01.

            	
              No
      General Obligations

            	
              19

            
	
              Section
      7.02.

            	
              Performance
      of Covenants of the Authority; Representations

            	
              20

            
	
              Section
      7.03.

            	
              Maintenance
      of Rights and Powers; Compliance with Laws

            	
              20

            
	
              Section
      7.04.

            	
              Enforcement
      of Obligations of the Company; Amendments

            	
              20

            
	
              Section
      7.05.

            	
              Further
      Instruments

            	
              20

            
	
              Section
      7.06.

            	
              No
      Disposition of Trust Estate

            	
              21

            
	
              Section
      7.07.

            	
              Financing
      Statements

            	
              21

            
	
              Section
      7.08.

            	
              Tax
      Covenants; Rebate Fund

            	
              21

            
	
              Section
      7.09.

            	
              Notices
      of Trustee

            	
              22

            
	 
      	 
      	 
      
	
              ARTICLE
      VIII

            
	 
      	 
      	 
      
	
              DEFEASANCE

            
	 
      	 
      	 
      
	
              Section
      8.01.

            	
              Defeasance

            	
              22

            
	 
      	 
      	 
      
	
              ARTICLE
      IX

            
	 
      	 
      	 
      
	
              DEFAULTS
      AND REMEDIES

            
	 
      	 
      	 
      
	
              Section
      9.01.

            	
              Events
      of Default

            	
              23

            
	
              Section
      9.02.

            	
              Remedies

            	
              25

            
	
              Section
      9.03.

            	
              Restoration
      to Former Position

            	
              25

            
	
              Section
      9.04.

            	
              Owners’
      Right to Direct Proceedings

            	
              25

            
	
              Section
      9.05.

            	
              Limitation
      on Owners’ Right to Institute Proceedings

            	
              25

            
	
              Section
      9.06.

            	
              No
      Impairment of Right to Enforce Payment

            	
              26

            
	
              Section
      9.07.

            	
              Proceedings
      by Trustee without Possession of Bonds

            	
              26

            
	
              Section
      9.08.

            	
              No
      Remedy Exclusive

            	
              26

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
      9.09.

            	
              No
      Waiver of Remedies

            	
              26

            
	
              Section
      9.10.

            	
              Application
      of Moneys

            	
              26

            
	
              Section
      9.11.

            	
              Severability
      of Remedies

            	
              27

            
	 
      	 
      	 
      
	
              ARTICLE
      X

            
	 
      	 
      	 
      
	
              TRUSTEE;
      PAYING AGENT AND CO PAYING AGENTS; REGISTRAR

            
	 
      	 
      	 
      
	
              Section
      10.01.

            	
              Acceptance
      of Trusts

            	
              27

            
	
              Section
      10.02.

            	
              No
      Responsibility for Recitals

            	
              28

            
	
              Section
      10.03.

            	
              Limitations
      on Liability

            	
              28

            
	
              Section
      10.04.

            	
              Compensation,
      Expenses and Advances

            	
              28

            
	
              Section
      10.05.

            	
              Notice
      of Events of Default

            	
              29

            
	
              Section
      10.06.

            	
              Action
      by Trustee

            	
              29

            
	
              Section
      10.07.

            	
              Good
      Faith Reliance

            	
              29

            
	
              Section
      10.08.

            	
              Dealings
      in Bonds and with the Authority and the Company

            	
              30

            
	
              Section
      10.09.

            	
              Allowance
      of Interest

            	
              30

            
	
              Section
      10.10.

            	
              Construction
      of Indenture

            	
              30

            
	
              Section
      10.11.

            	
              Resignation
      of Trustee

            	
              30

            
	
              Section
      10.12.

            	
              Removal
      of Trustee

            	
              31

            
	
              Section
      10.13.

            	
              Appointment
      of Successor Trustee

            	
              31

            
	
              Section
      10.14.

            	
              Qualifications
      of Successor Trustee

            	
              31

            
	
              Section
      10.15.

            	
              Judicial
      Appointment of Successor Trustee

            	
              31

            
	
              Section
      10.16.

            	
              Acceptance
      of Trusts by Successor Trustee

            	
              32

            
	
              Section
      10.17.

            	
              Successor
      by Merger or Consolidation

            	
              32

            
	
              Section
      10.18.

            	
              Standard
      of Care

            	
              32

            
	
              Section
      10.19.

            	
              Notice
      to Owners of Bonds of Event of Default

            	
              32

            
	
              Section
      10.20.

            	
              Intervention
      in Litigation of the Authority

            	
              33

            
	
              Section
      10.21.

            	
              Paying
      Agent; Co Paying Agents

            	
              33

            
	
              Section
      10.22.

            	
              Qualifications
      of Paying Agent and Co Paying Agents; Resignation; Removal

            	
              33

            
	
              Section
      10.23.

            	
              Registrar

            	
              34

            
	
              Section
      10.24.

            	
              Qualifications
      of Registrar; Resignation; Removal

            	
              34

            
	
              Section
      10.25.

            	
              Several
      Capacities

            	
              35

            
	 
      	 
      	 
      
	
              ARTICLE
      XI

            
	 
      	 
      	 
      
	
              EXECUTION
      OF INSTRUMENTS BY OWNERS OF BONDS AND PROOF OF OWNERSHIP OF
      BONDS

            
	 
      	 
      	 
      
	
              Section
      11.01.

            	
              Execution
      of Instruments; Proof of Ownership

            	
              35

            
	 
      	 
      	 
      
	
              ARTICLE
      XII

            
	 
      	 
      	 
      
	
              MODIFICATION
      OF THIS INDENTURE AND THE LOAN AGREEMENT

            
	 
      	 
      	 
      
	
              Section
      12.01.

            	
              Limitations

            	
              36

            
	
              Section
      12.02.

            	
              Supplemental
      Indentures without Owner Consent

            	
              36

            

    

    
      
        	
                Section
      12.03.

              	
                Supplemental
      Indentures with Consent of Owners

              	
                37

              

      

       

    

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    
      	
              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

            
	 
      	 
      	 
      
	
              Section
      13.01.

            	
              Successors
      of the Authority

            	
              39

            
	
              Section
      13.02.

            	
              Parties
      in Interest

            	
              39

            
	
              Section
      13.03.

            	
              Severability

            	
              39

            
	
              Section
      13.04.

            	
              No
      Personal Liability of Authority Officials

            	
              39

            
	
              Section
      13.05.

            	
              Bonds
      Owned by the Authority or the Company

            	
              40

            
	
              Section
      13.06.

            	
              Counterparts

            	
              40

            
	
              Section
      13.07.

            	
              Governing
      Law

            	
              40

            
	
              Section
      13.08.

            	
              Notices

            	
              40

            
	
              Section
      13.09.

            	
              Holidays

            	
              41

            
	
              Section
      13.10.

            	
              Statutory
      Notice Regarding Cancellation of Contracts

            	
              41

            

    

    

    

    
      	
              Exhibit
      A – Form of 2008 Series A Bond

            	
              A-1

            
	
              Exhibit
      B – Form of Endorsement of Transfer

            	
              B-1

            
	
              Exhibit
      C – Form of Certificate of Authentication

            	
              C-1

            

    

     

    
      
        
        

      

      
        iv

        
          

        

      

      
        
        

      

    

     

    INDENTURE
OF TRUST

     

    THIS
INDENTURE OF TRUST (2008 Series A), dated as of March 1, 2008 (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 but not limited to machinery and equipment, whether or not
now in existence or under construction, whether located within or without the
State of Arizona Pima County, which shall be suitable for, among other things,
facilities for the furnishing of electric energy, gas or water, air and water
pollution control facilities and sewage and solid waste disposal facilities, 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;

     

    WHEREAS,
the Authority has heretofore issued and sold $150,000,000 aggregate principal
amount of The Industrial Development Authority of the County of Pima Industrial
Development Revenue Bonds, 1997 Series B (Tucson Electric Power Company Project)
(the “1997 Series B Bonds”), $146,415,000 of which remain outstanding, the
proceeds of which were loaned to the Company to refinance, by the payment or
redemption of The Industrial Development Authority of the County of Pima
Industrial Development Revenue Bonds, 1982 Series A (Tucson Electric Power
Company General Project) (the “1982 Bonds due June 15, 2022”), and The
Industrial Development Authority of the County of Pima Industrial Development
Revenue Bonds, 1982 Series A (Tucson Electric Power Company General Project)
(the “1982 Bonds due July 1, 2022” and, together with the 1982 Bonds due June
15, 2022, the “1982 Bonds”), or provision therefor, the portion of the costs of
the acquisition, construction, improvement and equipping of certain of its
facilities for the furnishing of electric energy (the “Facilities”) paid from
the proceeds of the 1982 Bonds;

     

    WHEREAS,
the Authority has heretofore issued and sold $75,000,000 aggregate principal
amount of The Industrial Development Authority of the County of Pima Industrial
Development Revenue Bonds, 1997 Series C (Tucson Electric Power Company Project)
(the “1997 Series C Bonds”), $74,330,000 of which remain outstanding, the
proceeds of which were loaned to the Company to refinance the portion of the
costs of the acquisition, construction, improvement and equipping of the
Facilities paid from the proceeds of The Industrial Development Authority of the
County of Pima Industrial Development Revenue Bonds, 1983 Series A (Tucson
Electric Power Company General Project); and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    WHEREAS,
the Authority proposes to issue and sell its revenue bonds for the purpose of
refinancing a portion of the costs of the Facilities previously refinanced from
the proceeds of the 1997 Series B Bonds and the 1997 Series C Bonds, by the
redemption of $16,415,000 aggregate principal amount of the 1997 Series B Bonds
and all outstanding 1997 Series C Bonds (such portion of the 1997 Series B Bonds
and all of the 1997 Series C Bonds being hereinafter referred to as the “1997
Bonds”);

     

    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 of the sum of one dollar lawful money of the United States
of America, to it duly paid by the Trustee at or before the execution and
delivery of these presents, 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 premium, if any, 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 premium, if any, 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:

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    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, to the Paying
Agent, any Co Paying Agent and the Registrar 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.

     

    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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Bonds:

     

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

     

    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.

     

    Depositary:

     

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

     

    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.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Indenture:

     

    “Indenture”
shall mean this Indenture of Trust, dated as of March 1, 2008, 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 $10,000,000; (c) bankers’ acceptances drawn
on and accepted by commercial banks having a combined capital and surplus of not
less than $10,000,000; (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
$10,000,000 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, Paying Agent, Co Paying Agent
or Registrar hereunder if such entities shall otherwise satisfy the requirements
set forth above.

     

    Loan
Agreement:

     

    “Loan
Agreement” shall mean the Loan Agreement, dated as of March 1, 2008, 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.

     

    1954
Code:

     

    “1954
Code” shall mean the Internal Revenue Code of 1954, as amended.  Each
reference to a section of the 1954 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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    thereof,
unless the context clearly requires otherwise, as well as future amendments to
the 1954 Code.

     

    1986 Code:

    

    “1986
Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.  Each reference to a section of the 1986 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 1986
Code section shall, in the event of a successor to the 1986 Code, be deemed to
be a reference to the successor to such 1986 Code section.

     

    1997
Bonds:

     

    “1997
Bonds” shall mean, collectively, $16,415,000 of the $146,415,000 aggregate
principal amount of The Industrial Development Authority of the County of Pima
Industrial Development Revenue Bonds, 1997 Series B (Tucson Electric Power
Company Project) which are being redeemed with a portion of the Bond proceeds
and the $74,330,000 aggregate principal amount of The Industrial Development
Authority of the County of Pima Industrial Development Revenue Bonds, 1997
Series C (Tucson Electric Power Company Project) which are being redeemed with a
portion of the Bond proceeds.

     

    Notice
by Mail:

     

    “Notice
by Mail” or “notice” of any action or condition “by Mail” 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; provided,
however, that if, because of the temporary or permanent suspension of delivery
of first class mail or for any other reason, it is impossible or impracticable
to give such notice by first class mail, then such giving of notice in lieu
thereof, which may include publication, as shall be made with the approval of
the Trustee (or, if there be no trustee hereunder, the Authority) shall
constitute a sufficient giving of such notice.

     

    Notice
by Publication:

     

    “Notice
by Publication” or “notice” of any action or condition “by Publication” shall
mean publication of a notice meeting the requirements of this Indenture in a
newspaper or financial journal of general circulation in The City of New York,
New York, which carries financial news, is printed in the English language and
is customarily published on each business day; provided, however, that any
successive weekly publication of notice required hereunder may be made, unless
otherwise expressly provided herein, on the same or different days of the week
and in the same or different newspapers or financial journals; and provided,
further, that if, because of the temporary or permanent suspension of the
publication or general circulation of any newspaper or financial journal or for
any other reason, it is impossible or impracticable to publish such notice in
the manner herein described, then such publication in lieu thereof as shall be
made with the approval of the Trustee (or, if there be no trustee hereunder, the
Authority) shall constitute a sufficient publication of such
notice.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    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.

     

    Paying
Agent; Co Paying Agent; Principal Office thereof:

     

    “Paying
Agent” and “Co Paying Agent” shall mean the paying agent and any co paying agent
appointed in accordance with Section 10.21 hereof.  “Principal Office”
of the Paying Agent or any Co Paying Agent shall mean the office thereof
designated in writing to the Trustee.

     

    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.

     

    Registrar;
Principal Office thereof:

     

    “Registrar”
shall mean the registrar appointed in accordance with Section 10.23
hereof.  “Principal Office” of the Registrar shall mean the office
thereof designated in writing to the Trustee.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    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 Tax Reform Act of 1986 and the 1954
Code, and any and all modifications, alterations, amendments and supplements
thereto.

     

    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 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, the Paying Agent or any Co Paying Agent 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.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    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, or redeem, or provide for the redemption therefor, of
the 1997 Bonds, an issue of Bonds, entitled to the benefit, protection and
security of this Indenture, in the aggregate principal amount of NINETY MILLION
SEVEN HUNDRED FORTY-FIVE THOUSAND DOLLARS ($90,745,000.00).  Each of
the Bonds shall be designated by the title “The Industrial Development Authority
of the County of Pima Industrial Development Revenue Bond, 2008 Series A (Tucson
Electric Power Company Project)”.  The Bonds shall mature, subject to
prior redemption upon the terms and conditions hereinafter set forth, on
September 1, 2029 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 SIX POINT THREE SEVEN FIVE PER CENTUM (6.375%) per
annum, with interest thereon payable semi-annually on each September 1 and March
1, commencing September 1, 2008.  Interest shall be calculated on the
basis of a 360-day year consisting of twelve 30-day months.

     

    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 March 19, 2008.  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 and premium, if any, on the Bonds shall be payable to the Owners of such
Bonds upon presentation and surrender of such Bonds at the Principal Office of
the Paying Agent or any Co Paying Agent.  Interest on the Bonds shall
be paid by check drawn upon the Paying Agent 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
Paying Agent 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 

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    account
maintained within the continental United States specified by such Owner or, if
such Owner maintains an account with the entity acting as Paying Agent, 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 his
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.

     

    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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    the other
moneys pledged therefor under this Indenture, and such fact shall be plainly
stated on the face of 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

     

    (d) 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.

     

    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.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    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
Registrar 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, the Trustee 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
Registrar, the Registrar shall register or register the transfer in such books,
under such reasonable regulations as the Registrar may prescribe.  The
Registrar 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
Registrar at the written request of the Owner thereof or his attorney duly
authorized in writing, upon surrender thereof at the Principal Office of the
Registrar, together with a written instrument of transfer satisfactory to the
Registrar 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.

     

    The
Authority, the Trustee, the Paying Agent, any Co-Paying Agent and the Registrar
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 premium, if any, and, except as
provided in Section 2.02 hereof, interest on, such Bond and for all other
purposes, and neither the Authority, the Trustee, the Paying Agent, any Co
Paying Agent nor the Registrar 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 Registrar 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, the Registrar, 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 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    a
condition precedent to the exercise of the privilege of making such exchange or
registration of transfer.  The Registrar 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

     

    (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 

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    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 Paying Agent or any Co Paying
Agent for payment or redemption, and all Bonds which shall have been surrendered
to the Registrar 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, the Paying
Agent, the Registrar 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.

     

    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, the Trustee or the Paying Agent, 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.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    ARTICLE
III

     

    REDEMPTION
OF BONDS

     

    Section
3.01. Redemption
Provisions.  (a)  Optional Redemption.
The Bonds shall be subject to redemption by the Authority, at the direction of
the Company, on any date on or after March 1, 2013 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)           Extraordinary Optional
Redemption.  The Bonds shall be subject to redemption by the
Authority, at the direction of the Company, in whole at any time at 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)           Mandatory
Redemption.  The Bonds shall be subject to mandatory redemption
by the Authority, at 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 103(b)(13) of the 1954
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 103(b)(13) of the 1954
Code.

     

    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

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    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 Paying Agent or any Co Paying Agent
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 Paying Agent or any Co Paying Agent 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).

     

    Section
3.03. Procedure for
Redemption.  (b)  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 Paying Agent or any
Co Paying Agent) and, if less than all of the Bonds are to be redeemed, the
numbers of the Bonds to be redeemed, 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 at
least thirty (30) 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 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

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    premium,
if any, 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.

     

    (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, premium, if any, 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.

     

    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 premium, if any, 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 premium,
if any, 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, 2008 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
Loan Payments; and

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    (ii)           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.

     

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

     

    Section
4.04. Use of Moneys in
Bond Fund.  Except
as otherwise provided in Sections 4.06, 9.01 and 10.04 hereof, all moneys in the
Bond Fund constituting part of the Trust Estate shall be used solely for the
payment of the principal of and premium, if any, and interest on the Bonds as
the same shall become due and payable at maturity, upon redemption or
otherwise.

     

    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 and furnish to the Paying Agent funds constituting
part of the Trust Estate sufficient to pay the principal of and premium, if any,
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 and premium, if any, thereon become 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 Paying Agent or any Co Paying Agent for the benefit of the
Owners thereof, the Paying Agent 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.

     

    Any
moneys which the Paying Agent shall segregate and hold in trust for the payment
of the principal of and premium, if any, or interest on any Bond and remaining
unclaimed for one (1) year after such principal, premium, if any, or interest
has become due and payable shall, upon the Company’s written request to the
Paying Agent, be paid to the Company, with notice to the Trustee of such action;
provided, however, that before the Paying Agent shall be required to make any
such repayment, the Paying Agent shall, at the expense of the Company, cause
notice to be given once by Publication 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 Publication, 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, the Trustee and the Paying Agent
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

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    Trustee,
the Paying Agent, any Co Paying Agent, shall be held by the Trustee, the Paying
Agent or any Co Paying Agent, as the case may be, 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

     

    DISPOSITION
OF PROCEEDS

     

    Section
5.01. Disposition of
Proceeds.  The
proceeds from the issuance and sale of the Bonds shall be applied as provided in
Section 4.03 of the Loan Agreement.

     

    ARTICLE
VI

     

    INVESTMENTS

     

    Section
6.01. Investments.  The
moneys in the Bond Fund shall, at the 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.  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 Bond Fund, the
Trustee shall request the Company to designate such investments to be sold or
otherwise converted into cash to the credit of the Bond 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 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

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    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.

     

    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 Sections 12.06 and 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.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    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.

     

    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 premium, if
any, 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.  (d)  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 1986
Code or otherwise subject to federal income taxation by reason of Title XIII of
the Tax Reform Act of 1986 and Section 103 of the 1954 Code, as
applicable.  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, 2008
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

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    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.

     

    (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.

     

    Section
7.09. 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 Publication given by
it pursuant to any provision hereof.

     

    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 premium, if any, 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 premium, if
any, 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,

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    (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 premium, if any, 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

     

    (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 premium, if any, 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 premium, if any, 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 premium, if any, 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 premium, if any, 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”:

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    (a)           a
failure to pay the principal of or premium, if any, on 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;

     

    (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 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 to
all Owners of Outstanding Bonds; but no such waiver, rescission and

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    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;

     

    (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

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    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.

     

    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 premium, if any, 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

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    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.

     

    (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;
PAYING AGENT AND CO PAYING AGENTS; REGISTRAR

     

    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

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    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 bad faith.

     

    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, the Paying Agent and any Co Paying Agent, and the Registrar under this
Indenture shall be entitled to reasonable compensation for their services
rendered hereunder (not limited by any provision of law regarding the
compensation of the trustee of an express trust) and to reimbursement for their
actual out of pocket expenses (including counsel fees) reasonably incurred in
connection therewith except as a result of their negligence or bad faith,
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.  If the Authority shall fail to perform any of the covenants
or agreements contained in this Indenture, other than the covenants or
agreements in respect of the payment of the principal of and premium, if any,
and interest on the Bonds, the Trustee may, in its uncontrolled discretion and
without notice to the Owners of the Bonds, at any time and from time to time,
make advances to effect performance of the same on behalf of the Authority, but
the Trustee shall be under no obligation so to do; and any and all such advances
may bear interest at a rate per annum not exceeding the base rate then in effect
for 90 day commercial loans by the Trustee or a commercial banking affiliate of
the Trustee designated as such by the Trustee in the city in which is located
the Principal Office of the Trustee (or such affiliate, as the case may be) to
borrowers of the highest credit standing; but no such advance shall operate to
relieve the Authority from any default hereunder.  In Section 5.03 of
the Loan Agreement, the Company has agreed that it will pay to the Trustee
(including any predecessor Trustee), the Paying Agent and any Co Paying Agent
and the Registrar 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

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    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.

     

    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, telex, 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.  Neither the Trustee, the Paying Agent, any Co Paying
Agent nor the Registrar shall be bound to recognize any person as an Owner of a
Bond or to take any action

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    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, the Paying Agent, any Co Paying Agent or the Registrar, 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, the Paying Agent, any Co Paying
Agent or the Registrar, 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 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.

     

    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 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.

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    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.  (e)  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 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.

     

    (c)           No
resignation or removal of the Trustee and no appointment of a successor Trustee
pursuant to this Article 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 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

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    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 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.

     

    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; and if at that
time, any of the Bonds shall not have been authenticated, such successor Trustee
may authenticate such Bonds either in the name of any such predecessor hereunder
or in the name of such successor; and, in all such cases, such certificate of
authentication shall have the full force which it is anywhere in the Bonds or in
this Indenture provided that the certificate of authentication of the Trustee
shall have; provided, however, that the right to adopt the certificate of
authentication of any predecessor Trustee or to authenticate Bonds in the name
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 man 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 to all Owners of Outstanding
Bonds.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    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. Paying Agent; Co
Paying Agents.  The
Authority shall, with the approval of the Company, appoint the Paying Agent for
the Bonds and may at any time or from time to time, with the approval of the
Company, appoint one or more Co Paying Agents for the Bonds, subject to the
conditions set forth in Section 10.22 hereof.  The Paying Agent and
each Co Paying Agent shall designate to the Trustee its Principal Office and
signify its acceptance of the duties and obligations imposed upon it hereunder
by a written instrument of acceptance delivered to the Authority and the Trustee
in which such Paying Agent or Co-Paying Agent will agree,
particularly:

     

    (a)           to
hold all sums held by it for the payment of the principal of and premium, if
any, or interest on Bonds in trust for the benefit of the Owners of the Bonds
until such sums shall be paid to such Owners or otherwise disposed of as herein
provided;

     

    (b)           to
keep such books and records as shall be consistent with prudent industry
practice, to make such books and records available for inspection by the
Authority, the Trustee and the Company at all reasonable times and, in the case
of a Co Paying Agent, to promptly furnish copies of such books and records to
the Paying Agent; and

     

    (c)           in
the case of a Co Paying Agent, upon the request of the Paying Agent, to
forthwith deliver to the Paying Agent all sums so held in trust by such Co
Paying Agent.

     

    The
Authority shall cooperate with the Trustee and the Company to cause the
necessary arrangements to be made and to be thereafter continued whereby funds
derived from the sources specified in Sections 4.03 and 4.04 hereof will be made
available to the Paying Agent and each Co Paying Agent for the payment when due
of the principal of, premium, if any, and interest on the Bonds.

     

    Section
10.22. Qualifications of
Paying Agent and Co Paying Agents; Resignation; Removal.  The
Paying Agent and any Co Paying Agent shall be a corporation or association duly
organized under the laws of the United States of America or any state or
territory thereof, having a combined capital stock, surplus and undivided
profits of at least $15,000,000 and authorized by law to perform all the duties
imposed upon it by this Indenture.  The Paying Agent and any Co Paying
Agent may at any time resign and be discharged of the duties and obligations
created by this Indenture by giving at least sixty (60) days’ notice to the
Authority, the Company and the Trustee.  The Paying Agent and any
Co-Paying Agent may be removed at any time, at the direction of the Company, by
an instrument, signed by the Authority, filed with the Paying Agent or such Co
Paying Agent, as the case may be, and with the Trustee.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

     

    In the
event of the resignation or removal of the Paying Agent or any Co Paying Agent,
the Paying Agent or such Co Paying Agent, as the case may be, shall pay over,
assign and deliver any moneys held by it in such capacity to its successor or,
if there be no successor, to the Trustee.

     

    In the
event that the Authority shall fail to appoint a Paying Agent hereunder, or in
the event that the Paying Agent shall resign or be removed, or be dissolved, or
if the property or affairs of the Paying Agent shall be taken under the control
of any state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, and the Authority shall not have appointed
its successor as Paying Agent, the Trustee shall ipso facto be deemed to be the
Paying Agent for all purposes of this Indenture until the appointment by the
Authority of the Paying Agent or successor Paying Agent, as the case may
be.

     

    Upon the
appointment of a successor Paying Agent, the Trustee shall give notice thereof
by Mail to all Owners of Bonds.

     

    Section
10.23. Registrar.  The
Authority shall, with the approval of the Company, appoint the Registrar for the
Bonds, subject to the conditions set forth in Section 10.24
hereof.  The Registrar shall designate to the Trustee its Principal
Office and signify its acceptance of the duties imposed upon it hereunder by a
written instrument of acceptance delivered to the Authority and the Trustee in
which such Registrar will agree, particularly, to keep such books and records as
shall be consistent with prudent industry practice and to make such books and
records available for inspection by the Authority, the Trustee and the Company
at all reasonable times.

     

    The
Authority shall cooperate with the Trustee and the Company to cause the
necessary arrangements to be made and to be thereafter continued whereby Bonds,
executed by the Authority and authenticated by the Trustee, shall be made
available for exchange, registration and registration of transfer at the
Principal Office of the Registrar.  The Authority shall cooperate with
the Trustee, the Registrar and the Company to cause the necessary arrangements
to be made and thereafter continued whereby the Paying Agent and any Co Paying
Agent shall be furnished such records and other information, at such times, as
shall be required to enable the Paying Agent and such Co Paying Agent to perform
the duties and obligations imposed upon them hereunder.

     

    Section
10.24. Qualifications of
Registrar; Resignation; Removal.  The
Registrar shall be a corporation or association duly organized under the laws of
the United States of America or any state or territory thereof, having a
combined capital stock, surplus and undivided profits of at least $15,000,000
and authorized by law to perform all the duties imposed upon it by this
Indenture.  The Registrar may at any time resign and be discharged of
the duties and obligations created by this Indenture by giving at least sixty
(60) days’ notice to the Authority, the Trustee and the Company.  The
Registrar may be removed at any time, at the direction of the Company, by an
instrument signed by the Authority filed with the Registrar and the
Trustee.

     

    In the
event of the resignation or removal of the Registrar, the Registrar shall
deliver any Bonds held by it in such capacity to its successor or, if there be
no successor, to the Trustee.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    In the
event that the Authority shall fail to appoint a Registrar hereunder, or in the
event that the Registrar shall resign or be removed, or be dissolved, or if the
property or affairs of the Registrar shall be taken under the control of any
state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, and the Authority shall not have appointed
its successor as Registrar, the Trustee shall ipso facto be deemed to be the
Registrar for all purposes of this Indenture until the appointment by the
Authority of the Registrar or successor Registrar, as the case may
be.

     

    Upon the
appointment of a successor Registrar, the Trustee shall give notice thereof by
Mail to all Owners of Bonds.

     

    Section
10.25. Several
Capacities.  Anything
herein to the contrary notwithstanding, the same entity may serve hereunder as
the Trustee, the Paying Agent or a Co Paying Agent and the Registrar and in any
combination of such capacities to the extent permitted by law.

     

    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.

     

    (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.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

    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;

     

    (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;

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

     

    (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 premium, if any, 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.

     

    (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 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

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    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.

     

    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.

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    Section
12.07. Amendment of Loan
Agreement with Consent of Owners.  Except
in the case of Supplemental Loan Agreements 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.

     

    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.

     

    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

     

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    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.

     

    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, the Trustee,
the Paying Agent, any Co Paying Agent or the Registrar 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; if to the
Trustee, at 100 Wall Street, Suite 1600, New York, New York 10005, Attention:
Vice President; and if to the Paying Agent, any Co Paying Agent or the
Registrar, at the address designated in the acceptance of appointment or
engagement.  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.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    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.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    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:    Vice
      President

                 

                 

              
	 
      	
                By:

              	/s/
      Bernhardt Wm. Collins
	 
      	 
      	
                Name:  Bernhardt
      Wm. Collins

              
	 
      	 
      	
                Title:    Secretary

                 

                 

              
	 
      	
                U.S.
      BANK TRUST NATIONAL ASSOCIATION

                 

                 

              
	 
      	
                By:

              	/s/
      Patrick J. Crowley
	 
      	 
      	
                Name:  Patrick
      J. Crowley

              
	 
      	 
      	
                Title:    Vice
      President

              

      

    

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

     

    EXHIBIT
A

     

    (FORM OF
BOND)

     

    No.

     

    THE
INDUSTRIAL DEVELOPMENT AUTHORITY

     

    OF THE
COUNTY OF PIMA

     

    INDUSTRIAL
DEVELOPMENT REVENUE BOND,

     

    2008
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 days of  March and  September  in
each year, commencing  September 1, 2008.  Interest will be
calculated on the basis of a 360-day year of twelve 30-day
months.

    

     

    The
principal of and premium, if any, on this Bond are payable at the principal
office of U.S. Bank Trust National Association, as Paying Agent, or at the
principal office of any co-paying agent appointed in accordance with the
Indenture (as hereinafter defined), at the option of the Registered Owner
hereof.  Interest on this Bond is payable by check drawn upon the
Paying Agent and mailed to the Registered Owner of this Bond as of the close of
business on the Record Date (as defined in the Indenture) at the registered
address of such Registered Owner; notwithstanding the foregoing, upon request to
the Paying Agent 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

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    acting as
Paying Agent, by deposit into such account.  Payment of the principal
of and premium, if any, 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.

     

    This Bond
is one of the duly authorized Industrial Development Revenue Bonds, 2008 Series
A (Tucson Electric Power Company Project) (the “Bonds”) of the Authority,
aggregating NINETY MILLION SEVEN HUNDRED FORTY FIVE THOUSAND DOLLARS
($90,745,000.00) 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 March 1, 2008 (the “Indenture”), between the Authority and U.S. Bank
Trust National Association, as trustee (the “Trustee”).  Pursuant to
the Loan Agreement, dated as of March 1, 2008 (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 redeem
$16,415,000 aggregate principal amount of The Industrial Development Authority
of the County of Pima Industrial Development Revenue Bonds, 1997 Series B
(Tucson Electric Power Company Project) and all of the outstanding The
Industrial Development Authority of the County of Pima Industrial Development
Revenue Bonds, 1997 Series C (Tucson Electric Power Company
Project).  All capitalized terms used and not otherwise defined herein
shall have the meanings assigned to such terms in the Indenture.

     

    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 U.S. Bank Trust National Association, as Registrar, 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 Registrar duly executed by
the Registered Owner or his duly authorized attorney.

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

    

     

    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 March 1, 2013 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 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 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 103(b)(13) of the Internal Revenue Code of 1954, as
amended (the “1954 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 103(b)(13) of the 1954 Code.

     

    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

     

    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    

     

    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 mailing a copy of the redemption notice by first class
mail at least thirty (30) 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 by
mailing, 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
premium, if any, 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.

     

    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, premium, if any, 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.

     

    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

     

    
      
        
        

      

      
        A-4

        
          

        

      

      
        
        

      

    

     

    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 (as defined in the Indenture), 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 premium, if
any, 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 (as defined in
the Loan Agreement), 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, the Trustee, the Registrar, the Paying Agent and any co-paying agent
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, the Trustee, the Paying Agent nor any co paying agent
shall be affected by any notice to the contrary.

     

    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, or its successor as 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 Registrar, 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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}]]