Document:

EX-4(b)

 Exhibit 4(b) 

 
  

 
 LOAN AGREEMENT 

(2013 Series A) 
 between 
 THE INDUSTRIAL DEVELOPMENT AUTHORITY 

OF THE COUNTY OF PIMA 
 and 
 TUCSON ELECTRIC POWER COMPANY 

 
  

Dated as of March 1, 2013 
  

 
 Relating To

 Industrial Development Revenue Bonds, 
 2013 Series A 
 (Tucson Electric Power Company Project) 

 
  

 

 TABLE OF CONTENTS 

 

							
	 	 	 	  	Page	 
	 LOAN AGREEMENT
	  	 	1	  
		
	 ARTICLE I DEFINITIONS
	  	 	2	  
			
	 Section 1.01.
	 	Definitions	  	 	2	  
		
	 ARTICLE II REPRESENTATIONS AND WARRANTIES
	  	 	2	  
			
	 Section 2.01.
	 	Representations and Warranties of the Authority	  	 	2	  
			
	 Section 2.02.
	 	Representations and Warranties of the Company	  	 	2	  
		
	 ARTICLE III THE FACILITIES
	  	 	3	  
			
	 Section 3.01.
	 	Facilities; Property of the Company	  	 	3	  
			
	 Section 3.02.
	 	Maintenance of Facilities; Remodeling	  	 	3	  
			
	 Section 3.03.
	 	Insurance	  	 	4	  
			
	 Section 3.04.
	 	Condemnation	  	 	4	  
		
	 ARTICLE IV ISSUANCE OF THE BONDS; THE LOAN; DISPOSITION OF PROCEEDS OF THE BONDS
	  	 	4	  
			
	 Section 4.01.
	 	Issuance of the Bonds	  	 	4	  
			
	 Section 4.02.
	 	Issuance of Other Obligations	  	 	4	  
			
	 Section 4.03.
	 	The Loan; Disposition of Bond Proceeds	  	 	4	  
			
	 Section 4.04.
	 	Investment of Moneys in Funds and Accounts	  	 	5	  
		
	 ARTICLE V LOAN PAYMENTS; OTHER OBLIGATIONS
	  	 	5	  
			
	 Section 5.01.
	 	Loan Payments	  	 	5	  
			
	 Section 5.02.
	 	Payments Assigned; Obligation Absolute	  	 	5	  
			
	 Section 5.03.
	 	Payment of Expenses	  	 	5	  
			
	 Section 5.04.
	 	Indemnification	  	 	6	  
			
	 Section 5.05.
	 	Payment of Taxes; Discharge of Liens	  	 	6	  
		
	 ARTICLE VI SPECIAL COVENANTS
	  	 	7	  
			
	 Section 6.01.
	 	Maintenance of Legal Existence	  	 	7	  
			
	 Section 6.02.
	 	Permits or Licenses	  	 	8	  
			
	 Section 6.03.
	 	Authority’s Access to Facilities	  	 	8	  
			
	 Section 6.04.
	 	Tax-Exempt Status of Interest on Bonds	  	 	8	  
			
	 Section 6.05.
	 	Use of Facilities	  	 	9	  
			
	 Section 6.06.
	 	Financing Statements	  	 	9	  

  
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	 ARTICLE VII ASSIGNMENT, LEASING AND SELLING
	  	 	10	  
			
	 Section 7.01.
	 	Conditions	  	 	10	  
			
	 Section 7.02.
	 	Instrument Furnished to the Authority and Trustee	  	 	12	  
			
	 Section 7.03.
	 	Limitation	  	 	12	  
		
	 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES
	  	 	12	  
			
	 Section 8.01.
	 	Events of Default	  	 	12	  
			
	 Section 8.02.
	 	Force Majeure	  	 	13	  
			
	 Section 8.03.
	 	Remedies	  	 	13	  
			
	 Section 8.04.
	 	No Remedy Exclusive	  	 	14	  
			
	 Section 8.05.
	 	Reimbursement of Attorneys’ and Agents’ Fees	  	 	14	  
			
	 Section 8.06.
	 	Waiver of Breach	  	 	14	  
		
	 ARTICLE IX REDEMPTION OF BONDS
	  	 	14	  
			
	 Section 9.01.
	 	Redemption of Bonds	  	 	14	  
			
	 Section 9.02.
	 	Compliance with the Indenture	  	 	15	  
		
	 ARTICLE X MISCELLANEOUS
	  	 	15	  
			
	 Section 10.01.
	 	Term of Agreement	  	 	15	  
			
	 Section 10.02.
	 	Notices	  	 	15	  
			
	 Section 10.03.
	 	Parties in Interest	  	 	16	  
			
	 Section 10.04.
	 	Amendments	  	 	16	  
			
	 Section 10.05.
	 	Counterparts	  	 	16	  
			
	 Section 10.06.
	 	Severability	  	 	16	  
			
	 Section 10.07.
	 	Governing Law	  	 	16	  
			
	 Section 10.08.
	 	Notice Regarding Cancellation of Contracts	  	 	17	  
			
	 Section 10.09.
	 	U.S.A. Patriot Act	  	 	17	  
			
	EXHIBIT A	 	 	  	 	 

  

  
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 LOAN AGREEMENT 

THIS LOAN AGREEMENT (2013 Series A), dated as of March 1, 2013 (this “Agreement”), 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 TUCSON ELECTRIC POWER COMPANY, a corporation organized and
existing under the laws of the State of Arizona (hereinafter called the “Company”), 
 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 Pima County, which shall be suitable for,
among other things, facilities for the furnishing of electric energy, 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 any 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 such loans to further advance the interest of the Authority or the public and in
the public interest; and 
 WHEREAS, pursuant to the provisions of the Act, the Authority has heretofore issued and sold
$90,745,000 aggregate principal amount of The Industrial Development Authority of the County of Pima Industrial Development Revenue Bonds, 2008 Series A (Tucson Electric Power Company Project) all of which remains outstanding (the “2008
Bonds”); and 
 WHEREAS, the Authority loaned proceeds of the 2008 Bonds to Tucson Electric Power Company, an Arizona
corporation (the “Company”), to refinance the costs of certain facilities for the furnishing of electric energy, including certain electric transmission and/or distribution facilities (the “Facilities”) as more fully described in
Exhibit A hereto; and 
 WHEREAS, the Authority proposes to issue and sell $90,745,000 aggregate principal amount of The
Industrial Development Authority of the County of Pima Industrial Development Revenue Bonds, 2013 Series A (Tucson Electric Power Company Project) (the “Bonds”), pursuant to an Indenture of Trust, dated as of March 1, 2013 (the
“Indenture”), between the Authority and U.S. Bank Trust National Association, as trustee (the “Trustee”), for the purpose of refinancing the Facilities previously refinanced with the proceeds of the 2008 Bonds. 

WHEREAS, the proceeds of the Bonds will be applied to redeem the 2008 Bonds. 

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby and in consideration of the premises, DO HEREBY AGREE as
follows: 

 ARTICLE I 
 DEFINITIONS 
 SECTION 1.01. Definitions. The terms
used in this Agreement shall for all purposes of this Agreement have the meanings specified in Section 1.01 of the Indenture, unless the context clearly requires otherwise. 

ARTICLE II 

REPRESENTATIONS AND WARRANTIES 
 SECTION 2.01. Representations and Warranties of the Authority. The Authority makes the following representations and warranties as the basis for the undertakings on the part of the Company
contained herein: 
 (a) The Authority is an Arizona nonprofit corporation designated by law as a political
subdivision of the State of Arizona created and existing under the Constitution and laws of the State of Arizona; 
 (b) The Authority has the power to enter into this Agreement and the Indenture and to perform and observe the agreements and covenants on its part contained herein and therein, including without
limitation the power to issue and sell the Bonds as contemplated herein and in the Indenture, and by proper action has duly authorized the execution and delivery hereof and thereof; 

(c) The execution and delivery of this Agreement and the Indenture by the Authority do not, and consummation of the
transactions contemplated hereby and fulfillment of the terms hereof and thereof by the Authority will not, result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other
agreement or instrument to which the Authority is now a party or by which it is now bound, or, to the best knowledge of the Authority, any order, rule or regulation applicable to the Authority of any court or of any regulatory body or administrative
agency or other governmental body having jurisdiction over the Authority or over any of its properties, or the Constitution or laws of the State of Arizona; and 
 (d) No consent, approval, authorization or other order of any regulatory body or administrative agency or other governmental body is legally required for the Authority’s participation in the
transactions contemplated by this Agreement, except such as may have been obtained or as may be required under the securities laws of any jurisdiction. 
 SECTION 2.02. Representations and Warranties of the Company. The Company makes the following representations and warranties as the basis for the undertakings on the part of the Authority
contained herein: 
 (a) The Company is a corporation duly organized and existing in good standing under the laws
of the State of Arizona and duly qualified as a foreign corporation in the State of New Mexico; 

  
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 (b) The Company has power to enter into this Agreement and to perform and
observe the agreements and covenants on its part contained herein and by proper corporate action has duly authorized the execution and delivery hereof and of all other documents required hereby to be executed by the Company; 

(c) The execution and delivery of this Agreement by the Company do not, and consummation of transactions contemplated
hereby and fulfillment of the terms hereof by the Company will not, result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Company
is a party or by which it is now bound, or the Restated Articles of Incorporation or bylaws of the Company, or any order, rule or regulation applicable to the Company of any court or of any regulatory body or administrative agency or other
governmental body having jurisdiction over the Company or over any of its properties, or any statute of any jurisdiction applicable to the Company; 
 (d) The Arizona Corporation Commission has approved all matters relating to the Company’s participation in the transactions contemplated by this Agreement which require said approval, and no other
consent, approval, authorization or other order of any regulatory body or administrative agency or other governmental body is legally required for the Company’s participation therein, except such as may have been obtained or may be required
under the securities laws of any jurisdiction; 
 (e) The Facilities are to be used solely for purposes
contemplated by the Act and are located or to be located within the State of Arizona and the State of New Mexico; and 
 (f) All of the proceeds of the Bonds will be expended to refinance a portion of the Facilities through the redemption of the 2008 Bonds. 

ARTICLE III 
 THE
FACILITIES 
 SECTION 3.01. Facilities; Property of the Company. The Facilities shall be the
property of the Company and the Authority shall have no right, title or interest in the Facilities. 

SECTION 3.02. Maintenance of Facilities; Remodeling. The Company shall at all times cause the Facilities, and
every element and unit thereof, to be maintained, preserved and kept in thorough repair, working order and condition and to cause all needful and proper repairs and renewals thereto to be made; provided, however, that the Company may cause the
operation of the Facilities, or any element or unit thereof, to be discontinued if, in the judgment of the Company, it is no longer advisable to operate the same, or if the Company intends to sell or dispose of the same, and within a reasonable time
shall endeavor to effectuate such sale or disposition. 

  
 3 

 The Company may, subject to the provisions of Section 6.05 hereof, at its own expense
remodel the Facilities or make such substitutions, modifications and improvements to the Facilities from time to time as it, in its discretion, may deem to be desirable for its uses and purposes, which remodeling, substitutions, modifications and
improvements shall be included under the terms of this Agreement as part of the Facilities. 
 SECTION 3.03.
Insurance. The Company shall keep the Facilities insured against fire and other risks to the extent usually insured against by companies owning and operating similar property, by reputable insurance companies or, at the Company’s
election, with respect to all or any element or unit of the Facilities, by means of an adequate insurance fund set aside and maintained by it out of its own earnings or in conjunction with other companies through an insurance fund, trust or other
agreement or, by means of unfunded self-insurance as may be reasonable and customary by companies owning and operating similar property. All proceeds of such insurance shall be for the account of the Company. 

SECTION 3.04. Condemnation. The Company shall be entitled to the entire proceeds of any condemnation award or
portion thereof made for damages to or takings of the Facilities or other property of the Company. 
 ARTICLE IV 

ISSUANCE OF THE BONDS; THE LOAN; DISPOSITION OF PROCEEDS OF THE BONDS 

SECTION 4.01. Issuance of the Bonds. The Authority shall issue the Bonds under and in accordance with the
Indenture, subject to the provisions of the bond purchase agreement among the Authority, the initial purchaser or purchasers of the Bonds and the Company. The Company hereby approves the issuance of the Bonds and all terms and conditions thereof.

 SECTION 4.02. Issuance of Other Obligations. The Authority and the Company expressly reserve the
right to enter into, to the extent permitted by law, but shall not be obligated to enter into, an agreement or agreements other than this Agreement with respect to the issuance by the Authority, under an indenture or indentures other than the
Indenture, of obligations to provide additional funds to pay the cost of construction of the Facilities or obligations to refund all or any principal amount of the Bonds, or any combination thereof. 

SECTION 4.03. The Loan; Disposition of Bond Proceeds. The Authority shall cause the proceeds of the
Bonds to be deposited with the trustee for the 2008 Bonds to be applied to the payment of the 2008 Bonds upon the redemption thereof. 
 The Authority shall establish the Bond Fund with the Trustee in accordance with Section 4.01 of the Indenture. 

  
 4 

 SECTION 4.04. Investment of Moneys in Funds and Accounts. The
Company and the Authority agree that any moneys held in any fund or account created by the Indenture shall be invested as provided in the Indenture. 
 ARTICLE V 
 LOAN PAYMENTS; OTHER OBLIGATIONS 

SECTION 5.01. Loan Payments. In consideration of the issuance of the Bonds and the disposition of the
proceeds thereof as contemplated in Section 4.03 hereof, the Company shall pay, or cause to be paid, to the Trustee for the account of the Authority an amount equal to the aggregate principal amount of the Bonds from time to time Outstanding
and, as interest on its obligation to pay such amount, an amount equal to interest on such Bonds, such amounts to be paid in installments due on the dates, in the amounts and in the manner provided in the Indenture for the Authority to cause amounts
to be deposited in the Bond Fund for the payment of the principal of and interest on the Bonds whether at stated maturity, upon redemption or acceleration or otherwise; provided, however, that the obligation of the Company to make any such payment
hereunder shall be reduced by the amount of any reduction under the Indenture of the amount of the corresponding payment required to be made by the Authority thereunder. 

SECTION 5.02. Payments Assigned; Obligation Absolute. It is understood and agreed that all Loan Payments are,
by the Indenture, to be pledged by the Authority to the Trustee, and that all rights and interest of the Authority hereunder (except for the Authority’s rights under Section 5.03, Section 5.04, Section 6.03 and Section 8.05
hereof and any rights of the Authority to receive notices, certificates, requests, requisitions and other communications hereunder) are to be pledged and assigned to the Trustee. The Company assents to such pledge and assignment and agrees that the
obligation of the Company to make the Loan Payments shall be absolute, irrevocable and unconditional and shall not be subject to cancellation, termination or abatement, or to any defense other than payment or to any right of set-off, counterclaim or
recoupment arising out of any breach by the Authority or the Trustee or any other party under this Agreement, the Indenture or otherwise, or out of any obligation or liability at any time owing to the Company by the Authority, the Trustee or any
other party, and, further, that the Loan Payments and the other payments due hereunder shall continue to be payable at the times and in the amounts herein and therein specified, whether or not the Facilities, or any portion thereof, shall have been
completed or shall have been destroyed by fire or other casualty, or title thereto, or the use thereof, shall have been taken by the exercise of the power of eminent domain, and that there shall be no abatement of or diminution in any such payments
by reason thereof, whether or not the Facilities shall be used or useful, whether or not any applicable laws, regulations or standards shall prevent or prohibit the use of the Facilities, or for any other reason, all of the foregoing being subject,
however, to the provisions of Section 6.01 and Section 7.01 hereof. 
 SECTION 5.03. Payment of
Expenses. The Company shall pay all Administration Expenses, including, without limitation, Administration Expenses incurred at and subsequent to the time the Bonds are deemed to have been paid in accordance with Article VIII of the Indenture.
The payment of the compensation and the reimbursement of expenses and advances of the Trustee under the Indenture shall be made directly to such entity. 

  
 5 

 SECTION 5.04. Indemnification. The Company releases the
Authority, the Trustee, the County of Pima, Arizona and their directors, officers, employees and agents from, agrees that the Authority, the Trustee and the County of Pima, Arizona, shall not be liable for, and agrees to indemnify and hold the
Authority, the Trustee, the County of Pima, Arizona and their directors, officers, employees and agents free and harmless from, any liability (including, without limitation, attorneys’ and other agents’ fees and expenses) for any loss or
damage to property or any injury to or death of any person that may be occasioned by any cause whatsoever pertaining to the Facilities, except (i) in the case of the Trustee, as a result of the negligence or willful misconduct of the Trustee or
its directors, officers, employees and agents; and (ii) in the case of the Authority and the County of Pima, Arizona, as a result of the gross negligence or willful misconduct of the Authority or the County of Pima, Arizona or their respective
directors, officers, employees and agents. 
 The Company will indemnify and hold the Authority, the Trustee and the County of
Pima, Arizona, free and harmless from any loss, claim, damage, tax, penalty, liability, disbursement, litigation expenses, attorneys’ and other agents’ fees and expenses or court costs arising out of, or in any way relating to, the
execution or performance of this Agreement, the issuance or sale of the Bonds, actions taken under the Indenture or any other cause whatsoever pertaining to the Facilities, except (i) in the case the Trustee, as a result of the negligence or
willful misconduct of the Trustee; and (ii) in the case of the Authority and the County of Pima, Arizona, as a result of the gross negligence or willful misconduct of the Authority or the County of Pima, Arizona. 

The Company will indemnify and hold the Authority and the County of Pima, Arizona and their directors, officers, employees and agents
free and harmless from any loss, claim, damage, tax, penalty, liability, disbursement, litigation expenses, attorney’s fees and expenses or court costs arising out of or in any way relating to any untrue statement or alleged untrue statement of
any material fact or omission or alleged omission to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading in any official statement or other offering material utilized
in connection with the sale of any Bonds. 
 SECTION 5.05. Payment of Taxes; Discharge of Liens. The
Company shall: (a) pay, or make provision for payment of, all lawful taxes and assessments, including income, profits, property or excise taxes, if any, or other municipal or governmental charges, levied or assessed by any federal, state or
municipal government or political body upon the Facilities or any part thereof or upon the Authority with respect to the Loan Payments, when the same shall become due; and (b) pay or cause to be satisfied and discharged or make adequate
provision to satisfy and discharge, within sixty (60) days after the same shall accrue, any lien or charge upon the Loan Payments, and all lawful claims or demands for labor, materials, supplies or other charges which, if unpaid, might be or
become a lien upon such amounts; provided, that, if the Company shall first notify the Authority and the Trustee of its intention so to do, the Company may in good faith contest any such lien or charge or claims or demands in appropriate legal
proceedings, and in such event may permit the items so contested and identified as such by the Company to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom, unless the Trustee shall notify the Company in
writing that, in the opinion of counsel to the Trustee, based upon material facts disclosed to the Trustee without any duty of investigation, by nonpayment of any such items the lien of the Indenture as to the Loan Payments will be materially
endangered, in which event the Company shall promptly pay and cause to be satisfied and discharged all such unpaid items. The Authority shall cooperate fully with the Company in any such contest. 

  
 6 

 ARTICLE VI 
 SPECIAL COVENANTS 
 SECTION 6.01. Maintenance of Legal
Existence. Except as permitted in this Section 6.01, the Company shall maintain its legal existence, shall not sell, transfer or otherwise dispose of all of its assets, as or substantially as an entirety, and shall not consolidate with or
merge with or into another entity. Unless such action would violate the Company’s covenant in Section 6.04, the Company may consolidate with or merge into another entity organized under the laws of the United States of America, any state
thereof or the District of Columbia, or sell, transfer or otherwise dispose of all of its assets, as or substantially as an entirety, to any Person, if the surviving or resulting Person (if other than the Company) or the transferee Person, as the
case may be, prior to or simultaneously with such merger, consolidation, sale, transfer or disposition, assumes, by delivery to the Trustee and the Authority of an instrument in writing satisfactory in form to the Trustee, all the obligations of the
Company under this Agreement, including, without limitation, the obligations of the Company under Section 5.01 hereof. Upon such an assumption following any such sale, transfer or other disposition of assets, the Company shall be released and
discharged from all liability in respect of all obligations under this Agreement. Notwithstanding the foregoing, in the case of any such sale, transfer or other disposition of assets, which do not include all of the Company’s interests in the
Facilities, the Company shall remain liable in respect of all obligations under this Agreement to the extent of the interests retained other than the obligations under Section 5.01 hereof, and the transferee shall not be required to assume any
obligations hereunder to such extent other than the obligations under Section 5.01 hereof; provided, however, that the transferee shall be required to assume all such other obligations unless the Company shall have delivered to the Authority
and the Trustee an opinion of Bond Counsel to the effect that the non-assumption by the transferee of such other obligations will not impair the validity under the Act of the Bonds and will not adversely affect the exclusion from gross income for
federal tax purposes of interest on the Bonds. 
 If consolidation, merger or sale, transfer or other disposition is made as
permitted by this Section 6.01, the provisions of this Section 6.01 shall continue in full force and effect and no further consolidation, merger or sale or other transfer shall be made except in compliance with the provisions of this
Section 6.01. 

  
 7 

 Anything in this Agreement to the contrary notwithstanding, the sale, transfer or other
disposition by the Company of all of its facilities (a) for the generation of electric energy, (b) for the transmission of electric energy or (c) for the distribution of electric energy, in each case considered alone, or all of its
facilities described in clauses (a) and (b), considered together, or all of its facilities described in clauses (b) and (c), considered together, shall in no event be deemed to constitute a sale, transfer or other disposition of all the
properties of the Company, as or substantially as an entirety, unless, immediately following such sale, transfer or other disposition, the Company shall own no properties in the other such categories of property not so sold, transferred or otherwise
disposed of. The character of particular facilities shall be determined by reference to the Uniform System of Accounts prescribed for public utilities and licensees subject to the Federal Power Act, as amended, to the extent applicable. 

SECTION 6.02. Permits or Licenses. In the event that it may be necessary for the proper performance of this
Agreement on the part of the Company or the Authority that any application or applications for any permit or license to do or to perform certain things be made to any governmental or other agency by the Company or the Authority, the Company and the
Authority each shall, upon the request of either, execute such application or applications. 
 SECTION 6.03.
Authority’s Access to Facilities. The Authority shall have the right, upon appropriate prior notice to the Company, to have reasonable access to the Facilities during normal business hours for the purpose of making examinations and
inspections of the same. 
 SECTION 6.04. Tax-Exempt Status of Interest on Bonds. 

(a) It is the intention of the parties hereto that interest on the Bonds shall be and remain tax-exempt, and to that end the covenants and
agreements of the Authority and the Company in this Section 6.04 and the Tax Agreement are for the benefit of the Owners from time to time of the Bonds. 
 (b) Each of the Company and the Authority covenants and agrees for the benefit of the Owners from time to time of the Bonds that it will not directly or indirectly use or permit the use of (to the extent
within its control) the proceeds of any of the Bonds or any other funds, or take or omit to take any action, if and to the extent such use, or the taking or omission to take such action, would cause any of the Bonds to be “arbitrage bonds”
within the meaning of Section 148 of the Code or otherwise subject to federal income taxation by reason of failing to qualify under Section 103 of the 1954 Code and Title XIII of the Tax Reform Act of 1986, as applicable, and any
applicable regulations promulgated thereunder. To such ends, the Authority and the Company will comply with all requirements of such Section 148 to the extent applicable to the Bonds. In the event that at any time the Authority or the Company
is of the opinion that for purposes of this Section 6.04(b) it is necessary to restrict or limit the yield on the investment of any moneys held by the Trustee under the Indenture, the Authority or the Company shall so notify the Trustee in
writing. 

  
 8 

 Without limiting the generality of the foregoing, the Company and the Authority agree that
there shall be paid from time to time all amounts required to be rebated to the United States of America pursuant to Section 148(f) of the Code and any applicable Treasury Regulations. This covenant shall survive payment in full or defeasance
of the Bonds and the satisfaction and discharge of the Indenture. The Company specifically covenants to pay or cause to be paid the Rebate Requirement as defined and described in the Tax Agreement. 

(c) The Authority certifies and represents that it has not taken, and the Authority covenants and agrees that it will not take, any
action which results in interest paid on the Bonds being included in gross income of the Owners of the Bonds for federal tax purposes by failing to qualify under Section 103 of the 1954 Code and Title XIII of the Tax Reform Act of 1986, as
applicable, and any regulations thereunder; and the Company certifies and represents that it has not taken or (to the extent within its control) permitted to be taken, and the Company covenants and agrees that it will not take or (to the extent
within its control) permit to be taken any action which will cause the interest on the Bonds to become includable in gross income for federal income tax purposes; provided, however, that neither the Company nor the Authority shall be deemed to have
violated these covenants if the interest on any of the Bonds becomes taxable to a person solely because such person is a “substantial user” of the Facilities or a “related person” within the meaning of Section 103(b)(13) of
the 1954 Code and provided, further, that none of the covenants and agreements herein contained shall require either the Company or the Authority to enter an appearance or intervene in any administrative, legislative or judicial proceeding in
connection with any changes in applicable laws, rules or regulations or in connection with any decisions of any court or administrative agency or other governmental body affecting the taxation of interest on the Bonds. The Company acknowledges
having read Section 7.08 of the Indenture and agrees to perform all duties imposed on it by such Section 7.08, by this Section and by the Tax Agreement. Insofar as Section 7.08 of the Indenture and the Tax Agreement impose duties and
responsibilities on the Company, they are specifically incorporated herein by reference. 
 (d) Notwithstanding any provision of
this Section 6.04 and Section 7.08 of the Indenture or the Tax Agreement, if the Company shall provide to the Authority and the Trustee an opinion of Bond Counsel to the effect that any specified action required under this
Section 6.04 and Section 7.08 of the Indenture is no longer required or that some further or different action is required to maintain the tax status of interest on the Bonds, the Company, the Trustee and the Authority may conclusively rely
upon such opinion in complying with the requirements of this Section 6.04, and the covenants hereunder shall be deemed to be modified to that extent. 
 SECTION 6.05. Use of Facilities. So long as any Bonds are Outstanding and the Facilities are operated by or for the benefit of the Company, the Company shall cause the Facilities to be used
for purposes contemplated by the Act and in the Tax Agreement. 
 SECTION 6.06. Financing Statements.
The Company shall file and record, or cause to be filed and recorded, all financing statements and continuation statements referred to in Section 7.07 of the Indenture. 

  
 9 

 ARTICLE VII 
 ASSIGNMENT, LEASING AND SELLING 
 SECTION 7.01.
Conditions. The Company’s interest in this Agreement may be assigned as a whole or in part, and its interest in the Facilities may be assigned, leased, subleased, sold, transferred or otherwise disposed of as a whole or in part (whether
an interest in a specific element or unit or an undivided interest), to any Person; provided, however, that no such assignment, lease, sublease, sale, transfer or other disposition (a) shall relieve the Company from its primary liability for
its obligations under Section 5.01 hereof or (b) shall be made unless the assignee, lessee, sublessee, purchaser or other transferee, as the case may be, prior to or simultaneously with such assignment, lease, sublease, sale, transfer or
other disposition, assumes, by delivery of an instrument in writing satisfactory in form to the Trustee and the Authority, all other obligations of the Company hereunder to the extent of the interest assigned, leased, subleased, sold, transferred or
otherwise disposed of, and the Company shall be released of and discharged from such obligations to the extent so assumed. Notwithstanding the foregoing, (a) if (i) the Company’s interest in this Agreement shall be assigned as a whole
or in undivided part, (ii) the Company’s interest in the Facilities shall be leased or subleased, as a whole or in undivided part and the term of such leasehold or subleasehold or the term of any extension or extensions thereof at the
option of the Company shall extend beyond the maturity date of the Bonds or (iii) the Company’s interest in the Facilities shall be assigned, sold, transferred or otherwise disposed of as a whole or in undivided part, and (b) in the
event that the assignee, lessee, sublessee, purchaser or other transferee shall assume the obligations of the Company under Section 5.01 hereof for the remaining term of this Agreement, to the extent of such assignment, lease, sublease, sale,
transfer or other disposition, the Company shall be released from and discharged of all liability in respect of such obligations to the extent so assumed (but only to such extent); provided, however, that the release and discharge of the Company
pursuant to clause (b) shall be conditioned upon the delivery by the Company to the Authority and the Trustee of a certificate of an Independent Expert (as hereinafter defined) describing the interests so assigned, leased, subleased, sold,
transferred or otherwise disposed of, together with all other rights, interests, assets and/or properties assigned, leased, subleased, sold, transferred or otherwise disposed of by the Company to the same Person in the same or a related transaction,
stating that such rights, interests, assets and/or properties so described constitute facilities for the generation, transmission and/or distribution of electric energy and stating that, in the opinion of such Independent Expert, the Fair Value (as
hereinafter defined) of such rights, interests, assets and/or properties to the Person acquiring the same is not less than an amount equal to 10/7 of the sum of (x) the aggregate principal amount of the Bonds then Outstanding and (y) the
outstanding principal amount of all other obligations of the Company representing indebtedness for borrowed money or for the deferred purchase price of property which are being assumed by such Person; provided, further, that after any such
assumption, release and discharge as aforesaid, the Company may again assume such obligations under Section 5.01 hereof, in whole or in part, at any time and from time to time, and, to the extent of any such assumption by the Company (but only
to such extent), the aforesaid assignee, lessee, sublessee, purchaser or other transferee shall be released from and discharged of all liability in respect of such obligations. 

  
 10 

 Anything herein to the contrary notwithstanding, the Company shall not make any assignment,
lease, sublease or sale as provided in the immediately preceding paragraph unless it shall have furnished to the Authority and the Trustee an opinion of Bond Counsel to the effect that the proposed assignment, lease or sale will not impair the
validity under the Act of the Bonds and will not adversely affect the exclusion of interest on the Bonds from gross income for federal tax purposes. 
 After any assignment, lease, sublease, sale, transfer or other disposition of any element or unit of the Facilities, or any interest therein, the Company may, at its option, cause such element or unit, or
interest therein, to no longer be deemed to be part of the Facilities for the purposes of this Agreement by delivering to the Authority and the Trustee the agreements or other documents required pursuant to Section 7.02 hereof together with an
instrument signed by an Authorized Company Representative stating that such element or unit, or interest therein, shall no longer be deemed to be part of the Facilities for the purposes of this Agreement. 

For purposes of this Section 7.01: 
 (a) “Independent Expert” means a Person which (i) is an engineer, appraiser or other expert and which, with respect to any certificate to be delivered pursuant to this Section, is qualified
to pass upon the matter set forth in such certificate and (ii)(A) is in fact independent, (B) does not have any direct material financial interest in the transferee or in any obligor upon the Bonds or under this Agreement or in any affiliate of
the transferee or any such obligor, (C) is not connected with the transferee or any such obligor as an officer, employee, promoter, underwriter, trustee, partner, director or any person performing similar functions and (D) is approved by
the Trustee in the exercise of reasonable care; for purposes of this definition “engineer” means a Person engaged in the engineering profession or otherwise qualified to pass upon engineering matters (including, but not limited to, a
Person licensed as a professional engineer, whether or not then engaged in the engineering profession); and for purposes of this definition “appraiser” means a Person engaged in the business of appraising property or otherwise qualified to
pass upon the Fair Value or fair market value of property. 
 (b) “Fair Value” means the fair value of
the interests, rights, assets and/or properties assigned, leased, subleased, sold, transferred or otherwise disposed of (but, in the case of a lease or sublease, only to the extent of such lease) as may be determined by reference to (i) except
in the case of a lease or sublease, the amount which would be likely to be obtained in an arm’s-length transaction with respect to such interests, rights, assets and/or properties between an informed and willing buyer and an informed and
willing seller, under no compulsion, respectively, to buy or sell, (ii) in the case of a lease or sublease, the amount (discounted to present value at a rate not lower than the taxable equivalent of the yield to maturity of the Bonds based on
prevailing market prices immediately prior to the first public announcement of the proposed transaction) which would be likely to be obtained in an arm’s-length transaction with respect to such interests, rights, assets and/or properties
between an informed and willing lessee and an informed and willing lessor, neither under any compulsion to lease, (iii) the amount of investment with respect to such interests, rights, assets and/or properties which, together with a reasonable
return thereon, would be likely to be recovered through ordinary business operations or otherwise, (iv) the cost, accumulated depreciation and replacement cost with respect to such interests, rights, assets and/or properties and/or (v) any
other relevant factors; provided, however, that (x) Fair Value shall be determined without deduction for any mortgage, deed of trust, pledge, security interest, encumbrance, lease, reservation, restriction, servitude, charge or similar right or
any other lien of any kind and (y) the Fair Value to the transferee of any property shall not reflect any reduction relating to the fact that such property may be of less value to a Person which is not the owner, lessee, sublessee or operator
of the property or any portion thereof than to a Person which is such owner, lessee or operator. Fair Value may be determined, without physical inspection, by the use of accounting and engineering records and other data maintained by the Company or
the transferee or otherwise available to the Independent Expert certifying the same. 

  
 11 

 SECTION 7.02. Instrument Furnished to the Authority and Trustee.
The Company shall, within fifteen (15) days after the delivery thereof, furnish to the Authority and the Trustee a true and complete copy of the agreements or other documents effectuating any such assignment, lease, sublease, sale, transfer or
other disposition. 
 SECTION 7.03. Limitation. This Agreement shall not be assigned nor shall the
Company’s interest in the Facilities be assigned, leased, subleased, sold, transferred or otherwise disposed of, in whole or in part, except as provided in this Article VII or in Section 6.01 or Section 5.02 hereof. This Article VII
shall not apply to any sale, transfer or other disposition by the Company of all of its assets, as or substantially as an entirety, as contemplated in Section 6.01. 
 ARTICLE VIII 
 EVENTS OF DEFAULT AND REMEDIES 

SECTION 8.01. Events of Default. Each of the following events shall constitute and is referred to in this
Agreement as an “Event of Default”: 
 (a) a failure by the Company to make any Loan Payment, which
failure shall have resulted in an “Event of Default” under clause (a) or (b) of Section 9.01 of the Indenture; 
 (b) a failure by the Company to pay when due any amount required to be paid under this Agreement or to observe and perform any covenant, condition or agreement on its part to be observed or performed
(other than a failure described in clause (a) above), 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 Company by
the Authority or the Trustee, unless the Authority and the Trustee shall agree in writing to an extension of such period prior to its expiration; provided, however, that the Authority and the Trustee shall be deemed to have agreed to an extension of
such period if corrective action is initiated by the Company within such period and is being diligently pursued; or 

  
 12 

 (c) the dissolution or liquidation of the Company, or failure by the Company
promptly to lift any execution, garnishment or attachment of such consequence as will impair its ability to make any payments under this Agreement, or the entry of an order for relief by a court of competent jurisdiction in any proceeding for its
liquidation or reorganization under the provisions of any bankruptcy act or under any similar act which may be hereafter enacted, or an assignment by the Company for the benefit of its creditors, or the entry by the Company into an agreement of
composition with its creditors (the term “dissolution or liquidation of the Company,” as used in this clause, shall not be construed to include the cessation of the corporate existence of the Company resulting either from a merger or
consolidation of the Company into or with another entity or a dissolution or liquidation of the Company following a transfer of all or substantially all its assets as an entirety, under the conditions permitting such actions contained in
Section 6.01 hereof). 
 SECTION 8.02. Force Majeure. The provisions of Section 8.01 hereof
are subject to the following limitations: if by reason of acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders of any kind of the government of the United States or of the State of Arizona, or any
department, agency, political subdivision, court or official of any of them, or any civil or military authority; insurrections; riots; epidemics; landslides; lightning; earthquakes; volcanoes; fires; hurricanes; tornadoes; storms; floods; washouts;
droughts; arrests; restraint of government and people; civil disturbances; explosions; breakage or accident to machinery; partial or entire failure of utilities; or any cause or event not reasonably within the control of the Company, the Company is
unable in whole or in part to carry out any one or more of its agreements or obligations contained herein, other than its obligations under Section 5.01, Section 5.03, Section 5.05 and Section 6.01 hereof, the Company shall not
be deemed in default by reason of not carrying out said agreement or agreements or performing said obligation or obligations during the continuance of such inability. The Company shall make reasonable effort to remedy with all reasonable dispatch
the cause or causes preventing it from carrying out its agreements; provided, that the settlement of strikes, lockouts and other industrial disturbances shall be entirely within the discretion of the Company, and the Company shall not be required to
make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of the opposing party or parties when such course is in the judgment of the Company unfavorable to the Company. 

SECTION 8.03. Remedies. 
 (a) Upon the occurrence and continuance of any Event of Default described in clause (a) of Section 8.01 hereof, and further upon the condition that, in accordance with the terms of the
Indenture, the Bonds shall have been declared to be immediately due and payable pursuant to any provision of the Indenture, the Loan Payments shall, without further action, become and be immediately due and payable. 

Any waiver of any “Event of Default” under the Indenture and a rescission and annulment of its consequences shall constitute a
waiver of the corresponding Event or Events of Default under this Agreement and a rescission and annulment of the consequences thereof. 
 (b) Upon the occurrence and continuance of any Event of Default, the Authority, or the Trustee with respect to the rights of the Authority assigned to the Trustee by the Indenture, may take any action at
law or in equity to collect any payments then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of the Company hereunder. 

  
 13 

 (c) Any amounts collected by the Trustee from the Company pursuant to this Section 8.03
shall be applied in accordance with the Indenture. 
 SECTION 8.04. No Remedy Exclusive. No remedy
conferred upon or reserved to the Authority hereby is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute. No delay or omission 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 thereof, but any such right or power may be
exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in this Article VIII, it shall not be necessary to give any notice, other than such notice as may be herein
expressly required. 
 SECTION 8.05. Reimbursement of Attorneys’ and Agents’ Fees. If the
Company shall default under any of the provisions hereof and the Authority or the Trustee shall employ attorneys or agents or incur other reasonable expenses for the collection of payments due hereunder or for the enforcement of performance or
observance of any obligation or agreement on the part of the Company contained herein, the Company will on demand therefor reimburse the Authority or the Trustee and any predecessor Trustee, as the case may be, for the reasonable fees of such
attorneys and such other reasonable expenses so incurred. 
 SECTION 8.06. Waiver of Breach. In the
event any obligation created hereby shall be breached by either of the parties and such breach shall thereafter be waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other
breach hereunder. In view of the assignment of certain of the Authority’s rights and interest hereunder to the Trustee, the Authority shall have no power to waive any breach hereunder by the Company in respect of such rights and interest
without the consent of the Trustee, and the Trustee may exercise any of such rights of the Authority hereunder. 
 ARTICLE IX

 REDEMPTION OF BONDS 
 SECTION 9.01. Redemption of Bonds. The Authority shall take, or cause to be taken, the actions required by the Indenture to discharge the lien created thereby through the redemption, or
provision for payment or redemption, of all Bonds then Outstanding, or to effect the redemption, or provision for payment or redemption, of less than all the Bonds then Outstanding, upon receipt by the Authority and the Trustee from the Company of a
notice designating the principal amount of the Bonds to be redeemed, or for the payment or redemption of which provision is to be made, and, in the case of redemption of Bonds, or provision therefor, specifying the date of redemption and the
applicable redemption provision of the Indenture. In the case of a redemption pursuant to Section 3.01(b)(iv) of the Indenture, the Company shall deliver to the Trustee a written certificate as described in the Indenture and shall direct the
Trustee to redeem such principal amount of Bonds as the Company determines is necessary to assure that the Company retains its right to deduct all interest payments under the Loan Agreement otherwise allowable or, if a partial redemption will not
enable the Company to retain the right to deduct such interest, the Company may direct the Trustee to redeem all the outstanding Bonds. Such redemption date shall not be less than thirty-five (35) days from the date such notice is given (unless
a shorter notice is satisfactory to the Trustee). Unless otherwise stated therein, such notice shall be revocable by the Company at any time prior to the time at which the Bonds to be redeemed, or for the payment or redemption of which provision is
to be made, are first deemed to be paid in accordance with Article VIII of the Indenture. The Company shall furnish any moneys or Government Obligations (as defined in the Indenture) required by the Indenture to be deposited with the Trustee or
otherwise paid by the Authority in connection with any of the foregoing purposes. 

  
 14 

 SECTION 9.02. Compliance with the Indenture. Anything in this
Agreement to the contrary notwithstanding, the Authority and the Company shall take all actions required by this Agreement and the Indenture in order to comply with any provisions of the Indenture requiring the mandatory redemption of Bonds.

 ARTICLE X 
 MISCELLANEOUS 
 SECTION 10.01. Term of Agreement. This
Agreement shall remain in full force and effect from the date hereof until the right, title and interest of the Trustee in and to the Trust Estate (as defined in the Indenture) shall have ceased, terminated and become void in accordance with Article
VIII of the Indenture and until all payments required under this Agreement shall have been made. Notwithstanding the foregoing, the covenants contained in Sections 5.03, 5.04, 6.04 and 8.05 hereof shall survive the termination of this
Agreement. 
 SECTION 10.02. Notices. Except as otherwise provided in this Agreement, all notices,
certificates, requests, requisitions and other communications hereunder 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 N. Oracle Road, Suite 100, Tucson, Arizona, 85704, Attention: Michael Slania; if to the Company, at 88 East Broadway Boulevard, Tucson, Arizona 85702, Attention: Treasurer; and if to the Trustee, at such
address as shall be designated by it in the Indenture. A copy of each notice, certificate, request or other communication given hereunder to the Authority, the Company, or the Trustee shall also be given to the others. The Authority, the Company,
and the Trustee may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates, requests or other communications shall be sent. Notwithstanding any other provision of this Agreement to the
contrary, any notice required to be delivered hereunder may be delivered by electronic means including, without limitation, email in PDF format. 

  
 15 

 SECTION 10.03. Parties in Interest. This Agreement shall inure
to the benefit of and shall be binding upon the Authority, the Company and their respective successors and assigns, and no other person, firm or corporation shall have any right, remedy or claim under or by reason of this Agreement; provided,
however, that the lien and security interest granted to the Trustee in Section 4.03 hereof, as well as the rights and remedies granted to the Authority in Article VIII hereof, shall inure to the benefit of the Trustee, on behalf of the Owners
from time to time of the Bonds, and shall be enforceable by the Trustee as a third party beneficiary or as assignee of the Authority; and provided, further, that the rights set forth in Section 10.09 hereof shall inure to the benefit of the
Trustee and shall be enforceable by the Trustee as a third party beneficiary; and provided, further, that neither Pima County, Arizona nor the State of Arizona shall in any event be liable for the payment of the principal of or premium, if any, or
interest on the Bonds or for the performance of any pledge, mortgage, obligation or agreement created by or arising out of this Agreement or the issuance of the Bonds, and further that neither the Bonds 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, but shall be limited obligations of the Authority payable solely
out of the revenues derived from this Agreement, or from the sale of the Bonds, or from the investment or reinvestment of any of the foregoing, as provided herein and in the Indenture. 

SECTION 10.04. Amendments. This Agreement may be amended only by written agreement of the parties hereto,
subject to the limitations set forth herein and in the Indenture. 
 SECTION 10.05. Counterparts.
This Agreement 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 Agreement. 

SECTION 10.06. Severability. If any clause, provision or section of this Agreement shall, for any reason, be
held illegal or invalid by any court, the illegality or invalidity of such clause, provision or section shall not affect any of the remaining clauses, provisions or sections hereof, and this Agreement shall be construed and enforced as if such
illegal or invalid clause, provision or section had not been contained herein. In case any agreement or obligation contained in this Agreement be held to be in violation of law, then such agreement or obligation shall be deemed to be the agreement
or obligation of the Authority or the Company, as the case may be, to the full extent permitted by law. 

SECTION 10.07. Governing Law. The laws of the State of Arizona shall govern the construction and enforcement
of this Agreement, except that the provisions of Section 13.09 of the Indenture, construed as provided in Section 13.07 of the Indenture, shall apply to this Agreement as if contained herein. 

  
 16 

 SECTION 10.08. 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 contract 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 cancellation shall be effective when written notice from the chief executive officer
or governing body of the political subdivision is received by all other parties to the contract unless the notice specifies a later time. 
 The Company covenants and agrees not to employ as an employee, agent or, with respect to the subject matter of this Agreement, a consultant, any person significantly involved in initiating, negotiating,
securing, drafting or creating such Agreement on behalf of the Authority within three (3) years from the execution hereof, unless a waiver is provided by the Authority. 

SECTION 10.09. U.S.A. Patriot Act. The Company acknowledges that in accordance with Section 326 of the
U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that
establishes a relationship or opens an account with the Trustee. The Company agrees that it will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act. 

  
 17 

 IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to be duly executed as of the day and
year first above written. 
  

			
	THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE COUNTY OF PIMA
		
	 By:
	 	 /s/ Frank Y. Valenzuela

		 	Name: Frank Y. Valenzuela
		 	Title: President
	
	 TUCSON ELECTRIC POWER COMPANY

		
	 By:
	 	 /s/ Kentton C. Grant

		 	Name: Kentton C. Grant
		 	Title: Vice President and Treasurer

 Signature Page to Loan Agreement (2013 Series A) 

 EXHIBIT A 
 A portion of the costs of the construction, improvement or equipping of the following Facilities will be refinanced with the proceeds of The Industrial Development Revenue Bonds, 2013 Series A (Tucson
Electric Power Company Project) (the “Bonds”) issued by The Industrial Development Authority of the County of Pima and referred to in the foregoing Loan Agreement. 

 
  

Certain high voltage transmission facilities and related improvements used to transmit energy from Unit No. 2 of the Springerville
Generating Station located in Apache County, Arizona to the City of Tucson and environs in Pima County and to Fort Huachuca in adjacent Cochise County, Arizona and additions and improvements to the Company’s low-voltage transmission and
distribution facilities in the City of Tucson and environs in Pima County and to Fort Huachuca and additions and improvements to the Sundt Generating Station (formerly known as the Irvington Generating Station) located in the City of Tucson, more
particularly described in the Tax Certificate and Agreement, dated the date of issuance of the Bonds, between The Industrial Development Authority of the County of Pima and Tucson Electric Power Company. 

  
 A-1EX-10.7

 Exhibit 10.7 
 AMENDED AND RESTATED 
 TAX AGREEMENT 

Between 

CONTRAN CORPORATION 
 AND 
 KEYSTONE CONSOLIDATED
INDUSTRIES, INC. 
 AMENDED AND RESTATED TAX AGREEMENT (the
“Agreement”) dated as of December 1, 2012 by and among Contran Corporation (“Contran”), a Delaware corporation having its principal executive offices at Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, TX
75240 and Keystone Consolidated Industries, Inc. (“Keystone”), a Delaware corporation having its principal executive offices at Three Lincoln Centre, 5430 LBJ Freeway, Suite 1700, Dallas, TX 75240. 

WHEREAS, Contran and Keystone are eligible to file consolidated returns of federal income taxes and, subject to
certain jurisdictional limitations, will be subject to or continue to be subject to combined state and local tax reporting effective August 16, 2011 and for all periods thereafter; 

WHEREAS, this Agreement supercedes and amends and restates the Tax Agreement dated August 16, 2011 previously
entered into between Contran and Keystone; 
 WHEREAS, Contran and Keystone wish to provide for the
allocation of liabilities, and procedures to be followed, with respect to federal income taxes of Keystone and any subsidiaries of Keystone and with respect to certain combined state and local taxes on the terms of this Agreement. 

NOW, THEREFORE, in consideration of the promises and agreements herein contained, the parties hereto agree as
follows: 
 1. Definitions. As used in this Agreement, the following terms have the meanings set forth below: 

(a) Code: The Internal Revenue Code of 1986, as amended, and with respect to any section thereof any
successor provisions under such Code or any successor Code. 
 (b) Combined Foreign, State and
Local Taxes: For a taxable period, and with respect to a specified group of entities, the amount of all Foreign, State and Local Taxes, for which liability is computed on the basis of a combined, unitary or consolidated return (whether at the
initiative of the tax authority or of the taxpayer). 

 (c) Contran Corporation: A Delaware corporation that is the
common parent of a group of corporations, which group of corporations includes the Keystone Group, electing to file a consolidated federal income tax return. 

(d) Federal Taxes: All federal income taxes, together with all interest and penalties with respect
thereto. 
 (e) Foreign, State and Local Taxes: All foreign, state and local taxes, including
franchise and similar taxes, together with all interest and penalties with respect thereto. 

(f) Contran Group: Contran and each of its direct and indirect subsidiaries which would be a member of an
affiliated group, within the meaning of section 1504(a) of the Code, and eligible to file a combined, unitary or consolidated return of which Contran is the common parent (the “Contran Tax Group”), as such Contran Group is constituted from
time to time. For purposes of this Agreement (to the extent related to the determination of Combined Foreign, State and Local Taxes for the Contran Group), the term “Contran Group” shall include all direct and indirect subsidiaries of
Contran with reference to which Combined Foreign, State and Local Taxes are determined. 
 (g)
Keystone Group: Keystone and each of its direct or indirect subsidiaries which would be a member of an affiliated group, within the meaning of section 1504(a) of the Code, and eligible to file a combined, unitary or consolidated return of which
Contran was the common parent, as such Keystone Group is constituted from time to time. For purposes of this Agreement (to the extent related to the determination of Combined Foreign, State and Local Taxes for the Keystone Group) , the term
“Keystone Group” shall include all direct and indirect subsidiaries of Keystone with reference to which Combined, Foreign, State and Local taxes are determined. 

(h) Keystone Group Tax Liability: For a taxable period, the liability for Federal Taxes and Combined
Foreign, State and Local taxes, as applicable, that the Keystone Group would have had if it were not a member of the Contran Group or Contran Tax Group during such taxable period (or during any taxable period prior thereto, and instead filed a
separate consolidated or combined return, as applicable, for such taxable period); provided, however, that for purposes of determining such liability for a taxable period all tax elections shall be consistent with the tax elections made by Contran
for such period. In making such tax elections it is understood Contran will make those tax elections which are beneficial to the Contran Tax Group on a consolidated basis. Nevertheless, Contran will use its best efforts in the case of those
elections which affect the computation of the Keystone Group Tax Liability, to make elections in a reasonable manner so as to minimize the Keystone Group Tax Liability. For purposes of this Agreement, in determining the Combined Foreign, State and
Local Taxes for the Keystone Group, such determination shall be made based on a separate Foreign, State and Local Tax Calculation as if the Keystone Group were a separate unitary filer with respect to states and other jurisdictions in which Contran
is required to file on a unitary or combined basis. 
 (i) Foreign, State and Local Tax
Calculation: For each reporting period, the Tax Calculation will be based on the estimated taxable income of the Keystone Group for the taxable period that includes such reporting period, applied to current year tax rates and using the Keystone
Group’s applicable apportionment factors and state, local or other applicable adjustments, in each case based on the applicable combined or unitary return most recently-filed as of each reporting period by the Contran Tax Group for each
applicable tax jurisdiction (as modified for extraordinary, one-time event adjustments or tax law changes, if any, impacting the unitary calculation for the Keystone Group). 

 2. Contran as Agent. Contran shall be the sole agent for the Keystone
Group in all matters relating to the Keystone Group Tax Liability. The Keystone Group shall not (a) terminate such agency or (b) without the consent of Contran, participate, or attempt to participate, in any matters related to the Keystone
Group Tax Liability, including, but not limited to, preparation or filing of, or resolution of disputes, protests or audits with the Internal Revenue Service, state or local taxing authorities concerning, the Contran Tax Group’s consolidated
returns of Federal Taxes, returns of Combined Foreign, State and Local Taxes. The Keystone Group shall cooperate fully in providing Contran with all information and documents necessary or desirable to enable Contran to perform its obligations under
this Section, including completion of Internal Revenue Service and state or local tax audits in connection with such Keystone Group Tax Liability and determination of the proper liability for such Keystone Group Tax Liability. 

3. Liability for Taxes; Refunds. 

(a) Contran, as the common parent of the Keystone Group, shall be responsible for, and shall pay to the
applicable taxing authority the consolidated tax liability for Federal Taxes and Combined Foreign, State and Local Taxes for the Contran Group and has the sole right to any refunds received from such taxing authority, as applicable, subject to the
provisions of Sections 5 and 6 of this Agreement. 
 (b) Notwithstanding any other provision of
this Agreement, Keystone and each subsidiary of Keystone which is a member of the Keystone Group shall be severally liable to Contran for the Keystone Group Tax Liability. 

(c) Contran shall indemnify Keystone and hold it and the Keystone Group harmless from and against any
Federal Taxes and Combined Foreign, State and Local Taxes attributable to the Contran Group or any other member of the Contran Tax Group, other than the Keystone Group, as such taxes are determined under this and other tax sharing agreements.

 4. Tax Returns. Contran shall file on behalf of the Keystone Group any and all federal, foreign, state
and local tax returns that are required as they pertain to the Keystone Group Tax Liability. The Keystone Group, at Contran’s request, shall join in any applicable consolidated returns of Federal Taxes and any returns of Combined Foreign, State
and Local Taxes (for which returns have not been theretofore filed) and execute its consent, if such consent has not previously been executed, to each such filing on any form as may be prescribed for such

 
consent if such consent is required. The decision of Contran’s Vice President and Tax Director (or any other officer so designated by Contran) with responsibility for tax matters shall,
subject to the provisions of this Agreement, be binding in any dispute between Contran and the Keystone Group as to what tax position should be taken with respect to any item or transaction of the Keystone Group. The preceding sentence is limited to
the tax positions that affect the Keystone Group Tax Liability and the combined Keystone Group and Contran Tax Group. In addition, Contran and members of the Contran Group, including Keystone and members of the Keystone Group, shall provide each
other with such cooperation, assistance and information as each of them may request of the other with respect to the filing of any tax return, amended return, claim for refund or other document with any taxing authority. Keystone shall be solely
responsible for all taxes due for the Keystone Group with respect to tax returns filed by Keystone or a member of the Keystone Group that are required to be filed on a separate company basis, independent of Contran. 

5. Payment of Keystone Group Tax Liability for Federal Taxes and Foreign, State and Local Taxes. On or before each
date, as determined under section 6655 of the Code (with respect to Federal Taxes) and the applicable tax provisions with respect to any Foreign, State and Local Taxes due pursuant to this Agreement, for payment of an installment of estimated
Federal Taxes or any Foreign, State and Local Taxes, Keystone shall pay to Contran an amount equal to the installment which the Keystone Group would have been required to pay as an estimated payment of Federal Taxes to the Internal Revenue Service
or any Foreign, State and Local Taxes to the applicable taxing authority if it were filing a separate consolidated, combined or unitary return in respect of the Keystone Group Tax Liability. Any balance owed with respect to the Keystone Group Tax
Liability for such taxable period shall be paid to Contran on or before the 15th day of the third month after the close of such taxable period. If it is not possible to determine the amount of such balance on or before such day, (a) a
reasonable estimate thereof shall be paid on or before such day, (b) the amount of such balance shall be finally determined on or before the earlier of; (i) the 15th day of the ninth month after the close of such taxable period (or the
applicable due date for the Contran foreign, state or local combined or unitary return) and (ii) the date on which the Contran Group consolidated tax return for such period is filed with the Internal Revenue Service or the applicable tax
authority, and (c) any difference between the amount so determined and the estimated amount paid shall; (i) in the case of an underpayment, be promptly paid to Contran and (ii) in the case of an overpayment, be promptly refunded or
applied against the estimated Keystone Group Tax Liability for the immediately following tax period, at the option of Contran. If the overpayment is not applied to the immediately following tax period, such overpayment shall be promptly refunded to
the Keystone Group. As between the parties to this Agreement, the Keystone Group shall be solely responsible for the Keystone Group Tax Liability and shall have no responsibility for Federal Taxes of the Contran Group other than payment of the
Keystone Group Tax Liability in accordance with the terms of this Agreement. Notwithstanding the foregoing, Contran at its option may extend the payment due date for any of the payments referenced above. 

6. Refunds for Keystone Group Losses and Credits for Federal Taxes. If the calculation with respect to the
Keystone Group Tax Liability for Federal Taxes results in a net operating loss (“NOL”) for the current tax period that, in the absence of a Code Section 172(b)(3) election made by Contran, is carried back under Code Sections 172 and
1502 to a prior 

 
taxable period or periods of the Keystone Group with respect to which the Keystone Group previously made payments to Contran, then, in that event, Contran shall pay (or credit) Keystone an amount
equal to the tax refund to which the Keystone Group would have been entitled had the Keystone Group filed a separate consolidated federal income tax return for such year (but not in excess of the net aggregate amount of the Keystone Group Tax
Liability paid to Contran with respect to the preceding two taxable periods). If the calculation with respect to the Keystone Group Tax Liability results in an NOL for the current tax period, that subject to the Code Section 172(b)(3) election
made by Contran, is not carried back under Code Sections 172 and 1502 to a prior taxable period or periods of the Keystone Group with respect to which Keystone made payments to Contran or is not carried back because the Contran Tax Group does not
have a consolidated net operating loss for the current tax period, then, in that event such NOL shall be an NOL carryover to be used in computing the Keystone Group Tax Liability for future taxable periods, under the law applicable to NOL carryovers
in general, as such law applies to the relevant taxable period. Payments made pursuant to this Section 6 shall be made on the date that Contran (or any successor common parent of a tax group to which the Keystone Group is a member) files its
consolidated federal income tax return for the taxable period involved. Principles similar to those discussed in this Section 6 shall apply in the case of the utilization of all Keystone Group loss and credit carrybacks and carryovers.

 7. Refunds for Keystone Group Combined or Unitary Foreign, State and Local Losses and Credits. The
foregoing principles contained in Section 6 shall apply in similar fashion to any consolidated, unitary or combined foreign, state or other local income tax returns, containing any member of the Keystone Group, which may be filed based on the
Keystone Group Tax Liability for Foreign, State and Local Taxes. 
 8. Subsequent Adjustments. If any
settlement with the Internal Revenue Service, foreign, state or local tax authority or court decision which has become final results in any adjustment to any item of income, deduction, loss or credit to the Contran Group in respect of any taxable
period subject to this Agreement, which, in any such case, affects or relates to any member of the Keystone Group as constituted during such taxable period, the Keystone Tax Group Liability shall be redetermined to give effect to such adjustment as
if it had been made as part of or reflected in the original computation of the Keystone Tax Group Liability and proper adjustment of amounts paid or owing hereunder in respect of such liability and allocation shall be promptly made in light thereof.

 9. Amendments. This Agreement may be amended, modified, superseded or cancelled, and any of the terms,
covenants, or conditions hereof may be waived, only by a written instrument specifically referring to this Agreement and executed by all parties (or, in the case of a waiver, by or on behalf of the party waiving compliance). The failure of any party
at any time or times to require performance of any provision of this Agreement shall in no manner affect the right at a later time to enforce the same. No waiver by any party of any condition, or of any breach of any term or covenant, contained in
this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach, or a waiver of any other condition or of any breach of any other term or covenant. 

 10. Retention of Records. Contran shall retain all tax returns, tax
reports, related workpapers and all schedules (along with all documents that pertain to any such tax returns, reports or workpapers) that relate to a taxable period in which the Keystone Group is included in a consolidated or combined tax return
with Contran. Contran shall make such documents available to Keystone at Keystone’s request. Contran shall not dispose of such documents without the permission of Keystone. 

11. Headings. The headings of this Agreement are for convenience of reference only, and shall not in any way
affect the meaning or interpretation of this Agreement. 
 12. Governing Law. This Agreement shall be
construed and enforced in accordance with the laws of the State of Delaware without regard to conflicts of laws provisions. 
 13. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be an original, but all of which shall constitute but one agreement. 

14. Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective subsidiaries, and their respective successors and assigns. 
 15. Effective Date. This
Agreement shall be effective as of December 1, 2012. 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first above written. 
  

			
	CONTRAN CORPORATION
		
	 By:
	 	 /s/ Kelly D. Luttmer

		 	Kelly D. Luttmer
		 	Vice President and Tax Director

 ATTEST: 
  

	
	 /s/ Gregory M. Swalwell

	 Vice President and Controller

	 Contran Corporation

  

			
	KEYSTONE CONSOLIDATED
	INDUSTRIES, INC.
		
	 By:
	 	 Bert E. Downing, Jr.

		 	Bert E. Downing, Jr.
		 	Vice President, Chief Financial Officer, Corporate Controller and Treasurer

 ATTEST: 
  

	
	 /s/ Sandra K. Myers

	 Corporate Secretary

	 Keystone Consolidated Industries, Inc.

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