8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT

(DATE OF EARLIEST EVENT REPORTED): November 14, 2013

Commission File Number	Registrant; State of Incorporation; Address; and Telephone Number	IRS Employer Identification Number
1-13739	UNS ENERGY CORPORATION	86-0786732
	(An Arizona Corporation) 88 E. Broadway Boulevard Tucson, AZ 85701 (520) 571-4000
1-5924	TUCSON ELECTRIC POWER COMPANY	86-0062700
	(An Arizona Corporation) 88 E. Broadway Boulevard Tucson, AZ 85701 (520) 571-4000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.03 - Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On November 14, 2013, The Industrial Development Authority of the County of Apache (Authority) issued and sold in a private placement for the benefit of Tucson Electric Power Company (TEP) $100,000,000 aggregate principal amount of tax-exempt Industrial Development Revenue Bonds, 2013 Series A (Tucson Electric Power Company Springerville Project) (Bonds).

The Bonds were issued under an Indenture of Trust, dated as of November 1, 2013 (Indenture), between the Authority and U.S. Bank Trust National Association, as Trustee (Trustee). The Bonds are payable solely from payments to be made by TEP pursuant to a Loan Agreement, dated as of November 1, 2013, between TEP and the Authority (Loan Agreement), pursuant to which the Authority has loaned the proceeds of the Bonds to TEP. Pursuant to the Loan Agreement, TEP is obligated to make payments in such amounts and at such times as will be sufficient to pay, when due, the principal of, and premium, if any, and interest on the Bonds and purchase price of the Bonds. TEP’s obligations under the Loan Agreement are unsecured.

The Bonds accrue interest at the Lender Rate, established monthly, from the date of original issuance unless and until the interest rate mode is converted to another permitted interest rate mode. The Bonds will be subject to optional, extraordinary optional and mandatory redemption prior to maturity, and to optional and mandatory tender for purchase in certain circumstances, all as described in the Indenture. Unless converted to another permitted interest rate mode earlier, the initial Lender Rate period runs from the date of original issuance through November 14, 2018, at which time the Bonds will be subject to mandatory tender for purchase. The Bonds mature on April 1, 2032.

Concurrently with the issuance of the Bonds, TEP entered into a Lender Rate Mode Covenants Agreement, dated as of November 14, 2013 (Covenants Agreement), with STI Institutional & Government, Inc., the purchaser of the Bonds (Lender).

The Covenants Agreement contains covenants and events of default which are the same, in all material respects, as those in the TEP Credit Agreement, including restrictions on mergers and sale of assets and requiring TEP not to exceed a maximum leverage ratio. Under the terms of the Covenants Agreement, TEP may pay dividends to UNS Energy so long as it maintains compliance with the agreement.

Events of default under the Covenants Agreement include the failure to make payments required under the Loan Agreement which result in a failure of the Authority to make required payments on the Bonds, failure to comply with the covenants contained in the Covenants Agreement, change in control, as defined, or certain bankruptcy events with respect to TEP or certain subsidiaries. In addition, an event of default under the Covenants Agreement would include the failure of TEP or certain subsidiaries to make required payments on indebtedness in excess of $30 million or the events giving the holders of such indebtedness the right to require repayment of such indebtedness.

The occurrence and continuance of an event of default under the Covenants Agreement may, among other remedies, entitle the Lender to notify the Trustee of such event of default and effect a mandatory purchase of the Bonds.

The proceeds of the sale of the Bonds, together with funds provided by TEP, will be used in the redemption, at par, on December 16, 2013, of all $100,000,000 in aggregate principal amount of the Authority’s Industrial Development Revenue Bonds, 1983 Series A (Tucson Electric Power Company Springerville Project). The bonds to be redeemed bear interest at a variable rate of interest and have a maturity date of December 15, 2018. The redemption price of the bonds to be redeemed will be paid by drawing on a letter of credit held by the trustee of such bonds and the proceeds of the sale of the Bonds, together with funds provided by TEP, will be used to reimburse the issuer of the letter of credit. The redemption will reduce the $186 million letter of credit facility supporting tax-exempt bonds under the TEP Credit Agreement to approximately $82 million.

The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the complete text of the Indenture, Loan Agreement and Covenants Agreement.

Item 9.01 - Financial Statements and Exhibits.

(d) Exhibits

4(a)	Indenture of Trust, dated as of November 1, 2013, between The Industrial Development Authority of the County of Apache and U.S. Bank Trust National Association, authorizing Industrial Development Revenue Bonds, 2013 Series A (Tucson Electric Power Company Springerville Project).
4(b)	Loan Agreement, dated as of November 1, 2013, between The Industrial Development Authority of the County of Apache and Tucson Electric Power Company, relating to Industrial Development Revenue Bonds, 2013 Series A (Tucson Electric Power Company Springerville Project).
4(c)	Lender Rate Mode Covenants Agreement, dated as of November 1, 2013, between Tucson Electric Power Company and STI Institutional & Government, Inc.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: November 14, 2013	UNS ENERGY CORPORATION ____________________________ (Registrant) /s/ Kevin P. Larson
	Senior Vice President and Chief Financial Officer
Date: November 14, 2013	TUCSON ELECTRIC POWER COMPANY ___________________________ (Registrant) /s/ Kevin P. Larson
	Senior Vice President and Chief Financial Officer

EX-4.A

INDENTURE OF TRUST
(2013 SERIES A)

BETWEEN

THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE COUNTY OF APACHE

AND

U.S. BANK TRUST NATIONAL ASSOCIATION

DATED AS OF NOVEMBER 1, 2013

Authorizing

The Industrial Development Authority of the County of Apache
Industrial Development Revenue Bonds,
2013 Series A
(Tucson Electric Power Company Springerville Project)

TABLE OF CONTENTS^* 

		Page
	ARTICLE I
	DEFINITIONS
	2
SECTION 1.01.	Definitions	2
	ARTICLE II
	THE BONDS
	21
SECTION 2.01.	Creation of Bonds	21
SECTION 2.02.	Denominations and Maturity; Interest Rates	21
SECTION 2.03.	Form of Bonds	34
SECTION 2.04.	Execution of Bonds	35
SECTION 2.05.	Authentication of Bonds	36
SECTION 2.06.	Bonds Not General Obligations	36
SECTION 2.07.	Prerequisites to Authentication of Bonds	36
SECTION 2.08.	Lost or Destroyed Bonds or Bonds Canceled in Error	37
SECTION 2.09.	Transfer, Registration and Exchange of Bonds	37
SECTION 2.10.	Other Obligations	39
SECTION 2.11.	Temporary Bonds	39
SECTION 2.12.	Cancellation of Bonds	39
SECTION 2.13.	Payment of Principal and Interest	40
SECTION 2.14.	Applicability of Book-Entry Provisions	40
SECTION 2.15.	Disposition of Proceeds	40
SECTION 2.16.	CUSIP Numbers	40
	ARTICLE III
	REDEMPTION OF BONDS
	40
SECTION 3.01.	Redemption Provisions	41
SECTION 3.02.	Selection of Bonds to be Redeemed	43
SECTION 3.03.	Procedure for Redemption	43
SECTION 3.04.	Payment of Redemption Price	44
SECTION 3.05.	No Partial Redemption After Default	45
SECTION 3.06.	Purchase in Lieu of Redemption	45
	ARTICLE IV
	THE BOND FUND
	45
SECTION 4.01.	Creation of Bond Fund	45
SECTION 4.02.	Liens	47
SECTION 4.03.	Custody of Bond Fund; Withdrawal of Moneys	47
SECTION 4.04.	Bonds Not Presented for Payment	47
SECTION 4.05.	Moneys Held in Trust	47
	ARTICLE V
	PURCHASE AND REMARKETING OF BONDS

*    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

	48
SECTION 5.01.	Purchase of Bonds	48
SECTION 5.02.	Remarketing of Bonds	51
SECTION 5.03.	Purchase Fund; Purchase of Bonds Delivered to Trustee	51
SECTION 5.04.	Delivery of Remarketed or Purchased Bonds	53
SECTION 5.05.	Bonds Pledged to the Credit Facility Issuer	53
SECTION 5.06.	Drawings on Credit Facility	54
SECTION 5.07.	Delivery of Proceeds of Sale	55
SECTION 5.08.	Limitations on Purchase	55
SECTION 5.09.	Duties of the Trustee with Respect to Tenders	55
	ARTICLE VI
	INVESTMENTS
	56
SECTION 6.01.	Investments	56
	ARTICLE VII
	CREDIT FACILITIES
	57
SECTION 7.01.	Letter of Credit	57
SECTION 7.02.	Termination	57
SECTION 7.03.	Alternate Credit Facilities	58
SECTION 7.04.	Mandatory Purchase of Bonds	59
SECTION 7.05.	Notices	59
SECTION 7.06.	Other Credit Enhancement; No Credit Facility	61
	ARTICLE VIII
	GENERAL COVENANTS
	61
SECTION 8.01.	No General Obligations	61
SECTION 8.02.	Performance of Covenants of the Authority; Representations	61
SECTION 8.03.	Maintenance of Rights and Powers; Compliance with Laws	62
SECTION 8.04.	Enforcement of Obligations of the Company; Amendments	62
SECTION 8.05.	Further Instruments	62
SECTION 8.06.	No Disposition of Trust Estate	62
SECTION 8.07.	Financing Statements	62
SECTION 8.08.	Tax Covenants; Rebate Fund	62
SECTION 8.09.	Notices from Trustee	63
	ARTICLE IX
	DEFEASANCE
	64
SECTION 9.01.	Defeasance	64
	ARTICLE X
	DEFAULTS AND REMEDIES
	66
SECTION 10.01.	Events of Default	66
SECTION 10.02.	Remedies	67
SECTION 10.03.	Restoration to Former Position	68
SECTION 10.04.	Owners’ Right to Direct Proceedings	68

SECTION 10.05.	Limitation on Owners’ Right to Institute Proceedings	68
SECTION 10.06.	No Impairment of Right to Enforce Payment	68
SECTION 10.07.	Proceedings by Trustee without Possession of Bonds	69
SECTION 10.08.	No Remedy Exclusive	69
SECTION 10.09.	No Waiver of Remedies	69
SECTION 10.10.	Application of Moneys	69
SECTION 10.11.	Severability of Remedies	70
	ARTICLE XI
	TRUSTEE
	70
SECTION 11.01.	Acceptance of Trusts	70
SECTION 11.02.	No Responsibility for Recitals	70
SECTION 11.03.	Limitations on Liability	70
SECTION 11.04.	Compensation, Expenses and Advances	70
SECTION 11.05.	Notice of Events of Default	71
SECTION 11.06.	Action by Trustee	71
SECTION 11.07.	Good Faith Reliance	72
SECTION 11.08.	Dealings in Bonds and with the Authority and the Company	72
SECTION 11.09.	Allowance of Interest	72
SECTION 11.10.	Construction of Indenture	72
SECTION 11.11.	Resignation of Trustee	73
SECTION 11.12.	Removal of Trustee	73
SECTION 11.13.	Appointment of Successor Trustee	73
SECTION 11.14.	Qualifications of Successor Trustee	74
SECTION 11.15.	Judicial Appointment of Successor Trustee	74
SECTION 11.16.	Acceptance of Trusts by Successor Trustee	74
SECTION 11.17.	Successor by Merger or Consolidation	74
SECTION 11.18.	Standard of Care	75
SECTION 11.19.	Notice to Owners of Bonds of Event of Default	75
SECTION 11.20.	Intervention in Litigation of the Authority	75
SECTION 11.21.	Credit Facilities	75
SECTION 11.22.	Force Majeure	75
	ARTICLE XII
	THE REMARKETING AGENT
	76
SECTION 12.01.	The Remarketing Agent	76
SECTION 12.02.	Notices	77
SECTION 12.03.	Several Capacities	77
	ARTICLE XIII
	EXECUTION OF INSTRUMENTS BY OWNERS OF BONDS AND PROOF OF OWNERSHIP OF BONDS
	77
SECTION 13.01.	Execution of Instruments; Proof of Ownership	77
	ARTICLE XIV
	MODIFICATION OF THIS INDENTURE AND THE LOAN AGREEMENT
	77
SECTION 14.01.	Limitations	77

SECTION 14.02.	Supplemental Indentures without Owner Consent	78
SECTION 14.03.	Supplemental Indentures with Consent of Owners	79
SECTION 14.04.	Effect of Supplemental Indenture	80
SECTION 14.05.	Consent of the Company or Credit Facility Issuer	80
SECTION 14.06.	Amendment of Loan Agreement without Consent of Owners	81
SECTION 14.07.	Amendment of Loan Agreement with Consent of Owners	81
SECTION 14.08.	Company as Owner	82
SECTION 14.09.	Administrative Agent acting for Owners	82
	ARTICLE XV
	MISCELLANEOUS
	82
SECTION 15.01.	Successors of the Authority	82
SECTION 15.02.	Parties in Interest	82
SECTION 15.03.	Severability	82
SECTION 15.04.	No Personal Liability of Authority Officials	82
SECTION 15.05.	Bonds Owned by the Authority or the Company	83
SECTION 15.06.	Counterparts	83
SECTION 15.07.	Governing Law	83
SECTION 15.08.	Notices	83
SECTION 15.09.	Holidays	84
SECTION 15.10.	Statutory Notice Regarding Cancellation of Contracts	84
SECTION 15.11.	Rating Agency Notices	84
Exhibit A –	Form of 2013 Series A Bond	A-1
Exhibit B –	Form of Endorsement of Transfer	B-1
Exhibit C –	Form of Certificate of Authentication	C-1

INDENTURE OF TRUST

THIS INDENTURE OF TRUST (2013 Series A), dated as of November 1, 2013 (this “Indenture”), between THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE COUNTY OF APACHE, 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, a national banking association, as trustee (hereinafter called the “Trustee”),

W I T N E S S E T H:

WHEREAS, the Authority is authorized and empowered under Title 35, Chapter 5, Arizona Revised Statutes, as amended (the “Act”), to issue its bonds in accordance with the Act and to make secured or unsecured loans for the purpose of financing or refinancing the acquisition, construction, improvement or equipping of projects consisting of land, any building or other improvement, and all real and personal properties, including machinery and equipment, whether or not now in existence or under construction, whether located within or without the State of Arizona or Apache 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 to further advance the interest of the Authority or the public and in the public interest; and

WHEREAS, the Authority has heretofore issued and sold on behalf of Tucson Electric Power Company, an Arizona corporation (the “Company”), $100,000,000 aggregate principal amount of The Industrial Development Authority of the County of Apache Industrial Development Revenue Bonds, 1983 Series A (Tucson Electric Power Company Springerville Project) (the “1983 Bonds”), all of which are currently outstanding; and

WHEREAS, the proceeds of the 1983 Bonds were loaned to the Company to finance a portion of the costs of certain facilities for the furnishing of electric energy (hereinafter collectively referred to as the “Facilities”), as more fully described in Exhibit A to the Loan Agreement, dated as of November 1, 2013 (the “Loan Agreement”), between the Authority and the Company; and

WHEREAS, the Authority proposes to issue and sell $100,000,000 aggregate principal amount of The Industrial Development Authority of the County of Apache Industrial Development Revenue Bonds, 2013 Series A (Tucson Electric Power Company Springerville Project) (the “Bonds”) for the purpose of refinancing the portion of the costs of the above-described Facilities previously financed with the proceeds of the 1983 Bonds; and

WHEREAS, the proceeds of the Bonds will be applied as set forth in Section 4.03 of the Loan Agreement to redeem the 1983 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 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 (as hereinafter defined) 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 IX 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 4.04 hereof, then and in that case these presents and the estate and rights hereby granted shall cease, terminate and be void, and thereupon the Trustee shall cancel and discharge this Indenture and execute and deliver to the Authority and the Company such instruments in writing as shall be requisite to evidence the discharge hereof; otherwise this Indenture is to be and remain in full force and effect.

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

ARTICLE I
DEFINITIONS

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

Act:

2

“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.

Administrative Agent;

“Administrative Agent” shall mean, such financial institution as may be appointed as administrative agent pursuant to any Lender Mode Covenants Agreement then in effect. For any Lender Interest Rate Period during which more than one Lender is an Owner, an Administrative Agent must be appointed pursuant to the Lender Mode Covenants Agreement.

Affiliate:

“Affiliate” shall mean a Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person. For this purpose “control” means the direct or indirect ownership of fifty percent (50%) or more of the outstanding capital stock or other ownership interest.

Alternate Credit Facility:

“Alternate Credit Facility” shall mean any Credit Facility delivered to the Trustee as a replacement for or in substitution of an existing Credit Facility pursuant to Section 7.03.

Applicable Margin:

“Applicable Margin” shall mean, for any day, the applicable rate per annum set forth below under the caption “Applicable Margin” based on the Applicable Rating Level on such date:

Applicable Rating Level	Applicable Margin
Level I	1.00%
Level II	1.125%
Level III	1.25%
Level IV	1.50%
Level V	1.75%
Level VI	2.00%

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For purposes of the foregoing, any change in the Applicable Margin will occur automatically without prior notice upon any change in the Applicable Rating Level. Each change in the Applicable Margin as provided herein shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change. If interest is determined with reference to the Base Rate at any time in accordance with Section 2.02(c)(vii) hereof, the Applicable Margin in each case shall be 100 basis points lower than the applicable amount set forth above.

Applicable Rating Level:

“Applicable Rating Level” shall mean, for any day, the level set forth below that corresponds to the ratings by S&P and Moody’s applicable on such date to the senior unsecured long-term debt, without third-party enhancement, of the Company applicable on such date):

	S&P	Moody’s
Level I	A- and higher	A3 and higher
Level II	BBB+	Baa1
Level III	BBB	Baa2
Level IV	BBB-	Baa3
Level V	BB+	Ba1
Level VI	BB and lower	Ba2 and lower

For purposes of the foregoing, (a) if either Moody’s or S&P shall not have in effect a rating for the senior unsecured long-term debt, without third-party enhancement, of the Company (other than by reason of the circumstances referred to in the last sentence of this definition), then such rating agency shall be deemed to have established a rating of Level VI; (b) if the ratings for the senior unsecured long-term debt, without third-party enhancement, of the Company established or deemed to have been established by Moody’s and S&P shall fall within different Applicable Rating Levels, the Applicable Rating Level shall be based on the higher of the two ratings unless one of the ratings is two or more Applicable Rating Levels lower than the other, in which case the Applicable Rating Level shall be determined by reference to the Applicable Rating Level next below that of the higher of the two ratings; and (c) if the ratings for the senior unsecured long-term debt, without third-party enhancement, of the Company established or deemed to have been established by Moody’s and S&P shall be changed (other than as a result of a change in the rating system of Moody’s or S&P), such change shall be effective as of the close of business on the date on which it is first announced by the applicable rating agency. Each change in the Applicable Rating Level shall apply during the period commencing on the effective date of such change as provided herein and ending on the date immediately preceding the effective date of the next such change to the Applicable Rating Level. If the rating system of Moody’s or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations or corporations, as applicable, the Company and the Lender shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such rating agency and, pending the

4

effectiveness of any such amendment, the Applicable Rating Level shall be determined by reference to the rating most recently in effect prior to such change or cessation.

Authority:

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

Authority Administration Fee:

“Authority Administration Fee” means the amount of $5,000 to be paid to the Authority on the date the Bonds are issued and thereafter, the amount of $5,000 to be paid to the Authority on each May 1 and November 1, commencing May 1, 2014, the Authority Administration Fee to be paid by the Company pursuant to the Loan Agreement and collected by the Trustee and paid over to the Authority.

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.

Authorized Credit Facility Representative:

“Authorized Credit Facility Representative” shall mean each person at the time designated to act on behalf of the Credit Facility Issuer by written certificate furnished to the Trustee containing the specimen signature of such person and signed on behalf of the Credit Facility Issuer by an authorized representative of the Credit Facility Issuer.

Authorized Officer of the Authority:

“Authorized Officer of the Authority” shall mean each (i) each member of the Board of Directors of the Authority and (ii) any other person at the time designated to act on behalf of the Authority by written certificate furnished to the Trustee containing the specimen signature of such person and signed on behalf of the Authority by an Authorized Officer of the Authority.

Bankruptcy Counsel:

“Bankruptcy Counsel” shall mean nationally recognized counsel experienced in bankruptcy matters as selected by the Company.

Base Rate:

5

“Base Rate” shall mean the higher of (i) the per annum rate which the Lender (or its commercial banking affiliate) publicly announces from time to time to be its prime lending rate, as in effect from time to time and (ii) the Federal Funds Rate, as in effect from time to time, plus 0.50% per annum. Any change in such rates shall be effective as of the date of such change in such rates.

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.

Bond Register:

“Bond Register” shall mean the register described in Section 2.03 hereof.

Bonds:

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

Book-Entry Form; Book-Entry System:

“Book-Entry Form” or “Book-Entry System” means a form or system, as applicable, under which physical Bond certificates in fully registered form are registered only in the name of a Depository or its nominee as Owner, with the physical Bond certificates held by and “immobilized” in the custody of the Depository, and the book-entry system maintained by and the responsibility of others than the Authority or the Trustee is the record that identifies and records the transfer of the interests of the owners of book-entry interests in those Bonds.

Business Day:

“Business Day” shall mean any day other than (i) a Saturday or Sunday or legal holiday or a day on which banking institutions in the city or cities in which the Principal Offices of (a) the Trustee, (b) during a Lender Rate Period, the Administrative Agent, or (c) the Credit Facility Issuer (or, in the case of a foreign bank, the licensed branch thereof which has issued, or will honor draws upon, any such Credit Facility), are located are authorized or required by law or executive order to close or (ii) a day on which the New York Stock Exchange or, if a Remarketing Agent shall have been appointed, the principal office of the Remarketing Agent is closed.

Change of Law:

6

“Change of Law” shall mean the adoption or taking effect after the Date of the Bonds of any law, rule or regulation that causes the interest payable on the Bonds: (i) to be included for federal income tax purposes in the gross income of the owners thereof in whole or in part, other than any owner of a Bond who is a “substantial user” of the Facilities or other facilities deemed financed or refinanced by the Bonds for federal income tax purposes or a “related person” within the meaning of Section 103(b)(13) of the 1954 Code or Section 147(a) of the 1986 Code; or (ii) to become subject to alternative minimum tax.

Commercial Paper Rate:

“Commercial Paper Rate” shall mean the Interest Rate Mode for the Bonds in which the interest rate on such Bonds is determined in accordance with Section 2.02(c)(i).

Commercial Paper Rate Period:

“Commercial Paper Rate Period” shall mean with respect to any Bond bearing interest at a Commercial Paper Rate, each period determined for such Bond in accordance with Section 2.02(c)(i).

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.

Company Account:

“Company Account” shall mean the account of that name established in the Bond Fund pursuant to Section 4.01.

Company Fund:

“Company Fund” shall mean the fund created by Section 5.07 hereof.

Conversion:

“Conversion” shall mean, with respect to a Bond, any conversion from time to time in accordance with the terms of this Indenture of that Bond, in whole, from one Interest Rate Mode to another Interest Rate Mode, including any conversion from a Lender Rate Period to a new Lender Rate Period, from a Ten Year Call Term Rate Period to a new Ten Year Call Term Rate Period, from a Five Year Call Term Rate Period to a new Five Year Call Term Rate Period and from a No Call Term Rate Period to a new No Call Term Rate Period.

Conversion Date:

“Conversion Date” shall mean the date on which any Conversion becomes effective.

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Credit Facility:

“Credit Facility” means any direct-pay letter of credit or any bond insurance policy, guaranty, surety bond, line of credit, revolving credit agreement, standby bond purchase agreement or other agreement or security device, and providing for (i) payment of the principal, interest and redemption premium on the Bonds or a portion thereof, (ii) payment of the purchase price of the Bonds or (iii) both (i) and (ii), including, without limitation, any Letter of Credit delivered pursuant to Section 7.01, or any Alternate Credit Facility delivered to the Trustee pursuant to Section 7.03.

Credit Facility Account:

“Credit Facility Account” shall mean the account of that name established in the Bond Fund pursuant to Section 4.01.

Credit Facility Issuer:

“Credit Facility Issuer” shall mean the institution issuing any Credit Facility, including, without limitation, an issuer of a Letter of Credit, or the institution issuing any Alternate Credit Facility. “Principal Office” of any Credit Facility Issuer shall mean the principal office thereof designated in the corresponding Credit Facility and which shall mean, in the case of a foreign bank, the licensed branch or agency thereof in the United States which has issued the Credit Facility. References to the Credit Facility Issuer in this Indenture shall be given no effect unless there is a Credit Facility delivered to and held by the Trustee pursuant to Article VII.

Credit Facility Proceeds Account:

“Credit Facility Proceeds Account” shall mean the account of that name established in the Purchase Fund pursuant to Section 5.03.

Daily Rate:

“Daily Rate” shall mean the Interest Rate Mode for Bonds in which the interest rate on such Bonds is determined on each Business Day in accordance with Section 2.02(c)(ii).

Daily Rate Period:

“Daily Rate Period” shall mean the period beginning on, and including, the Conversion Date of the Bonds to the Daily Rate and ending on, and including, the day preceding the next Business Day and each period thereafter beginning on, and including, a Business Day and ending on, and including, the day preceding the next Business Day until the day preceding the earlier of the Conversion of such Bonds to a different Interest Rate Mode or the maturity of the Bonds.

Date of the Bonds:

“Date of the Bonds” shall mean November 14, 2013.

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Depository:

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

Determination of Taxability:

“Determination of Taxability” shall mean a final determination by a court of competent jurisdiction or an administrative agency, to the effect that 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 other facilities deemed financed or refinanced by the Bonds for federal income tax purposes or a “related person” within the meaning of Section 103(b)(13) of the 1954 Code or Section 147(a) of the 1986 Code. No determination by any court or administrative agency shall be considered final for the purposes of this definition 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.

DTC:

“DTC” shall mean The Depository Trust Company.

Electronic Notice:

“Electronic Notice” shall mean notice transmitted by facsimile transmission or any other electronic method acceptable to both the sending and receiving party including, without limitation, email in PDF format.

Eligible Account:

“Eligible Account” shall mean an account that is either (a) maintained with a federal or state-chartered depository institution or trust company that has an S&P short-term debt rating of at least ‘A-2’ (or, if no short-term debt rating, a long-term debt rating of ‘BBB+’); or (b) maintained with the corporate trust department of a federal depository institution or state-chartered depository institution subject to regulations regarding fiduciary funds on deposit, which, in either case, has corporate trust powers and is acting in its fiduciary capacity.

Event of Bankruptcy

“Event of Bankruptcy” shall mean a petition by or against the Company or by the Authority under any bankruptcy act or under any similar act which may be enacted which shall have been filed (other than bankruptcy proceedings instituted by the Company or the Authority against third parties) unless such petition shall have been dismissed and such dismissal shall be final and not subject to appeal.

Event of Default

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“Event of Default” shall have the meaning set forth in Section 10.01.

Facilities:

“Facilities” shall mean of certain facilities for the furnishing of electric energy, as more fully described in Exhibit A to the Loan Agreement.

Federal Funds Rate:

“Federal Funds Rate”shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the next 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers, as published by the Federal Reserve Bank of New York on the next succeeding Business Day or if such rate is not so published for any Business Day, the Federal Funds Rate for such day shall be the average rounded upwards, if necessary, to the next 1/100th of 1% of the quotations for such day on such transactions received by the Lender from three Federal funds brokers of recognized standing selected by the Lender.

Five Year Call Term Rate:

“Five Year Call Term Rate” shall mean the Interest Rate Mode for Bonds in which the interest rate on such Bonds is determined in accordance with Section 2.02(c)(v) and the Bonds are subject to redemption as described in Section 3.01(a)(iv).

Five Year Call Term Rate Period:

“Five Year Call Term Rate Period” shall mean any period established by the Company pursuant to Section 2.02(e)(i) and beginning on, and including, the Conversion Date of Bonds to the Five Year Call Term Rate and ending on, and including, the day preceding the earliest of the change to a new Five Year Call Term Rate Period, the Conversion of such Bonds to a different Interest Rate Mode or the maturity of the Bonds.

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, depository 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

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otherwise required by law, such custodian shall be obligated to pay to the holders of such certificates, depository receipts or other instruments the full amount received by such custodian in respect of such obligations or specific payments and shall not be permitted to make any deduction therefrom.

Indenture:

“Indenture” shall mean this Indenture of Trust, dated as of November 1, 2013, between the Authority and the Trustee, and any and all modifications, alterations, amendments and supplements thereto.

Initial Lender Rate Conversion Date:

“Initial Lender Rate Conversion Date” shall mean the first date to occur on which the Bonds shall no longer bear interest at a Lender Rate established pursuant to Section 2.02(c)(vii)(A)(1) hereof.

Initial Lender Rate Period:

“Initial Lender Rate Period”shall mean the period from the Date of the Bonds to and including the earlier of November 14, 2018 or, if there should be a Conversion prior to November 14, 2018, the date immediately preceding the first Conversion Date, during which period all of the Bonds shall bear interest at Lender Rates established pursuant to Section 2.02(c)(vii)(A)(1) hereof for Lender Rate Interest Periods of one month in duration.

Initial Purchaser:

“Initial Purchaser” shall mean STI Institutional & Government, Inc., a Delaware corporation.

Interest Payment Date:

“Interest Payment Date” shall mean (a) (i) if the Interest Rate Mode is the Daily Rate or the Weekly Rate, the fifteenth (15th) calendar day of each month, or, if any such day shall not be a Business Day, the next Business Day, (ii) if the Interest Rate Mode is the Commercial Paper Rate, the day following the last day of each Commercial Paper Rate Period for such Bond, (iii) if the Interest Rate Mode is the Ten Year Call Term Rate, the Five Year Call Term Rate, or the No Call Term Rate, any day in the sixth calendar month following the Conversion to that Ten Year Call Term Rate, Five Year Call Term Rate or No Call Term Rate and in each sixth calendar month thereafter, as designated by the Company at the time of such Conversion, and in all cases, on the day after the last day of the Ten Year Call Term Rate Period, Five Year Call Term Rate Period or the No Call Term Rate Period (whether or not a Business Day), and (iv) if the Interest Rate Mode is the Lender Rate, the first Business Day of each month, commencing the first Business Day of December 2013 (i.e., December 2, 2013) and (b) the Conversion Date, including the Conversion Date which occurs on the effective date of a change to a new Ten Year

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Call Term Rate Period, Five Year Call Term Rate Period or No Call Term Rate Period for such Bond. In any case, the final Interest Payment Date shall be the maturity date.

Interest Period:

“Interest Period” shall mean for any Bond the period from, and including, each Interest Payment Date for such Bond to, and including, the day next preceding the next Interest Payment Date for such Bond, provided, however, that the first Interest Period for any Bond shall begin on (and include) the Date of the Bonds and the final Interest Period shall end the day next preceding the maturity date of the Bonds and provided, further, that, each Lender Rate Interest Period shall be the period established in accordance with the definition thereof.

Interest Rate Mode:

“Interest Rate Mode” shall mean the Commercial Paper Rate, the Daily Rate, the Weekly Rate, the Lender Rate, the Five Year Call Term Rate, the Ten Year Call Term Rate and the No Call Term Rate.

Investment Securities:

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

Lender:

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“Lender” shall mean the Owner of any of the Bonds during a Lender Rate Interest Period, which shall be, upon the initial authentication and delivery of the Bonds, the Initial Purchaser. To the extent that the Bonds are owned by more than one Owner, then an Administrative Agent is required to be appointed pursuant to the Lender Mode Covenants Agreement then in effect and the Administrative Agent shall be deemed to be the Lender and the Owner for purposes of all actions including, without limitation, the determination of the interest rate on the Bonds, voting and waiving of any rights of the Owners, to be taken by the Lender or the Owners of the Bonds while such Lender Mode Covenants Agreement is in effect.

Lender Mode Covenants Agreement:

“Lender Mode Covenants Agreement” shall mean (i) during the Initial Lender Rate Interest Period, the Lender Rate Mode Covenants Agreement, dated as of November 1, 2013, between the Company, and the Initial Purchaser, as the same may be amended, restated, supplemented, extended or otherwise modified from time to time; and (ii) during any subsequent Lender Rate Interest Period, the credit agreement, covenants agreement or similar agreement between or among the Company, and the applicable Lenders or Administrative Agent, relating to the Bonds during such Lender Rate Interest Period.

Lender Rate:

“Lender Rate”shall mean the Interest Rate Mode for the Bonds in which the interest rate on theBonds is determined in accordance with Section 2.02(c)(vii) hereof.

Lender Rate Interest Period:

“Lender Rate Interest Period”shall mean (a) during the Initial Lender Rate Period, each calendar month; provided that the first Lender Rate Interest Period shall begin on the Date of the Bonds and shall end on November 30, 2013, and (b) during any Lender Rate Interest Period after the Initial Lender Rate Period, a period of time established by the Lender and approved by the Company as described in Section 2.02(c)(vii)(A)(2).

Lender Rate Period:

“Lender Rate Period” shall mean the Initial Lender Rate Period and each subsequent period during which the Bonds bear interest at the Lender Rate as established pursuant to Section 2.02(c)(vii) hereof and ending on, and including, the day preceding the next Business Day until the day preceding the earlier of the Conversion of such Bonds to a different Lender Rate Period or Interest Rate Mode or the maturity of the Bonds.

Letter of Credit:

“Letter of Credit” shall mean an irrevocable direct-pay letter of credit issued and delivered to the Trustee in accordance with Section 7.01.

LIBOR:

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“LIBOR” shallmean that rate per annum which is equal to the quotient of: (i) the rate per annum equal to the offered rate for deposits in U.S. Dollars for a one month period, which rate appears on that page of Bloomberg reporting service, or such similar service as determined by the Lender, that displays British Bankers’ Association interest settlement rates for deposits in U.S. Dollars, as of 11:00 A.M. (London, England time) two Business Days prior to (a) the first day of the Initial Lender Rate Period and (b) thereafter, the first day of each month while the Bonds bear interest at the Lender Rate (the “Rate Determination Date”); provided, that if no such offered rate appears on such page, the rate used for such month will be the per annum rate of interest determined by the Lender to be the rate at which U.S. dollar deposits for the month, are offered to the Lender (or its commercial banking affiliate) in the London Inter-Bank Market as of 11:00 A.M. (London, England time), on the day which is two Business Days prior to the Rate Determination Date, divided by (ii) a percentage equal to 1.00 minus the maximum reserve percentages (including any emergency, supplemental, special or other marginal reserves) expressed as a decimal (rounded upward to the next 1/100th of 1%) in effect on any day to which the Lender (or its commercial banking affiliate) is subject with respect to any LIBOR loan pursuant to regulations issued by the Board of Governors of the Federal Reserve System with respect to eurocurrency funding (currently referred to as “eurocurrency liabilities” under Regulation D). This percentage will be adjusted automatically on and as of the effective date of any change in any reserve percentage.

Loan Agreement:

“Loan Agreement” shall mean the Loan Agreement, dated as of November 1, 2013, 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.

Margin Rate Factor:

“Margin Rate Factor” means the product of (a) one minus the Maximum Federal Corporate Tax Rate multiplied by (b) 1.53846. The Margin Rate Factor shall be 1.0 so long as the Maximum Federal Corporate Tax Rate shall be 35% and thereafter shall increase or decrease from time to time effective as of the effective date of any decrease or increase (respectively and as applicable) in the Maximum Federal Corporate Tax Rate.

Maximum Federal Corporate Tax Rate:

“Maximum Federal Corporate Tax Rate” means the maximum rate of income taxation imposed on corporations pursuant to Section 11(b) of the 1986 Code, as in effect from time to time (or, if as a result of a change in the 1986 Code the rate of income taxation imposed on corporations shall not be applicable to the Owners, the maximum statutory rate of federal income taxation which could apply to the Owners).

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Moody’s:

“Moody’s” shall mean Moody’s Investors Service, Inc., a Delaware corporation, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated in writing by the Company.

1954 Code:

“1954 Code” shall mean the Internal Revenue Code of 1954, as amended.

1986 Act:

“1986 Act” shall mean the Tax Reform Act of 1986, as amended from time to time.

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.

1983 Bonds:

“1983 Bonds” shall mean the $100,000,000 aggregate principal amount of The Industrial Development Authority of the County of Apache Industrial Development Revenue Bonds, 1983 Series A (Tucson Electric Power Company Springerville Project).

No Call Term Rate:

“No Call Term Rate” shall mean the Interest Rate Mode for Bonds in which the interest rate on such Bonds is determined in accordance with Section 2.02(c)(vi) and the Bonds are subject to redemption as described in Section 3.01(a)(v).

No Call Term Rate Period:

“No Call Term Rate Period” shall mean any period established by the Company pursuant to Section 2.02(f)(i) and beginning on, and including, the Conversion Date of Bonds to the No Call Term Rate and ending on, and including, the day preceding the earliest of the change to a new No Call Term Rate Period, the Conversion of such Bonds to a different Interest Rate Mode or the maturity of the Bonds.

Notice by Mail or Electronic Means:

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“Notice by Mail” or “notice” of any action or condition “by Mail or Electronic Means” shall mean a written notice meeting the requirements of this Indenture mailed by first class mail to the Owners of specified registered Bonds at the addresses shown in the registration books maintained pursuant to Section 2.09 hereof or notice delivered by electronic means including, without limitation, email in PDF format.

Outstanding:

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

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

(b)    on or after any Purchase Date for Bonds pursuant to Article V hereof, all Bonds (or portions of Bonds) which have been purchased on such date, but which have not been delivered to the Trustee, provided that funds sufficient for such purchase are on deposit with the Trustee in accordance with the provisions hereof;

(c)    those deemed to be paid in accordance with Article IX hereof; and

(d)    those in lieu of or in exchange or substitution for which other Bonds shall have been authenticated and delivered pursuant to this Indenture, or those otherwise paid without surrender pursuant to Section 2.08 hereof, 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 2.09 hereof. Each of the Company and the Credit Facility Issuer may be an Owner.

Person:

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

Plant:

“Plant” shall means Units 1 and 2 of the Springerville Generating Station, an electric power generating plant near Springerville, Arizona, in Apache County, Arizona, and any additions or improvements thereto or replacements thereof.

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Plant Agreements:

“Plant Agreements” shall mean all contracts relating to the ownership, construction and operation of the Plant, including the Facilities, as from time to time amended or supplemented.

Pledged Bonds:

“Pledged Bonds” shall mean Bonds purchased pursuant to Sections 5.01(a) and 5.01(b) from moneys received by the Trustee from a demand for payment under the Credit Facility, if any, then in effect until subsequently remarketed pursuant to Section 5.02.

Prevailing Market Conditions:

“Prevailing Market Conditions” shall mean, without limitation, the following factors: existing short-term market rates for securities, the interest on which is excluded from gross income for federal income tax purposes; indexes of such short-term rates; the existing market supply and demand and the existing yield curves for short-term and long-term securities for obligations of credit quality comparable to the Bonds, the interest on which is excluded from gross income for federal income tax purposes; general economic conditions, economic conditions in the electric utilities industry and financial conditions that may affect or be relevant to the Bonds; and such other facts, circumstances and conditions as the Remarketing Agent, in its sole discretion, shall determine to be relevant to the remarketing of the Bonds at the principal amount thereof.

Purchase Date:

“Purchase Date” shall mean (i) if the Interest Rate Mode is the Daily Rate or the Weekly Rate, any Business Day as set forth in Section 5.01(a)(i) and Section 5.01(a)(ii), respectively, and (ii) each day that such Bond is subject to mandatory purchase pursuant to Section 5.01(b); provided, however, that the date of the stated maturity of the Bonds shall not be a Purchase Date.

Purchase Fund:

“Purchase Fund” shall mean the fund so designated which is established pursuant to Section 5.03.

Purchase Payments:

“Purchase Payments” shall mean the amounts required to be paid by the Company pursuant to Section 5.02 of the Loan Agreement.

Rate Period:

“Rate Period” shall mean any period during which a single interest rate is in effect for a Bond.

Rating Agency:

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“Rating Agency” shall mean Moody’s, S&P and any other nationally recognized securities rating agency which has assigned a rating on the Bonds or, for purposes of Section 14.02(i) hereof, which was requested to assign a rating to the Bonds by the Company.

Ratings Confirmations:

“Ratings Confirmations” shall mean a certificate or letter from Moody’s, if the Bonds are then rated by Moody’s, and from S&P, if the Bonds are then rated by S&P, to the effect that the cancellation, expiration or termination of an existing Credit Facility or the cancellation, expiration or termination of an existing Credit Facility and the substitution of an Alternative Credit Facility in lieu thereof, as the case may be, will not, by itself, result in a reduction or withdrawal of its ratings then in effect on the Bonds.

Rebate Fund:

“Rebate Fund” shall mean the fund created by Section 8.08 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, including all moneys drawn by the Trustee under a Credit Facility, including a Letter of Credit, 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 (a) with respect to any Interest Period during which the Interest Rate Mode is the Commercial Paper Rate, the Daily Rate, the Weekly Rate or the Lender Rate, the close of business on the last Business Day of such Interest Period, and (b) with respect to any Interest Period during which the Interest Rate Mode is a Term Rate Period, the Business Day before payment unless, upon a Conversion, the Company designates some other Record Date to conform to industry conventions at the time of Conversion.

Reimbursement Agreement:

“Reimbursement Agreement” shall mean any agreement of the Company with a Credit Facility Issuer setting forth the obligations of the Company to such Credit Facility Issuer arising out of any payments under a Credit Facility.

Remarketing Agent:

“Remarketing Agent” shall mean any Remarketing Agent appointed in accordance with Section 12.01. “Principal Office” of the Remarketing Agent shall mean the office or offices designated in writing to the Trustee, the Credit Facility Issuer and the Company, which designation may be provided in the Remarketing Agreement entered into with such Remarketing

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Agent. References to the Remarketing Agent in this Indenture shall be given no effect unless a Remarketing Agent shall have been appointed in accordance with Section 12.01.

Remarketing Agreement:

“Remarketing Agreement” shall mean any remarketing agreement between the Company and a Remarketing Agent.

Remarketing Proceeds Account:

“Remarketing Proceeds Account” shall mean the account of that name established in the Purchase Fund pursuant to Section 5.03.

San Carlos:

“San Carlos” shall mean San Carlos Resources Inc., an Arizona corporation, which is a wholly-owned subsidiary of the Company.

SIFMA Swap Index:

“SIFMA Swap Index” shall mean, on any date, a rate determined on the basis of the seven-day high grade market index of tax-exempt variable rate demand obligations, as produced by Municipal Market Data, Inc., and published or made available by the Securities Industry & Financial Markets Association (formerly the Bond Market Association) (“SIFMA”) or any person acting in cooperation with or under the sponsorship of SIFMA and effective from such date; provided, however, that, if such index is no longer provided by Municipal Market Data, Inc. or its successor, the “Municipal Index” shall mean such other reasonably comparable index selected by the Remarketing Agent.

S&P:

“S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw Hill Companies and its successors and assigns, and, if such division shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally recognized securities rating agency designated in writing by the Company.

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:

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“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 1986 Code, the 1954 Code and the 1986 Act, and any and all modifications, alterations, amendments and supplements thereto.

Taxable Base Rate:

“Taxable Base Rate” shall have the meaning given to such term in Section 2.02(c)(vii)(A)(1) hereof.

Taxable LIBOR Rate:

“Taxable LIBOR Rate” shall have the meaning given to such term in Section 2.02(c)(vii)(A)(1) hereof.

Ten Year Call Term Rate:

“Ten Year Call Term Rate” shall mean the Interest Rate Mode for Bonds in which the interest rate on such Bonds is determined in accordance with Section 2.02(c)(iv) and the Bonds are subject to redemption as described in Section 3.01(a)(iii).

Term Rate Period:

“Term Rate Period” shall mean, as applicable, a Ten Year Term Rate Period, a Five Year Term Rate Period or a No Call Term Rate Period.

Ten Year Call Term Rate Period:

“Ten Year CallTerm Rate Period” shall mean any period established by the Company pursuant to Section 2.02(d)(i) and beginning on, and including, the Conversion Date of Bonds to the applicable Ten Year CallTerm Rate and ending on, and including, the day preceding earliest of the change to a new Ten Year CallTerm Rate Period, the Conversion of such Bonds to a different Interest Rate Mode or the maturity of the Bonds.

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 5.04, 5.05, 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

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from time to time on deposit therein (excluding, however, any moneys or Investment Securities held in the Rebate Fund), any and all other moneys and obligations (other than Bonds) which at such time are deposited or are required to be deposited with, or are held or are required to be held by or on behalf of, the Trustee in trust under any of the provisions of this Indenture and all other rights, titles and interests which at such time are subject to the lien of this Indenture; provided, however, that in no event shall there be included in the Trust Estate (a) moneys or obligations deposited with or held by the Trustee in the Rebate Fund pursuant to Section 8.08 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 IX hereof or moneys held pursuant to Section 4.04 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 designated 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 15.08 hereof except that (i) with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office of the Trustee at which, at any particular time, its corporate trust business shall be conducted and (ii) with respect to tenders of Bonds shall mean the office of the Trustee at which, at any particular time, its tender operations shall be conducted.

Weekly Rate:

“Weekly Rate” means the Interest Rate Mode for the Bonds in which the interest rate on such Bonds is determined weekly in accordance with Section 2.02(c)(iii).

Weekly Rate Period:

“Weekly Rate Period” means the period beginning on, and including, the date of any Conversion Date of Bonds to the Weekly Rate and ending on, and including, the next Tuesday and thereafter the period beginning on, and including, any Wednesday and ending on, and including, the earliest of the following Tuesday, the day preceding the Conversion of such Bonds to a different Interest Rate Mode or the maturity of the Bonds.

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 redeem, or provide for the redemption of, the 1983 Bonds, an issue of Bonds, entitled to the benefit, protection and security of this Indenture, in the aggregate principal amount of One Hundred Million Dollars ($100,000,000). Each of the Bonds shall be designated by the title “The Industrial Development Authority of the

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County of Apache Industrial Development Revenue Bond, 2013 Series A (Tucson Electric Power Company Springerville Project)”.

SECTION 2.02. Denominations and Maturity; Interest Rates.

(a)Denominations and Maturity. The Bonds shall be issuable as fully registered bonds only, when in Weekly Rate or Daily Rate, in denominations of $100,000 and any larger denomination constituting an integral multiple of $5,000, when in the Commercial Paper Rate, in denominations of $100,000 and any larger denomination constituting an integral multiple of $1,000, when in the Five Year Call Term Rate, Ten Year Call Term Rate or No Call Term Rate, in denominations of $5,000 and any integral multiple thereof, and, when in the Lender Rate, in denominations of $5,000,000 and any integral multiple of $1,000,000 in excess thereof.

The Bonds shall be dated as of the Date of the Bonds. Each Bond shall bear interest from the last Interest Payment Date to which interest has accrued and has been paid or duly provided for, or if no interest has been paid or duly provided for, from the Date of the Bonds until payment of the principal or redemption price thereof shall have been made or provided for in accordance with the provisions of this Indenture, whether upon maturity, redemption or otherwise; provided, however, that when in the Lender Rate, each Bond shall bear interest from the day subsequent to the last Lender Rate Interest Period for which interest has accrued and has been paid or duly provided for, or if no interest has been paid or duly provided for, from the Date of the Bonds.

The Bonds shall mature on April 1, 2032 (the “Maturity Date”).

(b)Interest Rates on the Bonds. During each Interest Period for each Interest Rate Mode, the interest rate or rates for the Bonds shall be determined in accordance with Section 2.02(c) and shall be payable on an Interest Payment Date for such Interest Period; provided that, while the Bonds accrue interest at the Daily Rate or Weekly Rate, the interest rate or rates borne by the Bonds shall not exceed the lesser of ten percent (10%) per annum or the maximum interest rate permitted by the Credit Facility, if any. Interest on Bonds while they accrue interest at the Daily Rate, Weekly Rate or Commercial Paper Rate shall be computed upon the basis of a 365 or 366-day year, as applicable, for the actual number of days elapsed. Interest on the Bonds while they accrue interest at the Lender Rate shall be computed (i) if the Lender Rate shall be determined on the basis of the Base Rate, upon the basis of a 365 or 366-day year, as applicable, for the actual number of days elapsed and (ii) if the Lender Rate shall be determined on the basis of LIBOR, upon the basis of a year of 360 days for the actual number of days elapsed. Interest on Bonds while they accrue interest at the Five Year Call Term Rate, Ten Year Call Term Rate or No Call Term Rate shall be computed upon the basis of a 360 day year, consisting of twelve 30 day months. Each Bond shall bear interest on overdue principal and, to the extent permitted by law, on overdue interest at the rate borne by such Bond on the day before the default or Event of Default occurred, provided that: (i) if the Interest Rate Mode was then the Commercial Paper Rate, the default rate for all of the Bonds shall be equal to the highest interest rate then in effect for any Bond; and (ii) and if the Interest Rate Mode was then the Lender Rate, the default rate for all the Bonds shall be the Base Rate plus 2%.

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(c)Interest Rate Modes. The Bonds shall bear interest at the Lender Rate from the Date of the Bonds until the Interest Rate Mode is converted to a different Interest Rate Mode.

Interest rates on (and, if the Interest Rate Mode is the Commercial Paper Rate, Commercial Paper Rate Periods for) Bonds shall be determined as follows:

(i)(II)    If the Interest Rate Mode for Bonds is the Commercial Paper Rate, the interest rate on a Bond for a specific Commercial Paper Rate Period shall be the rate established by the Remarketing Agent no later than 12:30 p.m. (New York City time) on the first day of that Commercial Paper Rate Period as the minimum rate of interest necessary, in the judgment of the Remarketing Agent taking into account then Prevailing Market Conditions, to enable the Remarketing Agent to sell such Bond on that day at a price equal to the principal amount thereof.

(A)Each Commercial Paper Rate Period applicable for a Bond shall be determined separately by the Remarketing Agent on or prior to the first day of such Commercial Paper Rate Period as being the Commercial Paper Rate Period permitted hereunder which, in the judgment of the Remarketing Agent, taking into account then Prevailing Market Conditions, will, with respect to such Bond, be the period which, if implemented on such day, would result in the Remarketing Agent being able to remarket such Bond at the principal amount thereof at the lowest interest rate then available and for the longest Commercial Paper Rate Period available hereunder at such rate, provided that on such determination date, if the Remarketing Agent determines that the current or anticipated future market conditions or anticipated future events are such that a different Commercial Paper Rate Period would result in a lower average interest cost on such Bond over the succeeding twelve (12) month period, then the Remarketing Agent shall select the Commercial Paper Rate Period which in the judgment of the Remarketing Agent would permit such Bond to achieve such lower average interest cost. Each Commercial Paper Rate Period shall be from one day to 270 days in length, shall end on a day preceding a Business Day and, if a Credit Facility is then in effect, shall not be longer than a period equal to the maximum number of days’ interest coverage provided by such Credit Facility minus fifteen days and if such 15th day is not a Business Day, then the immediately preceding Business Day.

(B)Notwithstanding subsection (B) above:

(1)if a Credit Facility is in effect and if no Alternate Credit Facility has taken effect, no new Commercial Paper Rate Period shall be established for any Bond unless the last Interest Payment Date for such Commercial Paper Rate Period occurs at least 15 days prior to the expiration, termination or cancellation of the then current Credit Facility;

(2)if the Company has previously determined to convert the Interest Rate Mode for any Bonds from the Commercial Paper Rate, no new Commercial Paper Rate Period for any such Bond to be converted shall be established unless the last day of such Commercial Paper Rate Period occurs prior to the Conversion Date;

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(3)no Commercial Paper Rate Period may be established after the making of a determination requiring mandatory redemption of all Bonds pursuant to Section 3.01(c) unless the Remarketing Agent discloses such determination to the purchaser (and evidence of the making of each such disclosure shall be furnished to the Trustee in writing, the Authority and the Company prior to the establishment of such Commercial Paper Rate Period) and unless the last day of such Commercial Paper Rate Period occurs prior to the redemption date;

(4)the Commercial Paper Rate Period for any Bond held by the Trustee pursuant to Section 5.05 shall be the period from and including the date of purchase pursuant to Section 5.01 through the next day immediately preceding a Business Day, which period will be re-established automatically until the day preceding the earliest of the Conversion to a different Interest Rate Mode, the maturity of the Bonds or the sale of such Bond pursuant to Section 5.02(b), and during such Commercial Paper Rate Period such Bond shall not bear interest but shall nevertheless remain Outstanding under this Indenture; and

(5)if the Remarketing Agent fails to set the length of a Commercial Paper Rate Period for any Bond, or if there is no Remarketing Agent in place, a new Commercial Paper Rate Period lasting through the next day immediately preceding a Business Day (or until the earlier stated maturity of the Bonds) will be established automatically and, if in that instance the Remarketing Agent fails for whatever reason to determine the interest for such Bond, or if there is no Remarketing Agent in place, then the interest rate for such Bond for that Commercial Paper Rate Period shall be the interest rate in effect for such Bond for the preceding Commercial Paper Rate Period.

(ii)If the Interest Rate Mode for Bonds is the Daily Rate, the interest rate on such Bonds for any Business Day shall be the rate established by the Remarketing Agent no later than 10:30 a.m. (New York City time) on such Business Day as the minimum rate of interest necessary, in the judgment of the Remarketing Agent, taking into account the then Prevailing Market Conditions, to enable the Remarketing Agent to sell such Bonds on such Business Day at a price equal to the principal amount thereof, plus accrued interest, if any, thereon as of such day. For any day which is not a Business Day or in the event that the interest rate on a Bond is not or cannot be determined by the Remarketing Agent for whatever reason, or if there is no Remarketing Agent in place, the interest rate on Bonds in the Daily Rate shall be the interest rate for such Bonds in effect for the next preceding Business Day.

(iii)If the Interest Rate Mode for Bonds is the Weekly Rate, the interest rate on such Bonds for a particular Weekly Rate Period shall be the rate established by the Remarketing Agent no later than 10:00 a.m. (New York City time) on the first day of such Weekly Rate Period, or, if such day is not a Business Day, on the next preceding Business Day, as the minimum rate of interest necessary, in the judgment of the Remarketing Agent, taking into account the then Prevailing Market Conditions, to enable the Remarketing Agent to sell such Bonds on such first day at a price equal to the principal amount thereof, plus accrued interest, if any, thereon.

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(iv)If the Interest Rate Mode for Bonds is the Ten Year Call Term Rate, the interest rate on such Bonds for a particular Ten Year Call Term Rate Period shall be the rate established by the Remarketing Agent no later than 12:00 noon (New York City time) on the Business Day preceding the first day of such Ten Year Call Term Rate Period as the minimum rate of interest necessary, in the judgment of the Remarketing Agent, taking into account the then Prevailing Market Conditions, to enable the Remarketing Agent to sell such Bonds on such first day at a price equal to the principal amount thereof.

(v)If the Interest Rate Mode for Bonds is the Five Year Call Term Rate, the interest rate on such Bonds for a particular Five Year Call Term Rate Period shall be the rate established by the Remarketing Agent no later than 12:00 noon (New York City time) on the Business Day preceding the first day of such Five Year Call Term Rate Period as the minimum rate of interest necessary, in the judgment of the Remarketing Agent, taking into account the then Prevailing Market Conditions, to enable the Remarketing Agent to sell such Bonds on such first day at a price equal to the principal amount thereof.

(vi)If the Interest Rate Mode for Bonds is the No Call Term Rate, the interest rate on such Bonds for a particular No Call Term Rate Period shall be the rate established by the Remarketing Agent no later than 12:00 noon (New York City time) on the Business Day preceding the first day of such No Call Term Rate Period as the minimum rate of interest necessary, in the judgment of the Remarketing Agent, taking into account the then Prevailing Market Conditions, to enable the Remarketing Agent to sell such Bonds on such first day at a price equal to the principal amount thereof.

(vii)(II)    If the Interest Rate Mode for the Bonds is the Lender Rate, the interest rate on the Bonds shall be the rate established as hereinafter described.

(6)The interest rate on the Bonds for each Lender Rate Interest Period during the Initial Lender Rate Period (calculated separately for each such Lender Rate Interest Period) shall be equal to the product of (x) 67% of the sum of (1) LIBOR plus (2) the Applicable Margin, multiplied by (y) the Margin Rate Factor; provided, however, that in no event shall the interest rate determined in accordance with this sentence exceed the sum of (I) LIBOR plus (II) the Applicable Margin (the “Taxable LIBOR Rate”). In addition, notwithstanding the foregoing, for any Lender Rate Interest Period during the Initial Lender Rate Period for which (A) the Lender shall have determined in its reasonable and good faith judgment that by reason of circumstances affecting the London Inter-Bank Market generally, deposits in U.S. dollars with one-month terms are not being offered to banks in the London Inter-Bank Market for one-month terms, or adequate means do not exist for ascertaining LIBOR, or (B) the Lender has determined that it has become unlawful or impossible for the Lender to make or maintain or fund loans based on LIBOR, or (C) the Lender has determined that LIBOR does not accurately and fairly reflect the Lender’s actual cost of funds, the Lender shall give written notice thereof to the Trustee and the Company and thereafter the interest rate in effect for such Lender Rate Interest Period and each succeeding Lender Rate Interest Period until the Lender gives notice to the Company and the Trustee that such conditions no longer apply shall be equal to the product of (x) 67% of the sum of (1) the Base Rate plus (2)  the Applicable Margin,

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multiplied by (y) the Margin Rate Factor; provided, however, that in no event shall the interest rate determined in accordance with this sentence exceed the sum of (I) the Base Rate plus (II) the Applicable Margin (the “Taxable Base Rate”). Notwithstanding the foregoing, (1) upon a Determination of Taxability during the Initial Lender Rate Period, from and after the date of a Determination of Taxability the interest rate on the Bonds shall equal the Taxable LIBOR Rate or the Taxable Base Rate as provided above, and (2) from and after the date of a Change of Law during the Initial Lender Rate Period, the interest rate on the Bonds as otherwise determined as provided above shall be adjusted to maintain the same after tax yield to the Lender as though such Change of Law had not occurred, provided that the interest rate on the Bonds as so adjusted shall not exceed the Taxable LIBOR Rate or Taxable Base Rate, as applicable. The Lender shall notify the Trustee and the Company of the interest rate on the Bonds for each Lender Rate Interest Period during the Initial Lender Rate Period by telephone or such other manner as may be appropriate by not later than 2:00 p.m. (New York City time) on the second Business Day preceding the first day of such Lender Rate Interest Period, which notice shall be promptly confirmed in writing. In the event that a Determination of Taxability or Change of Law shall have occurred and the Lender shall notify the Trustee and the Company in writing that, with respect to one or more prior Lender Rate Interest Periods, the interest rate set on the Bonds had not been adjusted as provided above in respect of such Determination of Taxability or Change of Law, there shall be payable, as additional interest on the Bonds on the second Business Days following receipt of such notice, the amount of additional interest specified therein which shall be the difference between the amount of interest payable on the Bonds for such Lender Rate Interest Periods as adjusted for such Determination of Taxability or Change of Law and the interest payable on the Bonds as previously established by the Lender.

(7)During any Lender Rate Period commencing after the Initial Lender Rate Period, (whether by a Conversion from another type of Interest Rate Mode to a Lender Rate Period or upon a Conversion Date from one Lender Rate Period to another Lender Rate Period), the interest rate on the Bonds will be determined by the Lender as follows:

(I) No later than 10:00 a.m. (New York City time), on the commencement date of the new Lender Rate Interest Period, and if such day is not a Business Day, the immediately preceding Business Day, the Lender shall, with the approval of the Company, notify the Company of the duration of the new Lender Rate Period and the new Lender Rate, including the new percentage of LIBOR and Base Rate and new Applicable Margin that will be applicable for such Lender Rate Period. On such date, the Lender also shall provide the Company and the Trustee with a certificate signed by an authorized signatory of the Lender stating that (x) the percentage of LIBOR and Base Rate and the Applicable Margin, applied that date in determining the new Lender Rate for the Bonds is the same percentage of LIBOR and the Applicable Margin, that would be quoted by the Lender that date to other customers of the Lender for obligations of amount, maturity and duration of such Lender Rate Period similar to the Bonds, (y) the interest rate setting mechanisms for any Lender Rate Period set forth in this subparagraph (2) (I) would result in the Lender Rate during such Lender Rate Period being the lowest rate that would be necessary for the Bonds to be sold on

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the first day of the new Lender Rate Period at par, plus accrued interest, if any, and (z) the signatory is familiar with the subject matter of the certificate and is authorized to sign the same for and on behalf of the Lender.

(II) The Lender Rate may be established other than as provided in subparagraph (2)(I) above if the Company shall have provided the Trustee with (i) a certificate signed by an authorized signatory of the Administrative Agent or, if no Administrative Agent is appointed, the Lender, setting forth the manner of calculation and initial amount of the Lender Rate, and (ii) an opinion of Bond Counsel to the effect that the interest rate setting mechanism utilized to determine such an alternative Lender Rate is authorized or permitted by the Act and is authorized by this Indenture and will not, in and of itself, adversely affect any exclusion of interest on the Bonds from gross income for purposes of federal income taxation.

(B)The determination by the Lender of the interest rate on the Bonds for a Lender Rate Interest Period (absent manifest error) shall be conclusive and binding upon the Authority, the Company, the Trustee, and the Owners of the Bonds. If for any reason the Lender shall fail to establish the interest rate on the Bonds for a Lender Rate Interest Period, the Bonds shall bear interest at the interest rate last in effect.

(C)For any Lender Rate Interest Period during which more than one Lender is an Owner of Bonds, an Administrative Agent must be appointed.

(ii)Unless the Interest Rate Mode for Bonds is the Lender Rate, the Remarketing Agent shall provide the Trustee and the Company with prompt Electronic Notice of each interest rate (and if the Interest Rate Mode for Bonds is the Commercial Paper Rate, of all Commercial Paper Rate Periods) determined under this Section 2.02(c).

(iii)In the event that the interest rate on a Bond is not or cannot be determined by the Remarketing Agent for whatever reason pursuant to (iii), (iv), (v) or (vi) above, or if there is no Remarketing Agent in place at a time when the provisions hereof provide for the determination of the interest rate on the Bonds by the Remarketing Agent, the Interest Rate Mode of such Bond shall remain in or, as applicable, be converted automatically to the Weekly Rate (without the necessity of complying with the requirements of Section 2.02(g), including, but not limited to, the requirement of mandatory purchase) and the Weekly Rate for such Weekly Rate Period shall be equal to the 100% of the SIFMA Swap Index. Anything in this Section 2.02(c)(viii) to the contrary notwithstanding, if a Credit Facility is then in effect, the Rate Period determined shall not extend beyond the remaining term of such Credit Facility minus fifteen (15) days and if such fifteenth day is not a Business Day, then the immediately preceding Business Day.

(d)Ten Year Call Term Rate Period.

(viii)Selection of Ten Year Call Term Rate Period. The Ten Year Call Term Rate Period for the Bonds shall be established by the Company in the notice given pursuant to

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Section 2.02(g). Each Ten Year Call Term Rate Period shall be at least ten years in duration and shall end on the day next preceding an Interest Payment Date; provided that no Ten Year Call Term Rate Period shall extend beyond the final maturity date of the Bonds. Anything in this Section 2.02(d) to the contrary notwithstanding, if a Credit Facility is then in effect, no Ten Year Call Term Rate Period shall extend beyond the remaining term of such Credit Facility minus fifteen (15) days and if such fifteenth day is not a Business Day, then the immediately preceding Business Day.

(ix)Change of Ten Year Call Term Rate Period. The Company may change the Bonds from a Ten Year Call Term Rate Period to a new Ten Year Call Term Rate Period or any other Rate Period on any Business Day on which the Bonds are subject to optional redemption pursuant to Section 3.01(a)(iii) by notifying the Trustee, the Credit Facility Issuer, if any, and the Remarketing Agent in writing at least five Business Days prior to the twentieth (20th) day prior to the proposed effective date of the change; provided that, if a Credit Facility is then in effect, the Company shall not be entitled to elect a change in the Ten Year Call Term Rate Period on a date on which the purchase price determined under Section 5.01(b)(i) includes any premium unless the Trustee has received written confirmation from the Credit Facility Issuer, on or before the date on which the Trustee must provide notice of such change to the Bondholders under Section 2.02(d)(iii), that it can draw under a Credit Facility on the proposed effective date of the change in an aggregate amount sufficient to enable the Trustee to pay the premium due upon the mandatory purchase of such Bonds on such proposed effective date pursuant to Section 5.01(b)(i). The notice delivered by the Company shall specify (A) the information required to be contained in the notice given by the Trustee to the Bondholders pursuant to Section 2.02(d)(iii), (B) the last day of any new Term Rate Period, (C) the purchase price for Bonds determined under Section 5.01(b)(i), and (D) that such change is subject to cancellation by the Company. Any such change in the Ten Year Call Term Rate Period may be cancelled by the Company by telephonic notice (to be confirmed in writing) to the Trustee, in which case the Company’s notice thereof shall be of no effect and no such change shall occur. Notwithstanding the foregoing, no change in the Ten Year Call Term Rate Period shall be effective unless the Credit Facility, if any, held or to be held by the Trustee after such change in the Ten Year Call Term Rate Period shall extend for the length of any new Rate Period plus fifteen (15) days.

(x)Notice of Change in Ten Year Call Term Rate Period. The Trustee shall notify the affected Bondholders of any change in the Ten Year Call Term Rate Period pursuant to Section 2.02(d)(ii) by Mail or Electronic Means, at least twenty (20) but not more than sixty (60) days before the effective date of such change. The notice will state:

(A)that there is to be a new Term Rate Period; and

(B)the effective date of the new Term Rate Period and that, on such effective date, Bonds will be purchased (and the purchase price therefor) and that if any owner of the Bonds shall fail to deliver a Bond for purchase with an appropriate instrument of transfer to the Trustee for purchase on said date, and if the Trustee is in receipt of the purchase price therefor, any such Bond not delivered shall nevertheless be deemed purchased on such effective date and shall cease to accrue interest on and from such date.

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(xi)Cancellation of Change in Ten Year Call Term Rate Period. Notwithstanding any provision of this Section 2.02(d), the Ten Year Call Term Rate Period shall not be changed if: (A) the Remarketing Agent has not determined the interest rate for the new Rate Period in accordance with this Section 2.02(d) or (B) all of the Bonds that are to be purchased pursuant to Section 5.01(b) are not remarketed or sold by the Remarketing Agent or (C) such change is cancelled by the Company as provided in Section 2.02(d)(ii) above. If such change fails to occur, the Bonds shall be converted automatically to the Weekly Rate and the initial interest rate shall be equal to 100% of the SIFMA Swap Index. If the proposed change of the Ten Year Call Term Rate Period is cancelled as provided in this paragraph, any mandatory purchase of such Bonds will remain effective. Anything in this Section 2.02(d)(iv) to the contrary notwithstanding, if a Credit Facility is then in effect, any Term Rate Period determined upon a cancellation of a change in the Ten Year Call Term Rate Period shall not extend beyond the remaining term of such Credit Facility minus fifteen (15) days and if such fifteenth day is not a Business Day, then the immediately preceding Business Day.

(e)Five Year Call Term Rate Period.

(iv)Selection of Five Year Call Term Rate Period. The Five Year Call Term Rate Period for the Bonds shall be established by the Company in the notice given pursuant to Section 2.02(g). Each Five Year Call Term Rate Period shall be at least five years in duration and shall end on the day next preceding an Interest Payment Date; provided that no Five Year Call Term Rate Period shall extend beyond the final maturity date of the Bonds. Anything in this Section 2.02(e) to the contrary notwithstanding, if a Credit Facility is then in effect, no Five Year Call Term Rate Period shall extend beyond the remaining term of such Credit Facility minus fifteen (15) days and if such fifteenth day is not a Business Day, then the immediately preceding Business Day.

(v)Change of Five Year Call Term Rate Period. The Company may change the Bonds from a Five Year Call Term Rate Period to a new Five Year Call Term Rate Period or any other Rate Period on any Business Day on which the Bonds are subject to optional redemption pursuant to Section 3.01(a)(iv) by notifying the Trustee, the Credit Facility Issuer and the Remarketing Agent in writing at least five Business Days prior to the twentieth (20th) day prior to the proposed effective date of the change; provided that, if a Credit Facility is then in effect, the Company shall not be entitled to elect a change in the Five Year Call Term Rate Period on a date on which the purchase price determined under Section 5.01(b)(i) includes any premium unless the Trustee has received written confirmation from the Credit Facility Issuer, on or before the date on which the Trustee must provide notice of such change to the Bondholders under Section 2.02(e)(iii), that it can draw under a Credit Facility on the proposed effective date of the change in an aggregate amount sufficient to enable the Trustee to pay the premium due upon the mandatory purchase of such Bonds on such proposed effective date pursuant to Section 5.01(b)(i). Such notice shall specify (A) the information required to be contained in the notice given by the Trustee to the Bondholders pursuant to Section 2.02(e)(iii), (B) the last day of any new Term Rate Period, and (C) the purchase price for Bonds determined under Section 5.01(b)(i) and (D) that such change is subject to cancellation by the Company. Any such change in the Five Year Call Term Rate Period may be cancelled by the Company by telephonic notice (to be confirmed

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in writing) to the Trustee, in which case the Company’s notice thereof shall be of no effect and no such change shall occur. Notwithstanding the foregoing, no change in the Five Year Call Term Rate Period shall be effective unless the Credit Facility, if any, held or to be held by the Trustee after such change in the Five Year Call Term Rate Period shall extend for the length of any new Rate Period plus fifteen (15) days.

(vi)Notice of Change in Five Year Call Term Rate Period. The Trustee shall notify the affected Bondholders of any change in the Five Year Call Term Rate Period pursuant to Section 2.02(e)(ii) by Mail or Electronic Means, at least twenty (20) but not more than sixty (60) days before the effective date of such change. The notice will state:

(A)that there is to be a new Rate Period; and

(B)the effective date of the new Rate Period and that, on such effective date, Bonds will be purchased (and the purchase price therefor) and that if any owner of the Bonds shall fail to deliver a Bond for purchase with an appropriate instrument of transfer to the Trustee for purchase on said date, and if the Trustee is in receipt of the purchase price therefor, any such Bond not delivered shall nevertheless be deemed purchased on such effective date and shall cease to accrue interest on and from such date.

(vii)Cancellation of Change in Five Year Call Term Rate Period. Notwithstanding any provision of this Section 2.02(e), the Five Year Call Term Rate Period shall not be changed if: (A) the Remarketing Agent has not determined the interest rate for the new Rate Period in accordance with this Section 2.02(e) or (B) all of the Bonds that are to be purchased pursuant to Section 5.01(b) are not remarketed or sold by the Remarketing Agent or (C) such change is cancelled by the Company as provided in Section 2.02(e)(ii) above. If such change fails to occur, the Bonds shall be converted automatically to the Weekly Rate and the initial interest rate shall be equal to the 100% of the SIFMA Swap Index. If the proposed change of the Five Year Call Term Rate Period is cancelled as provided in this paragraph, any mandatory purchase of such Bonds will remain effective. Anything in this Section 2.02(e)(iv) to the contrary notwithstanding, if a Credit Facility is then in effect, the Five Year Call Rate Period determined upon a cancellation of a change in the Five Year Call Term Rate Period shall not extend beyond the remaining term of such Credit Facility minus fifteen (15) days and if such fifteenth day is not a Business Day, then the immediately preceding Business Day.

(f)No Call Term Rate Period.

(i)Selection of No Call Term Rate Period. The No Call Term Rate Period for the Bonds shall be established by the Company in the notice given pursuant to Section 2.02(g). Each No Call Term Rate Period shall be at least one year in duration and shall end on the day next preceding an Interest Payment Date; provided that no No Call Term Rate Period shall extend beyond the final maturity date of the Bonds. Anything in this Section 2.02(f) to the contrary notwithstanding, if a Credit Facility is then in effect, no No Call Term Rate Period shall extend beyond the remaining term of such Credit Facility minus fifteen (15) days and if such fifteenth day is not a Business Day, then the immediately preceding Business Day.

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(ii)Change of No Call Term Rate Period. The Company may change the Bonds from a No Call Term Rate Period to a new No Call Term Rate Period or any other Rate Period on any Business Day on which the Bonds are subject to optional redemption pursuant to Section 3.01(a)(v) by notifying the Trustee, the Credit Facility Issuer and the Remarketing Agent in writing at least five Business Days prior to the twentieth (20th) day prior to the proposed effective date of the change; provided that, if a Credit Facility is then in effect, the Company shall not be entitled to elect a change in the No Call Term Rate Period on a date on which the purchase price determined under Section 5.01(b)(i) includes any premium unless the Trustee has received written confirmation from the Credit Facility Issuer, on or before the date on which the Trustee must provide notice of such change to the Bondholders under Section 2.02(f)(iii), that it can draw under a Credit Facility on the proposed effective date of the change in an aggregate amount sufficient to enable the Trustee to pay the premium due upon the mandatory purchase of such Bonds on such proposed effective date pursuant to Section 5.01(b)(i). Such notice shall specify (A) the information required to be contained in the notice given by the Trustee to the Bondholders pursuant to Section 2.02(f)(iii), (B) the last day of such new Rate Period, and (C) the purchase price for Bonds determined under Section 5.01(b)(i) and (D) that such change is subject to cancellation by the Company. Any such change in the No Call Term Rate Period may be cancelled by the Company by telephonic notice (to be confirmed in writing) to the Trustee, in which case the Company’s notice thereof shall be of no effect and no such change shall occur. Notwithstanding the foregoing, no change in the No Call Term Rate Period shall be effective unless the Credit Facility, if any, held or to be held by the Trustee after such change in the No Call Term Rate Period shall extend for the length of any new Rate Period plus fifteen (15) days.

(iii)Notice of Change in No Call Term Rate Period. The Trustee shall notify the affected Bondholders of any change in the No Call Term Rate Period pursuant to Section 2.02(f)(ii) by Mail or Electronic Means, at least twenty (20) but not more than sixty (60) days before the effective date of such change. The notice will state:

(A)that there is to be a new Rate Period; and

(B)the effective date of the new Term Rate Period and that, on such effective date, Bonds will be purchased (and the purchase price therefor) and that if any owner of the Bonds shall fail to deliver a Bond for purchase with an appropriate instrument of transfer to the Trustee for purchase on said date, and if the Trustee is in receipt of the purchase price therefor, any such Bond not delivered shall nevertheless be deemed purchased on such effective date and shall cease to accrue interest on and from such date.

(iv)Cancellation of Change in No Call Term Rate Period. Notwithstanding any provision of this Section 2.02(f), the No Call Term Rate Period shall not be changed if: (A) the Remarketing Agent has not determined the interest rate for the new Rate Period in accordance with this Section 2.02(f) or (B) all of the Bonds that are to be purchased pursuant to Section 5.01(b) are not remarketed or sold by the Remarketing Agent or (C) such change is cancelled by the Company as provided in Section 2.02(f)(ii) above. If such change fails to occur, the Bonds shall be converted automatically to the Weekly Rate and the initial interest rate shall be equal to the 100% of the SIFMA Swap Index. If the proposed change of the No Call Term

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Rate Period is cancelled as provided in this paragraph, any mandatory purchase of such Bonds will remain effective. Anything in this Section 2.02(f)(iv) to the contrary notwithstanding, if a Credit Facility is then in effect, the Rate Period determined upon a cancellation of a change in the No Call Term Rate Period shall not extend beyond the remaining term of such Credit Facility minus fifteen (15) days and if such fifteenth day is not a Business Day, then the immediately preceding Business Day.

(g)Conversion of Interest Rate Mode.

(i)Method of Conversion. The Interest Rate Mode for all of the Bonds is subject to Conversion to a different Interest Rate Mode from time to time by the Company, such right to be exercised by notifying the Trustee, the Credit Facility Issuer, if any, and the Remarketing Agent, if any, at least five Business Days prior to (x) in the cases of Conversion from the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Term Rate, the thirtieth (30th) day prior to the effective date of such proposed Conversion and (y) in all other cases, the fifteenth day prior to such proposed effective date; provided that, in any event, with respect to Conversion from the Commercial Paper Rate, the effective date of such Conversion may not occur until the latest Interest Payment Date relating to the Commercial Paper Rate Period then in effect for the Bonds to be converted, and, provided further, that no new Commercial Paper Rate Period for such Bonds may be established subsequent to such notice which would have an Interest Payment Date later than the proposed date of Conversion; and provided, further, that, if a Credit Facility is then in effect, the Company shall not be entitled to elect to convert Bonds to a different Interest Rate Mode on a date on which the purchase price determined under Section 5.01(b)(i) includes any premium, unless the Trustee has received written confirmation, on or before the date on which the Trustee must provide notice of such Conversion to Bondholders under Section 2.02(g)(iii), from the Credit Facility Issuer that it can draw under the Credit Facility on the proposed effective date of the Conversion in an aggregate amount sufficient to enable the Trustee to pay any premium due upon any mandatory purchase of Bonds on such proposed effective date pursuant to Section 5.01(b)(i); and provided, further, that if a Credit Facility is then in effect the Company may not elect an Interest Rate Mode other than the Daily Rate or the Weekly Rate without the consent of the Credit Facility Issuer. The notice of the Company shall specify the effective date of such Conversion and the information required by Section 2.02(g)(iii). If the Conversion is to the Ten Year Call Term Rate, such notice shall specify the information required pursuant to Section 2.02(d)(iii). If the Conversion is to the Five Year Call Term Rate, such notice shall specify the information required pursuant to Section 2.02(e)(iii). If the Conversion is to the No Call Term Rate, such notice shall specify the information required pursuant to Section 2.02(f)(iii). In addition, in the case of a Conversion to the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Term Rate from the Lender Rate, Daily Rate, Weekly Rate or Commercial Paper Rate, as the case may be, or any Conversion to the Lender Rate, Daily Rate, Weekly Rate or Commercial Paper Rate from the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Term Rate, such Conversion shall be conditioned upon the delivery to the Authority, the Trustee and the Company on or prior to the Conversion Date of an opinion of Bond Counsel stating that such Conversion is authorized or permitted by the Act and is authorized by this Indenture and will not, in and of itself, adversely affect any exclusion of interest on the Bonds from gross income for purposes of federal income

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taxation. Any such Conversion may be cancelled by the Company by telephonic notice (to be confirmed in writing) to the Trustee, the Credit Facility Issuer, if any, and the Remarketing Agent by the opening of business on the Conversion Date, in which case, the Company’s notice of Conversion shall be of no effect and the Conversion shall not occur, provided, however, that any mandatory purchase of Bonds on the proposed conversion date shall remain effective.

(ii)Limitations. Any Conversion of the Interest Rate Mode for the Bonds pursuant to paragraph (i) above must comply with the following:

(C)the Conversion Date must be a date on which the Bonds are subject to optional redemption pursuant to Section 3.01(a);

(D)if the proposed Conversion Date would not be an Interest Payment Date except for such Conversion, the Conversion Date must be a Business Day;

(E)if the Conversion is from the Commercial Paper Rate, (1) the Conversion Date shall be no earlier than the latest Interest Payment Date established for the Bonds prior to the giving of notice to the Remarketing Agent of the proposed Conversion and (2) no further Interest Payment Date may be established for such Bonds while the Interest Rate Mode is then the Commercial Paper Rate if such Interest Payment Date would occur after the effective date of that Conversion;

(F)after a determination is made requiring mandatory redemption of all Bonds pursuant to Section 3.01(c), no change in the Interest Rate Mode may be made prior to the redemption of Bonds pursuant to Section 3.01(c);

(G)the Credit Facility, if any, held or to be held by the Trustee after Conversion (1) must cover the principal of and interest (computed on the basis of a 365 day year for the Daily Rate, the Weekly Rate and the Commercial Paper Rate, and on the basis of a 360 day year consisting of twelve 30 day months for the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Term Rate) which will accrue on the Outstanding Bonds for the maximum permitted period between the Interest Payment Dates for the proposed Interest Rate Mode plus at least two (2) days and, (2) in the case of the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Term Rate, must extend for the entire length of such Ten Year Call Term Rate Period, Five Year Call Term Rate Period or the No Call Rate Period, plus fifteen (15) days;

(H)Notwithstanding any other provision of this Indenture to the contrary, the Company shall not be entitled to elect a Conversion if the purchase price upon such Conversion includes any premium unless the Trustee has received a written opinion of Bond Counsel stating that such Conversion will not, in and of itself, adversely affect any exclusion of interest on the Bonds from gross income for purposes of federal income taxation.

(iii)Notice to Bondholders of Conversion of Interest Rate. The Trustee, at the expense of the Company, shall notify the Remarketing Agent and the Owners of each Conversion by Mail or Electronic Means at least fifteen (15) days but not more than thirty (30) days before

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the Conversion Date if the Interest Rate Mode is the Commercial Paper Rate, the Daily Rate, the Weekly Rate or the Lender Rate and at least twenty (20) days but not more than sixty (60) days before the Conversion Date if the Interest Rate Mode is the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Term Rate. The notice shall state:

(A)that the Interest Rate Mode will be converted and what the new Interest Rate Mode will be;

(B)the Conversion Date; and

(C)(1) that Bonds will be subject to mandatory purchase on the Conversion Date in accordance with Section 5.01(b), (2) the purchase price, and (3) that if any owner of Bonds shall fail to deliver a Bond for purchase with an appropriate instrument of transfer to the Trustee on the Conversion Date, and if the Trustee is in receipt of the purchase price therefor, such Bond not delivered shall nevertheless be purchased on the Conversion Date and shall cease to accrue interest on and from such date.

If the Conversion is to the Ten Year Call Term Rate, the notice will also state the information required by Section 2.02(d)(iii). If the Conversion is to the Five Year Call Term Rate, the notice will also state the information required by Section 2.02(e)(iii). If the Conversion is to the No Call Term Rate, the notice will also state the information required by Section 2.02(f)(iii).

(iv)Cancellation of Conversion of Interest Rate Mode. Notwithstanding any provision of this Section 2.02, the Interest Rate Mode for Bonds shall not be converted if: (A) the Remarketing Agent has not determined the initial interest rate for a new Interest Rate Mode in respect of which the interest rate is to be determined by the Remarketing Agent in accordance with this Section 2.02 or (B) the Lender has not determined the initial interest rate for a new Lender Rate Period in accordance with Section 2.02 or if the conditions for establishing a new Lender Rate Period are not otherwise met, (C) the Conversion is cancelled by the Company as provided in Section 2.02(g)(i) above or (D) in the case of a Conversion requiring an opinion of Bond Counsel, the Trustee shall have failed to receive from Bond Counsel prior to the opening of business on the Conversion Date the opinion of such Bond Counsel required under Section 2.02(g)(i). If such Conversion fails to occur, such Bonds shall be converted automatically to the Weekly Rate and the initial interest rate shall be equal to the 100% of the SIFMA Swap Index. If the proposed Conversion of Bonds is cancelled as provided in this paragraph, any mandatory purchase of Bonds shall nevertheless be effective and such Bonds shall bear interest as provided in the two preceding sentences. Anything in this Section 2.02(g)(iv) to the contrary notwithstanding, if a Credit Facility is then in effect, the Rate Period determined upon a failed Conversion shall not extend beyond the remaining term of such Credit Facility minus fifteen (15) days and if such fifteenth day is not a Business Day, then the immediately preceding Business Day.

(v)Additional Requirements for Conversion to Commercial Paper Rate. The following additional conditions must be satisfied before a Conversion to a Commercial Paper Rate shall become effective: (A) the Company must engage, at its expense, a commercial paper issuing and paying agent (the “Issuing Agent”), reasonably acceptable to the Authority, having

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access to DTC’s electronic money market issuing and payment system and otherwise eligible to serve as an issuing and paying agent under DTC’s policies and procedures for the issuance and payment of commercial paper; (B) the Remarketing Agent must arrange for the execution and delivery to DTC of any required DTC letter of representation for the eligibility of the Bonds in the Commercial Paper Rate in DTC’s book entry system and the provision of any needed CUSIP numbers; (C) the Authority and the Company shall take all other action needed to comply with DTC requirements applicable to the issuance and payment of the Bonds while in the Commercial Paper Rate; and (D) the Authority and the Company shall enter into any amendment of this Indenture and the Agreement, as applicable, that is needed to comply with DTC’s requirements concerning the issuance and payment of the Bonds in the Commercial Paper Rate.

(h)Binding Effect of Determination and Computations. The determination of each interest rate in accordance with the terms of this Indenture shall be conclusive and binding upon the Owners of the Bonds, the Authority, the Company, the Trustee, the Remarketing Agent and the Credit Facility Issuer, if any.

(i)Further Restriction on any Conversion. Notwithstanding anything else herein to the contrary, any Conversion which would result in the same Credit Facility being in effect for only a portion of the Bonds, shall not be permitted.

SECTION 2.03. Form of Bonds. Bonds shall be authenticated and delivered hereunder solely as fully registered bonds without coupons. Bonds shall be numbered as determined by the Trustee.

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 Trustee. Interest on the Bonds shall be paid by check drawn upon the Trustee and mailed to the Owners of such Bonds as of the close of business on the Record Date with respect to each interest payment date at the registered addresses of such Owners as they shall appear as of the close of business on such Record Date on the registration books maintained pursuant to Section 2.09 hereof notwithstanding the cancellation of any such Bond upon any exchange or registration of transfer subsequent to such Record Date, except that if and to the extent that there should be a default on the payment of interest on any Bond, such defaulted interest shall be paid to the Owners in whose name such Bond (or any Bond or Bonds issued upon any exchange or registration of transfer thereof) is registered as of the close of business on a date selected by the Trustee in its discretion, but not more than fifteen (15) days or less than ten (10) days prior to the date of payment of such defaulted interest; notwithstanding the foregoing, upon request to the Trustee by an Owner of not less than $1,000,000 in aggregate principal amount of Bonds, interest on such Bonds and, after presentation and surrender of such Bonds, the principal thereof shall be paid to such Owner by wire transfer to the account maintained within the continental United States specified by such Owner or, if such Owner maintains an account with the entity acting as Trustee, by deposit into such account; provided that if the Interest Rate Mode is the Commercial Paper Rate, the Daily Rate or the Weekly Rate, interest payable on any Bond shall, at the written request of the registered owner, received by the Trustee at least one Business Day prior to the applicable Record Date (or on or one Business Day prior to an Interest Payment Date if the

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Interest Rate Mode is the Commercial Paper Rate), be payable to the registered owner in immediately available funds by wire transfer to a bank account of such registered owner within the United States or by deposit into a bank account maintained with the Trustee, in either case, to the bank account number of such owner specified in such written request and entered by the Trustee on the Bond Register maintained by the Trustee pursuant to Section 2.09 hereof; provided further, however, that if the Interest Rate Mode is the Commercial Paper Rate, interest on any Bond payable on the Interest Payment Date following the end of the Commercial Paper Rate Period shall be paid only upon presentation and surrender of such Bond at the Principal Office of the Trustee. 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, including, without limitation, such variations as shall be required in connection with a Conversion.

SECTION 2.04. Execution of Bonds. The Bonds shall be executed on behalf of the Authority by two Authorized Officers of the Authority. Each Authorized Officer of the Authority may execute or cause to be executed with a facsimile signature in lieu of a manual signature the Bonds, provided the signature of such Authorized Officer 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 2.05. 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 2.05 is subject to the provisions of Section 11.17 hereof.

SECTION 2.06. Bonds Not General Obligations. Neither Apache County, Arizona nor the State of Arizona shall in any event be liable for the payment of the principal of or

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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 Apache County, Arizona or the State of Arizona within the meaning of any constitutional or statutory provisions whatsoever. The Bonds and the premium, if any, and the interest thereon shall be limited obligations of the Authority payable solely from the Receipts and Revenues of the Authority from the Loan Agreement and the other moneys pledged therefor under this Indenture, and such fact shall be plainly stated on each Bond.

SECTION 2.07. 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 2.07.

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

(b)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;

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

(d)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

(e)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 2.08. 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 tenor 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

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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 2.08.

Every substitute Bond issued pursuant to the provisions of this Section 2.08 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 2.09. Transfer, Registration and Exchange of Bonds. The Trustee shall maintain and keep, at its Principal Office, books for the registration and registration of transfer of Bonds, which, at all reasonable times, shall be open for inspection by the Authority, 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 Trustee, the Trustee shall register or register the transfer in such books, under such reasonable regulations as the Trustee may prescribe. The Trustee shall make all necessary provisions to permit the exchange or registration of transfer of Bonds at its Principal Office.

The transfer of any Bond shall be registered upon the registration books of the Trustee at the written request of the Owner thereof or his attorney duly authorized in writing, upon surrender thereof at the Principal Office of the Trustee, together with a written instrument of transfer satisfactory to the Trustee duly executed by the Owner or his duly authorized attorney. Upon the registration of transfer of any such Bond or Bonds, the Authority shall issue in the name of the transferee, in authorized denominations, a new Bond or Bonds in the same aggregate principal amount and in the same Interest Rate Mode as the surrendered Bond or Bonds. In addition, if such Bond bears interest at the Commercial Paper Rate, the Trustee will make the appropriate insertions on the face of the Bond.

The Authority and the Trustee may deem and treat the Owner of any Bond as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and premium, if any, and, except as provided in Section 2.03 hereof, interest on, such Bond and for all other purposes, and neither the Authority nor the Trustee shall be affected by any notice to the contrary. All such payments so made to any such Owner or upon his order shall be valid and effective to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid.

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

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

Upon issuance and with respect to Bonds in the Lender Rate, the Bonds shall be registered in the name of the Initial Purchaser and or any assignee or transferee of the Initial Purchaser which is a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act of 1933, as amended and is permitted pursuant to the provisions of the Lender Mode Covenants Agreement; provided that if any transfer of Bonds would result in there being more than one Owner of the Bonds such transfer shall not be made until an Administrative Agent has been appointed under the Lender Mode Covenants Agreement. While the Bonds are in the Lender Rate, the Bonds may, at the request of the Owners of all of the Bonds and with the consent of the Company, be transferred and registered in the name of Cede & Co., as nominee for the Depository. Upon the Conversion of the Bonds from the Lender Rate to any other Interest Rate Mode, the Bonds shall be registered in the name of Cede & Co., as nominee for the Depository. Bonds registered in the name of Cede & Co. 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 Depository, or by the Depository to another nominee thereof, or by any nominee of the Depository to any other nominee thereof, or by the Depository or any nominee thereof to any successor securities Depository 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:

(ii)the Depository shall have notified the Company and the Trustee that it is unwilling or unable to continue to act as securities Depository 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 Depository with respect to such Bonds;

(iii)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

(iv)(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 11.19 hereof

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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 Depository may contain a legend reflecting the foregoing restrictions on registration of transfer and exchange.

SECTION 2.10. 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 2.11. Temporary Bonds. Pending the preparation of definitive Bonds, the Authority may execute and the Trustee shall authenticate and deliver temporary Bonds. Temporary Bonds shall be issuable as registered Bonds without coupons, of any authorized denomination, and substantially in the form of the definitive Bonds but with such omissions, insertions and variations as may be appropriate for temporary Bonds, all as may be determined by the Authority. Temporary Bonds may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Bonds. As promptly as practicable the Authority shall execute and shall furnish definitive Bonds and thereupon temporary Bonds may be surrendered in exchange therefor without charge at the Principal Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Bonds a like aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds.

SECTION 2.12. Cancellation of Bonds. All Bonds which shall have been surrendered to the Trustee for payment or redemption, and all Bonds which shall have been surrendered to the Trustee for exchange or registration of transfer, shall be delivered to the Trustee for cancellation. All Bonds delivered to or acquired by the Trustee for cancellation shall be canceled and disposed of by the Trustee in accordance with its customary procedures.

SECTION 2.13. 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

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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 2.14. Applicability of Book-Entry Provisions. Anything in this Indenture to the contrary notwithstanding, if all of the Bonds Outstanding shall have been registered in the name of Cede & Co., as nominee for the Depository, (a) the provisions of the Blanket Issuer Letter of Representations, dated February 17, 1998, between the Authority and The Depository Trust Company relating to the manner of and procedures for payment and redemption of Bonds and the purchase of Bonds in accordance with the terms hereof and the payment of the purchase price and related matters shall apply so long as such Depository shall be the Owner of all Outstanding Bonds and (b) the Authority and the Trustee, as applicable, may enter into a similar agreement, on terms satisfactory to the Company, with any subsequent Depository and the provisions thereof shall apply so long as such Depository shall be the Owner of all Outstanding Bonds.

SECTION 2.15. 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.

SECTION 2.16. CUSIP Numbers. The Authority in issuing the Bonds or in connection with a Conversion may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Owners of the Bonds; provided that the Trustee shall have no liability for any defect in the “CUSIP” numbers as they appear on the any Bond, notice or elsewhere, and, provided further that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Bonds or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Bonds, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the “CUSIP” numbers.

ARTICLE III
REDEMPTION OF BONDS

SECTION 3.01. Redemption Provisions. (III) (III) Optional Redemption. Whenever the Interest Rate Mode for Bonds is the Daily Rate, Weekly Rate or Lender Rate, such Bonds shall be subject to redemption by the Authority at the direction of the Company, on any Business Day, in whole or in part, at a redemption price of 100% of the principal amount thereof, plus accrued interest, if any, to the redemption date.

(i)Whenever the Interest Rate Mode for a Bond is the Commercial Paper Rate, such Bond shall be subject to redemption at the option of the Authority, upon the direction of the Company, in whole or in part, at a redemption price of 100% of the principal amount thereof on the Interest Payment Date for each Commercial Paper Rate Period for that Bond.

(ii)Whenever the Interest Rate Mode for Bonds is the Ten Year Call Term Rate, such Bonds shall be subject to redemption at the option of the Authority, upon the direction

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of the Company, in whole or in part, (A) at any time on or after the tenth anniversary of the commencement of the then current Ten Year Call Term Rate Period, at a redemption price equal to 100% of the principal amount thereof, plus interest accrued, if any, to the redemption date and (B) on the final Interest Payment Date for such Ten Year Call Term Rate Period at a redemption price equal to 100% of the principal amount thereof.

(iii)Whenever the Interest Rate Mode for Bonds is the Five Year Call Term Rate, such Bonds shall be subject to redemption at the option of the Authority, upon the direction of the Company, in whole or in part, (A) at any time on or after the fifth anniversary of the commencement of the then current Five Year Call Term Rate Period, at a redemption price equal to 100% of the principal amount thereof, interest accrued, if any, to the redemption date and (B) on the final Interest Payment Date for such Five Year Call Term Rate Period at a redemption price equal to 100% of the principal amount thereof.

(iv)Whenever the Interest Rate Mode for Bonds is the No Call Term Rate, such Bonds shall be subject to redemption at the option of the Authority, upon the direction of the Company, in whole or in part on the final Interest Payment Date for such No Call Term Rate Period at a redemption price equal to 100% of the principal amount thereof.

If the Company has given notice of a change in the Ten Year Call Term Rate Period pursuant to Section 2.02(d) notice of a change in the Five Year Call Term Rate Period pursuant to Section 2.02(e), notice of a change in the No Call Term Rate Period pursuant to Section 2.02(f) or notice of Conversion of the Interest Rate Mode for the Bonds to the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Term Rate pursuant to Section 2.02(g) and, at least thirty (30) days prior to such change in the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Rate Period for the Bonds or such Conversion of an Interest Rate Mode for the Bonds to the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Term Rate the Company has provided (i) a certification of the Remarketing Agent to the Trustee and the Authority that the redemption provisions applicable to the subject Bonds are not consistent with Prevailing Market Conditions and (ii) an opinion of Bond Counsel that a change in the redemption provisions of the subject Bonds will not, in and of itself, adversely affect any exclusion of interest on such Bonds from gross income for purposes of federal income taxation, the redemption provisions may be revised, effective as of the date of such change in the Ten Year Call Term Rate Period, the Five Year Call Term Rate Period or the No Call Term Rate Period or the Conversion Date, as determined by the Remarketing Agent in its judgment, taking into account the then Prevailing Market Conditions as set forth in such certification, which shall be appended by the Trustee to its counterpart of this Indenture. Any such revision of the redemption provisions shall not be considered an amendment of or a supplement to this Indenture and shall not require the consent of any Bondholder or any other Person or entity.

(j)Extraordinary Optional Redemption. Whenever the Interest Rate Mode for Bonds is the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Term Rate, the Bonds shall be subject to redemption by the Authority, at the direction of the Company, in whole, or, in the case of events described in clause (iv) below, in part, at any time at 100% of the principal amount thereof plus accrued interest, if any, to the redemption date, if:

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

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

(iv)the operation of the Facilities or the Plant 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; or

(v)the Company shall have delivered to the Trustee a written certificate to the effect that by reason of a change in use of the Facilities or any portion thereof for federal income tax purposes, the Company has been unable, after reasonable effort, to obtain an opinion of Bond Counsel, that it is more likely than not that Section 150 of the Code will not prevent interest payable under the Loan Agreement from being deductible for federal income tax purposes.

(k)Mandatory Redemption. The Bonds shall be subject to mandatory redemption by the Authority, at 100% of the principal amount thereof plus accrued interest to the redemption date, on the 180th day (or such earlier date as may be designated by the Company) after a final determination by a court of competent jurisdiction or an administrative agency, to the effect that, as a result of a failure by the Company to perform or observe any covenant, agreement or representation contained in the Loan Agreement, the interest payable on the Bonds is included for federal income tax purposes in the gross income of the owners thereof, other than any owner of a Bond who is a “substantial user” of the Facilities or other facilities deemed financed or refinanced by the Bonds for federal income tax purposes or a “related person” within the meaning of Section 103(b)(13) of the 1954 Code or Section 147(a) of the 1986 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 other facilities deemed financed or refinanced by the Bonds for federal income tax purposes or a “related person” within the meaning of Section 103(b)(13) of the 1954 Code or Section 147(a) of the 1986 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 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

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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. The Trustee shall treat any Bond of a denomination greater than the minimum authorized denomination for the Interest Rate Mode then applicable to the Bonds as representing that number of separate Bonds each of that minimum authorized denomination (and, if any Bond is not in a denomination that is an integral multiple of the minimum authorized denomination for such Interest Rate Mode, one separate Bond of the remaining principal amount of the Bond) as can be obtained by dividing the actual principal amount of such Bond by that minimum authorized denomination; provided that no Bond shall be redeemed in part if it results in the unredeemed portion of the Bond being in a principal amount other than an authorized denomination. If it is determined that one or more, but not all, of the units of principal amount represented by any such Bond is to be called for redemption, then, upon notice of intention to redeem such unit or units, the Owner of such Bond shall forthwith surrender such Bond to the Trustee for (y) payment to such Owner of the redemption price (including the redemption premium, if any, and accrued interest to the date fixed for redemption) of the 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 the portion called for redemption shall fail to present such Bond to the Trustee for payment and exchange as aforesaid, such Bond shall, nevertheless, become due and payable on the date fixed for redemption to the extent of the unit or units of principal amount called for redemption (and to that extent only).

SECTION 3.03. Procedure for Redemption. (III) In the event any of the Bonds are called for redemption, the Trustee shall give notice, in the name of the Authority, of the redemption of such Bonds, which notice shall (i) specify the Bonds to be redeemed, the redemption date, the redemption price, and the place or places where amounts due upon such redemption will be payable (which shall be the Principal Office of the Trustee) and, if less than all of the Bonds are to be redeemed, the numbers 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 or Electronic Means at least twenty (20) days prior to the date fixed for redemption to the Owners of the Bonds to be redeemed; provided, however, that failure duly to give such Notice by Mail or Electronic Means, or any defect therein, shall not affect the validity of any proceedings for the redemption of Bonds as to which there shall have been no such failure or defect. If a notice of redemption shall be unconditional, or if the conditions of a conditional notice or redemption shall have been satisfied, then upon presentation and surrender of Bonds so called for redemption at the place or places of payment, such Bonds shall be redeemed. The Trustee shall promptly deliver to the Company a copy of each such notice of redemption.

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(b)With respect to any notice of redemption of Bonds in accordance with Section 3.01(a) hereof, unless, upon the giving of such notice, such Bonds shall be deemed to have been paid within the meaning of Article IX 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 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 and such failure to redeem shall not constitute an Event of Default hereunder. In the event that such notice of redemption contains such a condition and such moneys are not so received or any other condition referenced in the notice of redemption shall not have been met, the redemption shall not be made and the Trustee shall within a reasonable time thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received or such other conditions were not satisfied.

(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 IX hereof.

(d)In addition to any conditional calls otherwise permitted pursuant to the terms of this Indenture, any notice of redemption delivered pursuant to Section 3.01(a) hereof may be revoked by the Company by written notice delivered to the Trustee by the Company on or prior to the date set for redemption date. In the event that a notice of redemption is so revoked by the Company, such notice shall be of no force and effect, the redemption shall not be made, such failure to redeem shall not constitute an Event of Default hereunder and the Trustee shall, within a reasonable time thereafter, give notice, in the manner in which the notice of redemption was given, that such notice of redemption was revoked by the Company.

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), (b) or (c) of the first paragraph of Section 10.01 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.

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SECTION 3.06. Purchase in Lieu of Redemption. Bonds subject to optional redemption or extraordinary optional redemption as provided in this Article may be purchased in lieu of redemption on the applicable redemption date at a purchase price equal to the redemption price thereof, plus accrued interest, if any, thereon to, but not including, the date of such purchase, if the Trustee has received a written request from the Company on or before the Business Day prior to the date the Bonds would otherwise be subject to redemption specifying that the moneys provided or to be provided by the Company shall be used to purchase such Bonds in lieu of redemption. Moneys received for such purpose shall be held by the Trustee in the Bond Fund in trust for the Owner of the Bonds so purchased. While a Credit Facility is in place in respect of any Bonds, any such purchase of such Bonds will be made from moneys received from a drawing on such Credit Facility and applied as provided herein. No purchase of Bonds by the Company pursuant to this subsection or advance or use of any moneys to effectuate any such purpose shall be deemed to be a payment or redemption of the Bonds or any portion thereof, and such purchase shall not operate to extinguish or discharge the indebtedness evidenced by such Bonds.

ARTICLE IV
THE BOND FUND

SECTION 4.01. Creation of Bond Fund. (IV) 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 Apache Industrial Development Revenue Bonds, 2013 Series A (Tucson Electric Power Company Springerville Project) Bond Fund” to be held for the benefit of the Owners of the Bonds, the moneys in which, in accordance with Section 4.01(c), the Trustee shall make available to pay (i) the principal or redemption price of Bonds as they mature or become due, upon surrender and (ii) the interest on Bonds as it becomes payable. The Bond Fund shall be an Eligible Account. There are hereby established with the Trustee within the Bond Fund two separate and segregated accounts, to be designated “Company Account” and “Credit Facility Account”. The Credit Facility Account and the Company Account are maintained as separate and segregated accounts and any moneys held therein shall not be commingled with any other moneys or funds. The Bond Fund, and all moneys and certificated securities therein, shall be kept in the possession of the Trustee. Neither the Authority nor the Company shall have any interest in the Credit Facility Account.

(b)There shall be deposited into the accounts of the Bond Fund from time to time the following:

(v)into the Company Account, (A) all Loan Payments, and (B) all other moneys received by the Trustee under and pursuant to the provisions of this Indenture or any of the provisions of the Loan Agreement, when accompanied by directions from the Company that such moneys are to be paid to the Bond Fund; and

(vi)into the Credit Facility Account, all moneys drawn by the Trustee under a Credit Facility, if any, to pay principal or redemption price of the Bonds and interest on the Bonds and deposited directly therein, and only such moneys.

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(c)Except as provided in subsection (e) of this Section, moneys in the Bond Fund shall be used solely for the payment of the principal or redemption price of the Bonds and interest on the Bonds from the following source or sources but only in the following order of priority:

(xii)proceeds of the Credit Facility, if any, deposited directly into, and held in, the Credit Facility Account, provided that, in no event shall moneys held in the Credit Facility Account be used to pay any premium which may be due on the Bonds pursuant to Section 3.01(a) unless the Credit Facility, if any, then in effect is available to pay such premium, and provided further, that in no event shall moneys in the Credit Facility Account be used to pay any amount which may be due on Bonds held pursuant to Section 5.05 or any other Bonds registered in the name of the Company; and

(xiii)moneys held in the Company Account.

(d)Except with respect to payments of principal or redemption price of and interest on Bonds held pursuant to Section 5.05 or any other Bonds registered in the name of the Company, the Trustee shall draw upon or demand payment under the Credit Facility, if any, then held by the Trustee in accordance with its terms in an amount, after taking into account any moneys then on deposit in the Credit Facility Account, and in a manner so as to provide immediately available funds for principal or redemption price and interest to the Bondholders when due, whether upon maturity, redemption, acceleration, Interest Payment Date or otherwise, with the Trustee making any such drawing or demand under such Credit Facility in respect of interest on the Bonds in an amount sufficient to pay interest through the date such drawing or demand is payable in accordance with the terms of such Credit Facility. If such Credit Facility fails, by the time provided in the Credit Facility on the date such payment is due, to honor a drawing to provide the immediately available funds for principal or redemption price and interest on the Bonds or the Credit Facility has been repudiated, the Trustee shall immediately (but in no event later than 2:30 p.m. (New York City time) on such date) notify the Company in writing or by Electronic Notice and the Company shall pay amounts sufficient for the principal or redemption price of and interest on the Bonds when due.

(e)While a Credit Facility is in effect and there is no default in the payment of principal or redemption price of or interest on the Bonds, any amounts in the Company Account shall be paid to the Credit Facility Issuer to the extent of any amounts that the Company owes the Credit Facility Issuer pursuant to the Reimbursement Agreement (as certified in writing by the Credit Facility Issuer to the Trustee and the Company). Any amounts remaining in the Bond Fund (first, from the Credit Facility Account, and second, from the Company Account) after payment in full of the principal or redemption price of and interest on the Bonds (or provision for payment thereof) and payment of any outstanding fees, expenses and indemnities of the Trustee (including its reasonable attorney fees and expenses) shall be paid, first, to the Credit Facility Issuer, to the extent of any amounts that the Company owes the Credit Facility Issuer pursuant to the Reimbursement Agreement (as certified in writing by the Credit Facility Issuer to the Trustee and the Company) and, second, to the Company.

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(f)In the event that the Bond Fund no longer qualifies as an Eligible Account, the Trustee shall, within thirty (30) calendar days, move the Bond Fund to another financial institution such that the Eligible Account requirement will again be satisfied.

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. Custody of Bond Fund; Withdrawal of Moneys. The Bond Fund shall be in the custody of the Trustee but in the name of the Authority and the Authority hereby authorizes and directs the Trustee to withdraw from the Bond Fund funds constituting part of the Trust Estate sufficient to pay the principal of and 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 4.04. 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 Trustee for the benefit of the Owners thereof, the Trustee shall segregate and hold such moneys in trust, without liability for interest thereon, for the benefit of the Owners of such Bonds, who shall, except as provided in the following paragraph, thereafter be restricted exclusively to such fund or funds for the satisfaction of any claim of whatever nature on their part under this Indenture or relating to said Bonds.

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

SECTION 4.05. Moneys Held in Trust. All moneys and Investment Securities held by the Trustee in the Bond Fund, and all moneys required to be deposited with or paid to the Trustee for deposit into the Bond Fund, and all moneys withdrawn from the Bond Fund and held by the Trustee, shall be held by the Trustee, in trust, and such moneys and Investment Securities (other than moneys held pursuant to Section 4.04 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

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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 IX hereof.

ARTICLE V
PURCHASE AND REMARKETING OF BONDS

SECTION 5.01. Purchase of Bonds.

(e)Purchase of the Bonds on Demand of Owner.

(vi)During Daily Rate Period. If the Interest Rate Mode for Bonds is the Daily Rate, any such Bond shall be purchased on the demand of the owner thereof, on any Business Day during a Daily Rate Period at a purchase price equal to the principal amount thereof plus accrued interest, if any, to the Purchase Date upon written notice or Electronic Notice to the Remarketing Agent and to the Trustee, at its Principal Office not later than 11:00 a.m. (New York City time) on such Business Day of such Owner’s demand for purchase pursuant to this Section 5.01(a)(i), which notice (A) states the principal amount (or portion thereof in an authorized denomination) of such Bond to be purchased, (B) states the Purchase Date on which such Bond shall be purchased and (C) irrevocably requests such purchase and agrees to deliver such Bond, if not in Book-Entry Form, duly endorsed in blank for transfer, with all signatures guaranteed, to the Trustee at or prior to 11:00 a.m. (New York City time) on such Purchase Date.

The Trustee shall promptly, but in no event later than 11:15 a.m. (New York City time) on such Business Day, provide the Credit Facility Issuer with Electronic Notice of the receipt of the notice referred to in the preceding paragraph.

(vii)During Weekly Rate Period. If the Interest Rate Mode for Bonds is the Weekly Rate, any such Bond shall be purchased on the demand of the owner thereof, on any Business Day during a Weekly Rate Period at a purchase price equal to the principal amount thereof plus accrued interest, if any, to the Purchase Date, upon written notice to the Trustee, at its Principal Office at or before 5:00 p.m. (New York City time) on a Business Day not later than the seventh day prior to the Purchase Date, which notice (A) states the principal amount (or portion thereof in an authorized denomination) of such Bond to be purchased, (B) states the Purchase Date on which such Bond shall be purchased and (C) irrevocably requests such purchase and agrees to deliver such Bond, if not in Book-Entry Form, duly endorsed in blank for transfer, with all signatures guaranteed, to the Trustee at or prior to 12:00 Noon (New York City time) on such Purchase Date.

The Trustee shall promptly, but in no event later than 4:00 p.m. (New York City time) on the next succeeding Business Day, provide the Remarketing Agent and the Credit Facility Issuer with Electronic Notice of the receipt of the notice referred to in the preceding paragraph.

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(viii)Notwithstanding any other provision of this Section 5.01(a), the Owner of a Bond may demand purchase of a portion of such Bond only if the portion to be purchased and the portion to be retained by such Owner each will be in an authorized denomination.

(f)Mandatory Purchases of Bonds.

(ii)Mandatory Purchase on Conversion Date. Bonds shall be subject to mandatory purchase at a purchase price equal to the principal amount thereof plus accrued interest, if any, plus if the Interest Rate Mode for such Bonds is the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Term Rate, the redemption premium, if any, which would be payable under Section 3.01(a) if those Bonds were redeemed on the Purchase Date (A) on each Conversion Date for such Bonds for any Conversion and (B) on the effective date of any change in the Ten Year Call Term Rate Period, the Five Year Call Term Rate Period or the No Call Term Rate Period for such Bonds by the Company pursuant to Section 2.02(d)(ii), Section 2.02(e)(ii) or Section 2.02(f)(ii), as applicable.

(iii)Mandatory Purchase on Cancellation, Substitution, Expiration or Termination of Credit Facility. The Bonds shall be subject to mandatory purchase at a purchase price equal to the principal amount thereof, plus accrued interest, if any, to the Purchase Date, on the Business Day preceding the date of cancellation, termination or substitution by the Trustee at the written request of the Company of the then current Credit Facility or the fifteenth day (or if such day is not a Business Day, the preceding Business Day) preceding the stated expiration of the term of the then current Credit Facility, if any; provided, that, if the then current Credit Facility, if any, shall be cancelled, terminated or substituted by the Trustee at the request of the Company, including such cancellation in connection with the delivery of an Alternate Credit Facility, the Purchase Date shall be a Business Day on which the Bonds are subject to optional redemption and the purchase price in such event shall also include, if applicable, a premium equal to the redemption premium which would be payable under Section 3.01(a) if the Bonds were redeemed on the Purchase Date; provided, further, that the Bonds shall not be so purchased if the Company shall have furnished Ratings Confirmation to the Trustee.

(iv)Mandatory Purchase at Direction of Credit Facility Issuer. If a Credit Facility is in effect, the Bonds shall be subject to mandatory purchase at a purchase price equal to the principal amount thereof, plus accrued interest, if any, to the Purchase Date, if the Trustee receives written notice from the Credit Facility Issuer directing such mandatory purchase upon the occurrence and continuance of an event of default under the Reimbursement Agreement. Such mandatory purchase shall occur on the second Business Day after the date of receipt by the Trustee of the notice sent by the Credit Facility Issuer. Upon receipt of such notice, the Trustee shall immediately: (A) draw on that Credit Facility in an amount sufficient to pay the principal and interest which will be due on the Purchase Date and hold such amount uninvested and without any liability for interest until the Purchase Date when such amount shall be applied to pay the amounts due to the owners of the Bonds on the Purchase Date, and (B) notify the Remarketing Agent and, as soon as practicable but in no event less than one Business Day prior to the Purchase Date, Owners of such mandatory purchase by Mail or Electronic Means in accordance with Section 7.05(b).

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(v)Mandatory Purchase on Business Day After End of Commercial Paper Rate Period, Ten Year Call Term Rate Period, Five Year Call Term Rate Period or No Call Term Rate Period. Whenever the Interest Rate Mode for a Bond is the Commercial Paper Rate, the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Term Rate, such Bond shall be subject to mandatory purchase on the Business Day following the end of each Commercial Paper Rate Period, Ten Year Call Term Rate Period, Five Year Call Term Rate Period or No Call Term Rate Period, as the case may be, for such Bond at a purchase price equal to the principal amount thereof plus accrued interest, if any, to the Purchase Date.

(vi)Mandatory Purchase at Direction of Lender. Whenever the Interest Rate Mode for the Bonds is the Lender Rate and a Lender Mode Covenants Agreement is in effect, the Bonds shall be subject to mandatory purchase at a purchase price equal to the principal amount thereof, plus accrued interest, if any, to the Purchase Date, if the Trustee receives written notice from the Lender directing such mandatory purchase upon the occurrence and continuance of a “Mandatory Purchase Event” under the Lender Mode Covenants Agreement. Such mandatory purchase shall occur on the second Business Day after the date of receipt by the Trustee of the notice sent by the Administrative Agent.

(g)Payment of Purchase Price. The purchase price of any Bond purchased pursuant to Section 5.01 (and delivery of a replacement Bond in exchange for the portion of any Bond not purchased if such Bond is purchased in part only) shall be payable on the Purchase Date upon delivery of such Bond to the Trustee on such Purchase Date; provided that such Bond must be delivered to the Trustee at or prior to 12:00 Noon (New York City time) for payment by the close of business on the date of such purchase.

In the event any Purchase Date for a Bond is also an Interest Payment Date for such Bond, interest on such Bond shall be paid to the Owner pursuant to the provisions set forth in Section 2.13.

Any Bond delivered for payment of the purchase price shall be accompanied by an instrument of transfer thereof, in form satisfactory to the Trustee executed in blank by the owner thereof and with all signatures guaranteed by a member of an Approved Signature Guarantee Medallion Program. The Trustee may refuse to accept delivery of any Bond for which an instrument of transfer satisfactory to it has not been provided and shall have no obligation to pay the purchase price of such Bond until a satisfactory instrument is delivered.

If the owner of any Bond (or portion thereof) that is subject to purchase pursuant to this Article fails to deliver such Bond with an appropriate instrument of transfer to the Trustee for purchase on the Purchase Date, and if the Trustee is in receipt of the purchase price therefor, such Bond (or portion thereof) shall nevertheless be purchased on the Purchase Date hereof. Any owner who so fails to deliver such Bond for purchase on (or before) the Purchase Date shall have no further rights thereunder, except the right to receive the purchase price thereof from those moneys deposited with the Trustee in the Purchase Fund pursuant to Section 5.03 upon presentation and surrender of such Bond to the Trustee properly endorsed for transfer in blank with all signatures guaranteed. The Trustee shall, as to any Bonds which have not been delivered to it, promptly notify the Remarketing Agent of such non delivery. Upon such notification, the

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Trustee shall place a stop transfer against an appropriate amount of Bonds registered in the name of the Owner(s) on the Register, commencing with the lowest serial number Bond registered in the name of such Owner(s) (until stop transfers have been placed against an appropriate amount of Bonds) until the appropriate purchased Bonds are surrendered to the Trustee.

The Trustee shall hold all Bonds delivered pursuant to this Section 5.01 in trust for the benefit of the Owners thereof until moneys representing the purchase price of such Bonds shall have been delivered to or for the account of or to the order of such Bondholders, and thereafter shall deliver replacement Bonds, prepared by the Trustee in accordance with the directions of the Remarketing Agent and authenticated by the Trustee, for any Bonds purchased in accordance with the directions of the Remarketing Agent, to the Remarketing Agent for delivery to the purchasers thereof.

SECTION 5.02. Remarketing of Bonds. (V) Upon the receipt by the Remarketing Agent of any notice pursuant to Section 5.01(a), the Remarketing Agent, subject to the terms of the Remarketing Agreement, shall use its best efforts to offer for sale and sell the Bonds in respect of which such notice has been given. If a Remarketing Agent shall have been appointed, unless otherwise instructed by the Company and with the consent of the Credit Facility Issuer, the Remarketing Agent, subject to the terms of the Remarketing Agreement, shall use its best efforts to offer for sale and sell any Bonds purchased pursuant to Section 5.01(b)(i), (ii) and (iv). Any such Bonds shall be offered: (i) at a price equal to the principal amount thereof, plus interest accrued, if any, to the Purchase Date, and (ii) pursuant to terms calling for payment of the purchase price on such Purchase Date against delivery of such Bonds; provided, however, in no event shall the Remarketing Agent sell any Bond if the amount to be received from the sale of such Bond (including accrued interest, if any) is less than the principal amount thereof, plus accrued interest to the sale date. The Remarketing Agent, the Trustee or the Credit Facility Issuer may purchase any Bond offered pursuant to this Section 5.02 for their respective accounts.

(b)The Remarketing Agent shall, subject to the terms of the Remarketing Agreement, use its best efforts to offer for sale and sell, on behalf of the Company, Bonds held pursuant to Section 5.05 other than Bonds purchased pursuant to Section 5.01(b)(iii) and, at the direction of the Company, any Bonds held for the Company by the Trustee pursuant to Section 5.04(a)(iii)(A); provided that any Bonds held pursuant to Section 5.05 shall only be released as provided in Section 5.05. Any such Bonds shall be offered at a purchase price equal to the principal amount thereof plus accrued interest, if any, thereon to the date of purchase. If any Bonds to be remarketed have been called for redemption, the Remarketing Agent shall give notice thereof to prospective purchasers of Bonds.

SECTION 5.03. Purchase Fund; Purchase of Bonds Delivered to Trustee. (V) There is hereby established with the Trustee a Purchase Fund, which shall be an Eligible Account, the moneys in which shall be used solely to pay the purchase price of Bonds purchased pursuant to Section 5.01. There are hereby established with the Trustee within the Purchase Fund two separate and segregated accounts, to be designated “Remarketing Proceeds Account” and “Credit Facility Proceeds Account”. The Purchase Fund and the accounts therein shall be maintained as separate and segregated accounts and any moneys held therein shall not be

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commingled with moneys in the Company Fund established by Section 5.07 or in any other account or with any other funds of the Trustee, shall be held on and after any Purchase Date solely for the benefit of the owners of Bonds purchased on such Purchase Date pursuant to Section 5.01, shall not secure any other Bonds or be available for any purpose except as described in this paragraph and shall not be invested. Neither the Authority nor the Company shall have any interest in the Purchase Fund.

(b)There shall be deposited into the accounts of the Purchase Fund from time to time the following:

(v)into the Remarketing Proceeds Account, only such moneys representing proceeds from the resale by the Remarketing Agent of Bonds, as described in Section 5.02(a), to Persons other than the Company, its Affiliates, the Authority or any guarantor of the Bonds, delivered by the Remarketing Agent to the Trustee pursuant to Section 5.07 and deposited directly therein; and

(vi)into the Credit Facility Proceeds Account, only such moneys drawn by the Trustee under a Credit Facility, if any, for the purchase of Bonds.

(c)On each date Bonds are to be purchased pursuant to Section 5.01, such Bonds shall be purchased, but only from the funds listed below, from the owners thereof. Funds for the payment of such purchase price shall be derived from the following sources in the order of priority indicated, provided that funds derived from Section 5.03(c)(iii) shall not be combined with funds derived from Section 5.03(c)(i) or (ii) to purchase any Bonds (or authorized denomination thereof):

(ix)Proceeds of the remarketing of such Bonds to Persons other than the Company, its Affiliates, the Authority or any guarantor of the Bonds pursuant to Section 5.02(a) and furnished to the Trustee by the Remarketing Agent and deposited directly into, and held in, the Remarketing Proceeds Account;

(x)Proceeds of a draw on the Credit Facility, if any, deposited by the Trustee directly into, and held in, the Credit Facility Proceeds Account; and

(xi)Moneys paid by the Company (including the proceeds of the remarketing of such Bonds to the Company, its Affiliates, the Authority or any guarantor of the Bonds) to pay the purchase price furnished to the Trustee.

(d)In the event that the Purchase Fund no longer qualifies as an Eligible Account, the Trustee shall, within 30 calendar days, move the Purchase Fund to another financial institution such that the Eligible Account requirement will again be satisfied.

Anything herein to the contrary notwithstanding, the Trustee shall not be obligated to use its own funds to purchase any Bonds hereunder.

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SECTION 5.04. Delivery of Remarketed or Purchased Bonds. (V) Bonds purchased pursuant to Section 5.03 shall be delivered as follows:

(i)Bonds sold by the Remarketing Agent to Persons or entities other than the Company, its Affiliates, the Authority or any guarantor of the Bonds, shall be delivered by the Remarketing Agent to the purchasers thereof.

(ii)Bonds, the principal and interest portions of the purchase price of which are paid with moneys described in Section 5.03(c)(ii), shall be delivered to the Trustee to be held pursuant to Section 5.05.

(iii)Bonds purchased solely with moneys described in Section 5.03(c)(iii) shall, at written direction of the Company, be (A) delivered to or held by the Trustee for the account of the Company, (B) delivered to the Trustee for cancellation or (C) delivered to the Company.

(b)If, on any date prior to the release of Bonds held by or for the account of the Company pursuant to Section 5.04(a)(iii), all Bonds are called for redemption pursuant to Section 3.01(a) or Section 3.01(b) or an acceleration of the Bonds pursuant to Section 10.01 occurs, such Bonds shall be deemed to have been paid and shall thereupon be delivered to and cancelled by the Trustee.

SECTION 5.05. Bonds Pledged to the Credit Facility Issuer. The Trustee shall register in its name as the Credit Facility Issuer’s designee or such other party designated by the Credit Facility Issuer any Bonds delivered to the Trustee pursuant to Section 5.04(a)(ii) upon receipt of notice from the Trustee of such delivery. Thereafter, the Trustee shall hold such Bonds pledged for the account of and subject to the security interest in favor of the Credit Facility Issuer. Each such Bond shall constitute a Pledged Bond until released as provided herein, shall be deposited in a separate custodial account established by the Trustee for the Credit Facility Issuer, and shall be released only (a) in the case of Bonds which were not purchased pursuant to Section 5.01(b)(ii) or Section 5.01(b)(iii), after the Trustee shall have been notified in writing (either by hand delivery or facsimile transmission) by the Credit Facility Issuer that the Credit Facility has been reinstated for the principal and interest portions of the drawing made to pay the purchase price of such Bond and (b) either upon telephonic notice (promptly confirmed within one Business Day in writing) to the Trustee from the Remarketing Agent that such Bond has been remarketed at a purchase price equal to the principal amount thereof plus accrued interest, if any, thereon to the date of purchase or upon Electronic Notice from the Credit Facility Issuer which directs the Trustee to release such Bond to the Company. Upon the remarketing of a Pledged Bond as described in the preceding sentence, such Bond shall be released and delivered to the purchaser thereof as identified by the Remarketing Agent against receipt of such purchase price from the purchaser on such date. The proceeds received from the remarketing of any Pledged Bond shall be paid by wire transfer and in immediately available funds on the Purchase Date to the Credit Facility Issuer. Upon receipt of the above described Electronic Notice from the Credit Facility Issuer, the Trustee shall deliver such Bonds to the Company to be held pursuant to Section 5.04(a)(iii).

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On each Interest Payment Date prior to the release of Pledged Bonds, the Trustee shall apply moneys credited to the Company Account of the Bond Fund to the payment of the principal, redemption price, if any, and interest on such Pledged Bonds in the manner provided in Section 4.01, but shall not draw on the Credit Facility or otherwise use moneys credited to the Credit Facility Account of the Bond Fund for that purpose to any extent whatsoever.

If, on any date prior to the release of Pledged Bonds, all Bonds are called for redemption pursuant to Article III hereof or the Trustee declares an acceleration of the Bonds pursuant to Section 10.01 hereof, then those Pledged Bonds shall be deemed to have been paid by the Credit Facility Issuer in respect of principal of the Bonds upon such redemption or acceleration and shall thereupon be delivered to the Trustee for cancellation.

It is recognized and agreed by the Trustee that such Pledged Bonds are held by the Trustee for the benefit of the Credit Facility Issuer as a secured creditor.

Notwithstanding anything to the contrary in this Section 5.05, if and for so long as the Bonds are to be registered in accordance with Section 2.14, the registration requirements under this Section shall be deemed satisfied if Pledged Bonds are (i) registered in the name of the Depository or its nominee in accordance with Section 2.14, (ii) credited on the books of the Depository to the account of the Trustee (or its nominee) and (iii) further credited on the books of the Trustee (or such nominee) to the account of the Credit Facility Issuer (or its designee).

SECTION 5.06. Drawings on Credit Facility. (V) The Trustee shall prior to 12:00 noon (New York City time) on each Purchase Date draw under the Credit Facility, if any, held by the Trustee in accordance with its terms in a manner so as to furnish immediately available funds by 2:00 p.m. (New York City time) on such Purchase Date, in an amount sufficient, together with moneys described in Section 5.03(c)(i) and available for such purchase, to enable the Trustee to pay the purchase price of such Bonds to be purchased on such Purchase Date, from moneys on deposit in the Credit Facility Proceeds Account, provided however, that in no event shall moneys in the Credit Facility Proceeds Account be used to pay any amount which may be due on Bonds held pursuant to Section 5.05.

(b)If any Credit Facility permits any drawings to be made later than is provided herein, the Trustee shall make any drawing required under this Section 5.06 in accordance with the terms of the Credit Facility for drawing thereunder in a manner so as to be reasonably assured that immediately available funds will be available to the Trustee by 2:00 p.m. (New York City time) on a Purchase Date to pay the purchase price and the Trustee shall deposit those moneys directly into the Credit Facility Proceeds Account.

(c)If the Credit Facility Issuer fails by 2:00 p.m. on any Purchase Date, for any reason, to provide an amount sufficient, together with moneys described in Section 5.03(c)(i) and available for such purchase, to enable the Trustee to pay the purchase price of such Bonds to be purchased on such Purchase Date or the Credit Facility has been repudiated, the Trustee shall immediately notify the Company by telephone and by Electronic Notice of such failure to pay and the Company shall furnish immediately available funds by 3:00 p.m. (New York City time) on such Purchase Date, in an amount sufficient, together with moneys described in Section 5.03

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(c)(i) and available for such purchase, to enable the Trustee to pay the purchase price of such Bonds to be purchased on such Purchase Date.

SECTION 5.07. Delivery of Proceeds of Sale. The proceeds of the remarketing of any Bonds by the Remarketing Agent shall be delivered by the Remarketing Agent directly to the Trustee no later than 11:30 a.m. (New York City time) on the Purchase Date, and, except as described in the next sentence, all such remarketing proceeds shall be deposited directly into the Remarketing Proceeds Account. The proceeds of any remarketing of Bonds by the Remarketing Agent to the Company, its affiliates, the Authority or any guarantor of the Bonds shall be delivered to the Trustee in accordance with the first sentence of this Section, separate and segregated from any other moneys and identified by the Remarketing Agent as to source, but shall not be deposited in the Purchase Fund but shall instead be deposited in a fund known as the “Company Fund” which is hereby established with the Trustee and which shall be maintained as a separate and segregated account and any moneys held therein shall not be commingled with moneys in the Purchase Fund or any other account or with any other funds of the Trustee. In the absence of any of the aforesaid identifications, the Trustee may conclusively assume that no moneys representing the proceeds from the remarketing by the Remarketing Agent of any Bonds were proceeds from the remarketing of Bonds to the Company, its Affiliates, the Authority or any guarantor of the Bonds. There shall also be deposited into the Company Fund from time to time all Purchase Payments made by the Company.

If a Credit Facility is then in effect, the moneys in the Company Fund shall be paid, to the extent not needed on such date to pay the purchase price of Bonds, first, to the Credit Facility Issuer, to the extent of any amounts that the Company owes the Credit Facility Issuer pursuant to a Reimbursement Agreement (as certified in writing by the Credit Facility Issuer to the Trustee and the Company) and, second, to the Company. If any Bonds held by the Trustee for the account of the Company pursuant to Section 5.04(a)(iii)(A) are remarketed by the Remarketing Agent pursuant to Section 5.02(b), then the proceeds received from such remarketing shall be remitted by the Trustee to the Company. If any Bonds held by the Trustee pursuant to Section 5.05 are remarketed by the Remarketing Agent pursuant to Section 5.02(b), then the proceeds received from such remarketing shall, on the date of such remarketing, be delivered by the Remarketing Agent to the Trustee, for the account of the Credit Facility Issuer, with Electronic Notice of the amount of such proceeds given by the Remarketing Agent to the Credit Facility Issuer, the Trustee and the Company, against delivery of such Bonds, subject to Section 5.05 hereof.

SECTION 5.08. Limitations on Purchase. Anything in this Indenture to the contrary notwithstanding, there shall be no purchase of (a) less than the entire amount of any Bond unless the amount to be purchased and the amount to be retained by the owner are in authorized denominations or (b) any Bond upon the demand of the Owner if the Bonds have been declared due and payable pursuant to Section 10.01.

SECTION 5.09. Duties of the Trustee with Respect to Tenders. The Trustee agrees:

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(iv)to hold all Bonds delivered to it pursuant to Section 5.01, as agent and bailee of, and in escrow for the benefit of, the respective owners thereof until moneys representing the purchase price of such Bonds shall have been delivered to or for the account of or to the order of such owners;

(v)to hold all moneys (without investment thereof or responsibility for interest thereon) delivered to it hereunder for the purchase of Bonds pursuant to Section 5.01 as agent and bailee of, and in escrow for the benefit of, the Person or entity which shall have so delivered such moneys until the Bonds purchased with such moneys shall have been delivered to or for the account of such Person or entity and thereafter to hold such moneys (without investment thereof) as agent and bailee of, and in escrow for the benefit of, the Person or entity which shall be entitled thereto on the Purchase Date;

(vi)to hold Bonds for the account of the Company as contemplated by Section 5.04(a)(iii);

(vii)to hold for the Credit Facility Issuer Bonds purchased pursuant to Section 5.01 with moneys representing the proceeds of a drawing under the Credit Facility by the Trustee as contemplated by Section 5.05; and

(viii)to keep such books and records as shall be consistent with corporate trust industry practice and to make such books and records available for inspection by the Authority and the Company at all reasonable times upon prior written notice.

ARTICLE VI
INVESTMENTS

SECTION 6.01. Investments. The moneys in the Bond Fund (except moneys in the Credit Facility Account) shall, at the written direction of the Company, be invested and reinvested in Investment Securities, such direction to specify the particular investment to be made. 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 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 11.05 hereof. Moneys held in the Credit Facility Account shall not be invested and the Trustee shall not be liable for the payment of interest thereon. The Trustee shall have no

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liability for any fees, costs, taxes, losses or other charges incurred in connection with any investment, reinvestment or liquidation of any investment hereunder.

ARTICLE VII
CREDIT FACILITIES

SECTION 7.01. Letter of Credit. Each Letter of Credit provided while the Interest Rate Mode for the Bonds is the Daily Rate or the Weekly Rate shall provide for direct-payments to or upon the order of the Trustee as hereinafter set forth and shall be the irrevocable obligation of the issuer of the Letter of Credit to pay to or upon the order of the Trustee, upon request and in accordance with the terms thereof (and the Trustee agrees to draw on the Letter of Credit at such times and in such amounts as may be required to provide the following amounts at the required times), up to (a) an amount equal to the principal amount of the Bonds (i) to pay the principal of the Bonds when due whether at stated maturity, upon redemption or acceleration or (ii) to enable the Trustee to pay the portion of the purchase price equal to the principal amount of Bonds purchased pursuant to Section 5.01 to the extent remarketing proceeds are not available in the Remarketing Proceeds Account for such purpose, plus (b) an amount equal to at least 45 days’ interest accrued on the Bonds computed at the assumed maximum rate of ten percent (10%) per annum (the “Interest Component”) (i) to pay interest on the Bonds when due or (ii) to enable the Trustee to pay the portion of the purchase price of the Bonds purchased pursuant to Section 5.01 equal to the interest accrued, if any, on such Bonds to the extent remarketing proceeds are not available for such purpose in the Remarketing Proceeds Account. The Trustee will draw upon such a Letter of Credit for the aforementioned amounts only while the Interest Rate Mode for such Bonds is the Daily Rate or the Weekly Rate.

Each Letter of Credit shall provide that if, in accordance with the terms of the Indenture, the Bonds shall become immediately due and payable pursuant to any provision of the Indenture, the Trustee shall be entitled to draw on the Letter of Credit to the extent of the aggregate principal amount of the Bonds then Outstanding plus, to the extent available under the Credit Facility, an amount sufficient to pay interest on all Outstanding Bonds, less amounts for which the Letter of Credit shall not have been reinstated. In no event will the Trustee be entitled to make drawings under the Letter of Credit for the payment of any amount due on any Bond held pursuant to Section 5.05 or otherwise registered in the name of the Company.

Except as provided in Section 4.01(e) and Section 10.10 hereof, the Trustee shall have no responsibility to reimburse the issuer of the Letter of Credit for any drawings on a Letter of Credit or any other Credit Facility Issuer for any drawings on the Credit Facility.

SECTION 7.02. Termination. If at any time there shall cease to be any Bonds Outstanding hereunder or if any then current Credit Facility is otherwise terminated, the Trustee shall promptly surrender any such Credit Facility to the Credit Facility Issuer for cancellation. The Trustee shall comply with the procedures set forth in the Credit Facility relating to the termination thereof.

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At any time the Bonds are subject to optional redemption in whole pursuant to Section 3.01(a), the Trustee shall upon such optional redemption, at the written direction of the Company, but subject to the conditions contained in this paragraph, deliver any Credit Facility for cancellation in accordance with the terms thereof which cancellation may be without substitution therefor or replacement thereof; provided, that the Company shall not be entitled to give any such direction if the purchase price of any Bonds to be purchased pursuant to Section 5.01(b)(ii) in connection with such cancellation, determined under such Section 5.01(b)(ii), includes any premium unless the Trustee has received written confirmation from the Credit Facility Issuer that the Trustee can draw under the Credit Facility on the Purchase Date related to such purchase of Bonds in an aggregate amount sufficient to pay the premium due upon such purchase of Bonds on such Purchase Date. If the Interest Rate Mode for Bonds is the Commercial Paper Rate, in addition to the written confirmation to the Trustee the Company shall notify the Remarketing Agent to establish a Commercial Paper Rate Period for each such Bond in accordance with Section 2.02(c)(i)(C)(1). Any such cancellation shall not become effective, surrender of such Credit Facility shall not take place and that Credit Facility shall not terminate, in any event, until payment by the issuer of that Credit Facility shall have been made for any and all drawings by the Trustee effected on or before such cancellation date (including, if applicable, any drawings for payment of the purchase price of Bonds to be purchased pursuant to Section 5.01(b)(ii) in connection with such cancellation). Notice of any proposed cancellation of the Credit Facility shall be given by the Company in writing to the Trustee at least twenty five (25) days prior to the effective date of such cancellation. Upon such cancellation, the Trustee shall surrender such Credit Facility to the Credit Facility Issuer in accordance with its terms.

SECTION 7.03. Alternate Credit Facilities. Subject to the conditions of this Section 7.03, the Company may, at its option, provide for the delivery to the Trustee of an Alternate Credit Facility, including, without limitation, a Letter of Credit, having administrative terms acceptable to the Trustee. At least twenty five (25) days prior to the proposed effective date of the proposed Alternate Credit Facility, the Company shall give notice, which notice, if the Interest Rate Mode is the Commercial Paper Rate, shall also contain a certification with respect to the length of each Commercial Paper Rate Period permitted hereunder after delivery of such Alternate Credit Facility, of such replacement to the Trustee, the Remarketing Agent and the then current Credit Facility Issuer. If (A)(x) all of the Bonds are then subject to optional redemption pursuant to Section 3.01(a) and (y) if the purchase price of any Bonds to be purchased pursuant to Section 5.01(b)(ii) in connection with cancellation, termination or substitution of the existing Credit Facility, determined under such Section 5.01(b)(ii), includes any premium and the Trustee has received written confirmation from the Credit Facility Issuer that the Trustee can draw under the Credit Facility (other than the Alternate Credit Facility being delivered in connection with such cancellation) on the Purchase Date related to such purchase of Bonds in an aggregate amount sufficient to pay the premium due upon such purchase of Bonds on such Purchase Date, or (B) the Company shall have provided to the Trustee Ratings Confirmations, then the Trustee shall (i) give the notice provided for in Section 7.05 and (ii) on the date of delivery of such Alternate Credit Facility, accept such Alternate Credit Facility and surrender the previously held Credit Facility, if any, to the previous Credit Facility Issuer for cancellation promptly on the day the Alternate Credit Facility becomes effective; provided, further, however, that such Credit Facility shall not be surrendered for cancellation until payment by the issuer of the Credit

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Facility to be surrendered shall have been made for any and all drawings by the Trustee effected on or before the date of such surrender for cancellation (including any drawings for payment of the purchase price of Bonds to be purchased pursuant to Section 5.01(b)(ii) in connection with such cancellation, termination or substitution). If the Interest Rate Mode for Bonds is the Commercial Paper Rate, and if the preceding sentence is applicable, the notices required under this Section 7.03 shall be delivered in sufficient time to permit the Remarketing Agent to establish a Commercial Paper Rate Period for each such Bond in accordance with Section 2.02(c)(i)(C)(1).

As a condition to accepting any Alternative Credit Facility, any Alternate Credit Facility delivered to the Trustee must be accompanied by an opinion of counsel to the issuer or provider of such Credit Facility stating that such Credit Facility is a legal, valid, binding and enforceable obligation of such issuer or obligor in accordance with its terms and an opinion of Bond Counsel delivered to the Trustee stating that the delivery of such Alternate Credit Facility to the Trustee is authorized under this Indenture and that the delivery of such Alternate Credit Facility will not, in and of itself, adversely affect the exclusion from gross income of the interest on the Bonds for federal income tax purposes. In addition, if the Company grants a security interest in any cash, securities or investment property to the issuer or provider of such Alternate Credit Facility, the Company must furnish the Trustee with an opinion of Bond Counsel stating that such grant will not, in and of itself, adversely affect any exclusion of interest on the Bonds from gross income for purposes of federal income taxation nor adversely affect any security interest created under the Indenture in favor of the holders of the Bonds.

SECTION 7.04. Mandatory Purchase of Bonds.

(d)Prior to Expiration of Credit Facility. On the fifteenth day (or if such day is not a Business Day, the preceding Business Day) preceding the stated expiration of the term of the then current Credit Facility if such Credit Facility is not extended and if the Company shall not have delivered Ratings Confirmations to the Trustee, the Bonds shall become subject to mandatory purchase in accordance with Section 5.01(b)(ii) and the Trustee shall give notice thereof in accordance with Section 7.05(a).

(e)Prior to Cancellation, Substitution or Termination of Credit Facility. Upon notice delivered by the Company pursuant to Section 7.02 or Section 7.03, if such notice shall not have been accompanied by Ratings Confirmations, the Bonds shall become subject to mandatory purchase pursuant to Section 5.01(b)(ii) and the Trustee shall give notice thereof in accordance with Section 7.05(a).

(f)At Direction of Credit Facility Issuer. Upon receipt of written notice delivered to the Trustee by the Credit Facility Issuer that states that an event of default has occurred and is continuing under the Reimbursement Agreement, the Bonds shall become subject to mandatory purchase pursuant to Section 5.01(b)(iii) and the Trustee shall give notice thereof in accordance with Section 7.05(b) and Section 5.01(b)(iii).

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SECTION 7.05. Notices.

(a)At the expense of the Company, the Trustee shall notify the Owners by Mail or Electronic Means of any expiration, termination, a substitution or cancellation of the Credit Facility which will subject the Bonds to mandatory purchase in accordance with Section 5.01(b)(ii) at least fifteen (15), but not more than twenty five (25), days before any Purchase Date resulting from such expiration, termination, substitution or cancellation. The notice will state:

(vii)that the Credit Facility is expiring or being cancelled, substituted or terminated;

(viii)the Purchase Date; and

(ix)that the Bonds will be subject to mandatory purchase (and the purchase therefor) on the Purchase Date in accordance with Section 5.01(b)(ii) and that if any Owner shall fail to deliver a Bond for purchase with an appropriate instrument of transfer to the Trustee on the Purchase Date, and if the Trustee is in receipt of the purchase price therefor, such Bond not delivered shall nevertheless be purchased on the Purchase Date and shall cease to accrue interest on and from such date.

(b)The Trustee shall, as soon as practicable but in no event later than one Business Day prior to the Purchase Date, notify the Owners by Mail or Electronic Means, of a mandatory purchase of Bonds at the direction of the Credit Facility Issuer as a result of the receipt by the Trustee of a notice from the Credit Facility Issuer stating that an event of default has occurred and is continuing under the Reimbursement Agreement. The notice will state:

(x)that the Bonds are subject to mandatory purchase at the direction of the Credit Facility Issuer as a result of an event of default occurring and continuing under the Reimbursement Agreement;

(xi)the Purchase Date, which shall occur on the second Business Day after the date of receipt by the Trustee of the notice from the Credit Facility Issuer; and

(xii)that the Bonds will be subject to mandatory purchase (and the purchase price therefor) on the Purchase Date in accordance with Section 5.01(b)(iii) and that if any owner shall fail to deliver a Bond for purchase with an appropriate instrument of transfer to the Trustee on the Purchase Date, and if the Trustee is in receipt of the purchase price therefor, such Bond not delivered shall nonetheless be purchased on the Purchase Date and cease to accrue interest on and from such date; and

(c)At the expense of the Company, the Trustee shall notify the Owners by Mail or Electronic Means of any expiration, termination, substitution or cancellation of the Credit Facility which will not subject the Bonds to mandatory purchase in accordance with Section 5.01(b)(ii) at least fifteen (15), but not more than twenty five (25), days before any such expiration, termination, substitution or cancellation. The notice will state:

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(ix)that the existing Credit Facility is expiring or being cancelled, substituted or terminated;

(x)if an Alternate Credit Facility is being provided, the identity of the issuer of the Alternate Credit Facility;

(xi)that the Trustee has received Ratings Confirmations; and

(xii)that the Bonds will not be subject to mandatory purchase in accordance with Section 5.01(b)(ii).

(d)Copies of any notices required by this Section 7.05 shall also be sent to the Authority and the Remarketing Agent.

SECTION 7.06. Other Credit Enhancement; No Credit Facility. Anything else to the contrary in this Article VII or in this Indenture notwithstanding, upon a mandatory purchase of the Bonds as set forth in Section 5.01(b)(i), Section 5.01(b)(ii) or Section 5.01(b)(iii), the Company shall not be required to provide a Credit Facility or other credit enhancement or the Company may provide credit or liquidity enhancement other than a Credit Facility providing for (i) the payment of the principal, interest and redemption payment on the Bonds or a portion thereof or (ii) payment of the purchase price of the Bonds; provided, however, such credit or liquidity enhancement shall have administrative provisions reasonably satisfactory to the Trustee and the Remarketing Agent, and the Company shall provide the Trustee with an opinion of Bond Counsel stating that the other credit or liquidity enhancement or the delivery of such other credit or liquidity enhancement, or both, will not, in and of itself, adversely affect any exclusion of interest on the Bonds from gross income for purposes of federal income taxation. In addition, no Credit Facility shall be required upon Conversion to any Term Rate Period including, without limitation, from a Ten Year Call Term Rate Period to a new Ten Year Call Term Rate Period, from a Five Year Call Term Rate Period to a new Five Year Call Term Rate Period or and from a No Call Term Rate Period to a new No Call Term Rate Period.

ARTICLE VIII
GENERAL COVENANTS

SECTION 8.01. No General Obligations. Each and every covenant herein made, including all covenants made in the various sections of this Article VIII, is predicated upon the condition that neither Apache County, Arizona nor the State of Arizona shall in any event be liable for the payment of the principal of, or premium, if any, or interest on the Bonds or for the performance of any pledge, mortgage, obligation or agreement created by or arising out of this Indenture or the issuance of the Bonds, and further that neither the Bonds, nor the premium, if any, or interest thereon, nor any such obligation or agreement of the Authority shall be construed to constitute an indebtedness of Apache 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, and the purchase price thereon shall be limited obligations of the Authority

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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 and the purchase price of 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 8.02. 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 8.03. 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 8.04. 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 14.06 and 14.07 of this Indenture (a revision to Exhibit A to the Loan Agreement not being deemed an amendment for purposes of this Section).

SECTION 8.05. 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, Apache County, the Authority or any other political subdivision of said State.

SECTION 8.06. No Disposition of Trust Estate. Except as permitted by this Indenture, the Authority shall not sell, lease, pledge, assign or otherwise dispose of or encumber its interest in the Trust Estate and will promptly pay or cause to be discharged or make adequate provision to discharge any lien or charge on any part thereof not permitted hereby.

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SECTION 8.07. 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 8.08. Tax Covenants; Rebate Fund. (VIII) The Authority covenants for the benefit of all beneficial 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 failing to comply with the requirements of Title XIII of the Tax Reform Act of 1986 and Section 103 of the 1954 Code, as applicable, and any applicable regulations promulgated thereunder. To that end the Authority covenants to comply with all covenants set forth in the Tax Agreement, which is hereby incorporated herein by reference as though fully set forth herein.

(b)The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder designated “The Industrial Development Authority of the County of Apache Industrial Development Revenue Bonds, 2013 Series A (Tucson Electric Power Company Springerville 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 in writing 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 8.08, 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 written directions of the Company, including supplying all necessary information in the manner set forth in the Tax Agreement, and shall not be required to take any actions thereunder in the absence of written directions from the Company.

(c)Upon receipt of the Company’s written instructions, the Trustee shall remit part or all of the balances in the Rebate Fund to the United States of America, as so directed. In addition, if the Company so directs, the Trustee shall deposit moneys into or transfer moneys out of the Rebate Fund from or into such accounts or funds as directed by the Company’s written

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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 8.08, 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 8.09. Notices from Trustee. The Trustee shall give notice to both the Authority and the Company whenever it is required hereby to give notice to either and, additionally, shall furnish to the Authority and the Company copies of any notice by Mail or Electronic Means given by it pursuant to any provision hereof.

ARTICLE IX
DEFEASANCE

SECTION 9.01. Defeasance. (IX) When the principal or redemption price, as the case may be, of, and interest on, all Bonds issued hereunder have been paid, or provision has been made for payment of the same, together with all amounts due to the Trustee and all other sums payable hereunder by the Authority, and all obligations owed to the Credit Facility Issuer have been paid and the Credit Facility has been returned to the Credit Facility Issuer for cancellation, the right, title and interest of the Trustee in the Loan Agreement and the moneys payable thereunder shall thereupon cease and the Trustee, on demand of the Authority, shall release this Indenture and shall execute such documents to evidence such release as may be reasonably required by the Authority and shall turn over to the Company all balances then held by it hereunder; provided, however, that notwithstanding any other provision in this Indenture, any money in the Credit Facility Account shall be paid solely to the Credit Facility Issuer and not to the Company. If payment or provision therefor is made with respect to less than all of the Bonds, the particular Bonds (or portions thereof) for which provision for payment shall have been considered made shall be selected by lot by the Trustee, and thereupon the Trustee shall take similar action for the release of this Indenture with respect to such Bonds.

(b)Provision for the payment of Bonds shall be deemed to have been made when the Trustee holds in the Bond Fund, in trust and irrevocably set aside exclusively for such payment, (i) moneys sufficient to make such payment and any payment of the purchase price of Bonds pursuant to Section 5.01 and/or (ii) Government Obligations maturing as to principal and interest in such amounts and at such times as will provide sufficient moneys (without consideration of any investment earnings thereof) to make such payment and any payment of the purchase price of Bonds pursuant to Section 5.01, and which are not subject to prepayment, redemption or call prior to their stated maturity; provided that if a Credit Facility is then held by the Trustee, (1) such payment and any payment of the purchase price of Bonds pursuant to Section 5.01 shall be made only from proceeds of the Credit Facility deposited directly into the Credit Facility Account or the Credit Facility Proceeds Account, as applicable, or (2) the Company shall have

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caused to be delivered to the Trustee both a certification as to whether the Bonds are then rated and an opinion of Bankruptcy Counsel which opinion, if the Bonds are then rated, shall be satisfactory to the Rating Agency, that any such payment and the payment of the purchase price of any Bonds pursuant to Section 5.01 will not be considered an avoidable “preferential transfer” by the Company or the Authority under Section 547 of the United States Bankruptcy Code or any other applicable state or federal bankruptcy law, in the event of the occurrence of an Event of Bankruptcy.

No Bonds in respect of which a deposit under clause (i) or (ii) above has been made shall be deemed paid within the meaning of this Article unless (A) the Bonds mature on the last day of the current Rate Period and no Bonds are required to be purchased upon demand of the owners pursuant to Section 5.01(a) or subject to mandatory purchase pursuant to Section 5.01(b) between the date of such deposit and the maturity date of the Bonds, or (B) the Bonds may be redeemed on or before the last day of the then current Rate Period and provision has been irrevocably made for such redemption on or before such date and no Bonds are required to be purchased upon demand of the owners pursuant to Section 5.01(a) or subject to mandatory purchase pursuant to Section 5.01(b) between the date of such deposit and the redemption date of the Bonds, and (C) in the case of a deposit of Government Obligations or a deposit consisting of a combination of cash and Government Obligations, the Trustee has received a certificate from a firm of independent certified public accountants to the effect that the amounts deposited are sufficient, without the need to reinvest any principal or interest, to make all payments that might become due on the Bonds (a copy of such certificate to be forwarded by the Company to the Rating Agency) and (D) the Trustee shall thereafter have received a written confirmation from the Rating Agency that such action would not result in (x) a permanent withdrawal of its rating on the Bonds or (y) a reduction in the then current rating on the Bonds; provided that notwithstanding any other provision of this Indenture, any Bonds purchased pursuant to Section 5.01 after such a deposit shall be surrendered to the Trustee for cancellation and shall not be remarketed. Notwithstanding the foregoing, no delivery to the Trustee under this subsection (b) shall be deemed a payment of any Bonds which are to be redeemed prior to their stated maturity until such Bonds shall have been irrevocably called or designated for redemption on a date thereafter on which such Bonds may be redeemed in accordance with the provisions of this Indenture and proper notice of such redemption shall have been given in accordance with Article III or the Authority shall have given the Trustee, in form satisfactory to the Trustee, irrevocable instructions to give, in the manner and at the times prescribed by Article III, notice of redemption. Neither the obligations nor moneys deposited with the Trustee pursuant to this Section shall be withdrawn or used for any purpose other than, and shall be segregated and held in trust for, the payment of the principal, purchase price or redemption price of and interest on the Bonds with respect to which such deposit has been made. In the event that such moneys or obligations are to be applied to the payment of principal, purchase price or redemption price of any Bonds more than sixty (60) days following the deposit thereof with the Trustee, the Trustee shall send a notice by Mail or Electronic Means to all owners of Bonds for the payment of which such moneys or obligations are being held, to their registered addresses, stating that moneys or obligations have been deposited with the Trustee and identifying the Bonds for the payment of which such moneys or obligations are being held and shall also send a copy of that notice by Mail or Electronic Means to the Rating Agency; provided, however, that the Trustee shall have

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no liability or obligation to the Rating Agency if it shall fail to give such organization such notice.

(c)Anything in Article IX to the contrary notwithstanding, if moneys or Government Obligations have been deposited or set aside with the Trustee pursuant to this Article for the payment of the principal or redemption price of the Bonds and the interest thereon and the principal or redemption price of such Bonds and the interest thereon shall not have in fact been actually paid in full, no amendment to the provisions of this Article shall be made without the consent of the Owner of each of the Bonds affected thereby.

Notwithstanding the foregoing, those provisions relating to the purchase of Bonds, the maturity of Bonds, the Depository and the interest payments and dates thereof, drawings upon the Credit Facility, if any, and the Trustee’s remedies with respect thereto, and provisions relating to exchange, transfer and registration of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non presentment of Bonds, the Rebate Fund and arbitrage matters under Section 148(f) of the Code, the holding of moneys in trust, and repayments to the Credit Facility Issuer or the Company from the Bond Fund and the duties of the Trustee in connection with all of the foregoing and the fees, expenses, right and indemnities of the Trustee, shall remain in effect and shall be binding upon the Trustee, the Authority, the Company and the Owners notwithstanding the release and discharge of the lien of this Indenture.

ARTICLE X
DEFAULTS AND REMEDIES

SECTION 10.01. Events of Default. Each of the following events shall constitute and is referred to in this Indenture as an “Event of Default”:

(b)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;

(c)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 five (5) days (thirty (30) days if the Interest Rate Mode for such Bonds is the Ten Year Call Term Rate, Five Year Call Term Rate or No Call Term Rate);

(d)a failure to pay the purchase price of any Bond required to be purchased pursuant to Section 5.01 hereof for a period of five (5) days after such payment becomes due and payable; or

(e)a failure by the Authority to observe and perform any covenant, condition, agreement or provision (other than as specified in clauses (a), (b) and (c) of this Section 10.01) 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

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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), (b) or (c) 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, the Trustee shall, by written notice to the Authority, the Credit Facility Issuer, if any, and the Company, declare the Bonds to be immediately due and payable, whereupon they shall, without further action, become and be immediately due and payable, anything in this Indenture or in the Bonds to the contrary notwithstanding, and the Trustee shall give notice thereof by Mail or Electronic Means to all Owners of Outstanding Bonds. On the date the Bonds have been so declared to be due and payable when a Credit Facility shall be in effect, the Trustee shall make a drawing or demand for payment under the Credit Facility in accordance with Section 4.01(d).

The provisions of the preceding paragraph, however, are subject to the condition that if, after the principal of the Bonds shall have been so declared to be due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Authority shall cause to be deposited with the Trustee a sum sufficient to pay all matured installments of interest upon all Bonds and the principal of any and all Bonds which shall have become due otherwise than by reason of such declaration (with interest upon such principal and, to the extent permissible by law, on overdue installments of interest, at the rate per annum borne by the Bonds) and such amounts as shall be sufficient to cover reasonable compensation and reimbursement of expenses payable to the Trustee and any predecessor Trustee, and all Events of Default hereunder other than nonpayment of the principal of Bonds which shall have become due by said declaration shall have been remedied, then, in every such case, such Event of Default shall be deemed waived and such declaration and its consequences rescinded and annulled, and the Trustee shall promptly give written notice of such waiver, rescission and annulment to the Authority and the Company, and, if notice of the acceleration of the Bonds shall have been given to the Owners of the Bonds, shall give notice thereof by Mail or Electronic Means to all Owners of Outstanding Bonds; but no such waiver, rescission and annulment shall extend to or affect any subsequent Event of Default or impair any right or remedy consequent thereon. The Trustee shall not annul any declaration resulting from any Event of Default which has resulted in a drawing under the Credit Facility unless the Trustee has received written confirmation from the Credit Facility Issuer that the notice that resulted in such Event of Default has been rescinded and Credit Facility has been fully reinstated.

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No Event of Default described in Section 10.01(a), (b) or (c) shall be deemed to have occurred solely by reason of such failure to make such payment if and to the extent that payments have nonetheless been made by a Credit Facility Issuer to the Trustee pursuant to the Credit Facility for deposit in the Bond Fund at such time and in such manner as to prevent an Event of Default described under such Section 10.01(a), (b) or (c).

SECTION 10.02. 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 10.03. 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 10.04. 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 10.05. 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

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

SECTION 10.06. 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 10.07. 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 10.08. 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 10.09. 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 X 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 10.10. Application of Moneys. Any moneys received by the Trustee under this Article X or otherwise held by the Trustee under this Indenture shall be applied in the

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following order; provided that any moneys received by the Trustee from a drawing on the Credit Facility shall be applied to the extent permitted by the terms thereof only as provided in paragraph (b) below with respect to the principal of, and interest accrued on, Bonds other than Bonds held of record by or, to the actual knowledge of the Trustee, for the account of the Company after purchase thereof pursuant to Section 5.04(a)(iii) and other than Bonds held pursuant to Section 5.05 or otherwise registered in the name of the Company; and provided, further, that moneys held in the Purchase Fund shall only be applied as set forth in Section 5.03:

(a)to the payment of the fees and expenses of the Trustee incurred or anticipated to be incurred, including reasonable counsel fees and expenses, any disbursements of the Trustee with interest thereon and its reasonable compensation and all other amounts owing to the Trustee under Section 11.04 hereof or under Section 5.04 and Section 5.05 of the Loan Agreement;

(b)to the payment of principal or redemption price (as the case may be) and interest then owing on the Bonds, including any interest on overdue interest (to the extent permitted by law) at the rate borne by such Bond on the day before the default or Event of Default occurred, provided that if the Interest Rate Mode was then the Commercial Paper Rate, the default rate for all of the Bonds shall be equal to the highest interest rate then in effect for any Bond, and in case such moneys shall be insufficient to pay the same in full, then to the payment of principal or redemption price and interest ratably, without preference or priority of one over another or of any installment of interest over any other installment of interest; and

(c)to the payment of any unpaid expenses of the Authority, including reasonable counsel fees and expenses, incurred in connection with the Event of Default.

The surplus, if any, shall be paid first to the Credit Facility Issuer to the extent of any amounts that the Company owes the Credit Facility Issuer pursuant to the Reimbursement Agreement (as certified in writing by the Credit Facility Issuer to the Trustee) and second (other than any moneys received by the Trustee from a drawing on a Credit Facility, if any) to the Company or the Person lawfully entitled to receive the same as a court of competent jurisdiction may direct.

SECTION 10.11. Severability of Remedies. It is the purpose and intention of this Article X 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 XI
TRUSTEE

SECTION 11.01. 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 XI, to all of which the Authority agrees and the respective Owners agree by their acceptance of delivery of any of the Bonds.

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SECTION 11.02. 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 11.03. 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 11.04. Compensation, Expenses and Advances. The Trustee under this Indenture shall be entitled to such compensation as agreed in writing for its services rendered hereunder (not limited by any provision of law regarding the compensation of the trustee of an express trust) and to reimbursement for its actual out of pocket expenses (including counsel fees and expenses) reasonably incurred in connection therewith except as a result of its negligence or willful misconduct, including, without limitation, compensation for any services rendered, and reimbursement for any expenses incurred, at and subsequent to the time the Bonds are deemed to have been paid in accordance with Article IX 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 5.04 of the Loan Agreement, the Company has agreed that it will pay to the Trustee (including any predecessor Trustee), such compensation and reimbursement of expenses and advances, but the Company may, without creating a default hereunder, contest in good faith the reasonableness of any such services, expenses and advances. If the Company shall have failed to make any payment to the Trustee or any predecessor Trustee under Section 5.04 of the Loan Agreement and such failure shall have resulted in an Event of Default under the Loan Agreement, the Trustee, and any

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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 11.04, 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 IX hereof; and provided further that funds in the Purchase Fund and funds in the Credit Facility Account shall not be used to compensate the Trustee.

In Section 5.05 of the Loan Agreement, the Company has agreed to indemnify the Trustee and any predecessor Trustee to the extent provided therein.

SECTION 11.05. 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), (b) or (c) of the first paragraph of Section 10.01 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 11.06. Action by Trustee. Prior to the occurrence and continuance of an Event of Default, the Trustee shall only undertake those acts specifically set forth herein, and no duties shall be implied against it. 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; provided, however, that no security or indemnity shall be requested or required for the Trustee to draw upon or demand payment under the Credit Facility, if any, then held by the Trustee in accordance with its terms when required under the provisions of this Indenture. 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 11.07. Good Faith Reliance. The Trustee shall be protected and shall incur no liability in acting or proceeding in good faith upon any resolution, notice, 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

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investigation or inquiry as to any statements contained or matters referred to in any such instrument, but may accept and rely upon the same as conclusive evidence of the truth and accuracy of such statements. The Trustee shall not be bound to recognize any person as an Owner of a Bond or to take any action at his request unless the ownership of such Bond is proved as contemplated in Section 13.01 hereof.

SECTION 11.08. Dealings in Bonds and with the Authority and the Company. The Trustee, in its individual or any other capacity, may in good faith buy, sell, own, hold and deal in any of the Bonds issued hereunder, and may join in any action which any Owner of a Bond may be entitled to take with like effect as if it did not act in any capacity hereunder. The Trustee, in its individual or any other capacity, either as principal or agent, may also engage in or be interested in any financial or other transaction with the Authority or the Company, and may act as a depository, 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 11.09. 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 11.10. 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 11.11. Resignation of Trustee. The Trustee may resign and be discharged of the trusts created by this Indenture by executing an instrument in writing resigning such trust and specifying the date when such resignation shall take effect, and filing the same with the President of the Authority and with the Company, not less than forty-five (45) days before the date specified in such instrument when such resignation shall take effect, and by giving notice of such resignation by Mail or Electronic Means to all Owners of Bonds. Such resignation shall take effect on the later to occur of (i) the day specified in such instrument and notice, unless previously a successor Trustee shall have been appointed as hereinafter provided, in which event such resignation shall take effect immediately upon the appointment of such successor Trustee and (ii) the appointment of a successor Trustee.

So long as no event which is, or after notice or lapse of time, or both, would become, an Event of Default shall have occurred and be continuing, if the Authority shall have delivered to the Trustee (i) an instrument appointing a successor Trustee, effective as of a date specified therein and (ii) an instrument of acceptance of such appointment, effective as of such date, by such successor Trustee in accordance with Section 11.16, 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 11.13 and such appointment shall be deemed to have been accepted as contemplated in Section 11.16, all as of such date, and all other provisions of this Article XI shall be applicable to such resignation, appointment and acceptance except to

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the extent inconsistent with this paragraph. The Authority shall deliver any such instrument of appointment at the direction of the Company.

SECTION 11.12. 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 11.13. Appointment of Successor Trustee. (XI) In case at any time the Trustee shall be removed, or be dissolved, or if its property or affairs shall be taken under the control of any state or federal court or administrative body because of insolvency or bankruptcy, or for any other reason, then a vacancy shall forthwith and ipso facto exist and a successor may be appointed, and in case at any time the Trustee shall resign or be deemed to have resigned, then a successor may be appointed, by filing with the Authority and the Company an instrument in writing appointing such successor Trustee executed by Owners of not less than a majority in principal amount of Bonds then Outstanding. Copies of such instrument shall be promptly delivered by the Authority to the predecessor Trustee, to the Trustee so appointed and the Company.

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

(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 11.14. Qualifications of Successor Trustee. Every successor Trustee (a) shall be a bank with trust powers or a 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 11.15. 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 XI 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

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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 XI within six (6) months after a vacancy shall have occurred in the office of Trustee, any Owner of a Bond may apply to any court of competent jurisdiction to appoint a successor Trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor Trustee.

SECTION 11.16. 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 11.04 hereof, such predecessor Trustee shall pay over to the successor Trustee all moneys and other assets at the time held by it hereunder.

SECTION 11.17. 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 all or substantially all 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 11.18. Standard of Care. Notwithstanding any other provisions of this Article XI, 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.

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SECTION 11.19. Notice to Owners of Bonds of Event of Default. If an Event of Default occurs of which the Trustee by Section 11.05 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 11.05 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 10.01 hereof, the Trustee shall give notice by Mail or Electronic Means to all Owners of Outstanding Bonds.

SECTION 11.20. 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 11.21. Credit Facilities. In making draws under the Credit Facility and disbursing the proceeds thereof, the Trustee is acting on behalf of the Bondholders and not as an agent of the Company or the Authority. Notwithstanding any other provision of this Indenture, when a Credit Facility is in effect, no resignation or removal of the Trustee shall be effective until such Credit Facility shall have been transferred to a successor Trustee in accordance with the terms of such Credit Facility.

SECTION 11.22. Force Majeure. In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances. The Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to maintain its computer (hardware and software) services in good working order.

ARTICLE XII
THE REMARKETING AGENT

SECTION 12.01. The Remarketing Agent. (XII) Upon the Conversion of the Bonds to an Interest Rate Mode requiring a Remarketing Agent, the Company shall appoint one or more Remarketing Agents. If, at any time, there is more than one Remarketing Agent (which term, as used hereinafter in this Section 12.01, means any one entity serving in the capacity of Remarketing Agent) hereunder, each such Remarketing Agent shall perform such of the duties of the Remarketing Agent hereunder as are set forth in a Remarketing Agreement with such Remarketing Agents and each such Remarketing Agent shall deliver to the Trustee a written instrument specifying, in the event of conflicting directions given by those Remarketing Agents to the Trustee, which set of directions shall be controlling for all purposes hereunder. Each

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Remarketing Agent, by written instrument delivered to the Authority, the Trustee and the Company (which written instrument may be the Remarketing Agreement), shall accept the duties and obligations imposed on it under this Indenture, subject to the terms and provisions of the Remarketing Agreement, and shall become a party to a Remarketing Agreement.

(b)In addition to the other obligations imposed on the Remarketing Agent hereunder, the Remarketing Agent shall keep such books and records with respect to its duties as Remarketing Agent as shall be consistent with prudent industry practice and shall make such books and records available for inspection by the Authority, the Trustee, the Credit Facility Issuer and the Company at all reasonable times.

(c)At any time a Remarketing Agent may resign in accordance with the Remarketing Agreement. Any Remarketing Agent may be removed at any time in accordance with the Remarketing Agreement. Upon resignation or removal of a Remarketing Agent, the Company, and if the Remarketing Agent was not the same as the Credit Facility Issuer or under common control with the Credit Facility Issuer, with the consent of the Credit Facility Issuer, such consent not to be unreasonably withheld, shall either appoint a successor Remarketing Agent or authorize the remaining Remarketing Agent or Agents to act alone in such capacity, in which case all references in this Indenture to the Remarketing Agent shall mean the remaining Remarketing Agent or Agents. If the last remaining Remarketing Agent resigns or is removed, the Company shall appoint a successor Remarketing Agent. Any successor Remarketing Agent shall have combined capital, surplus and undivided profits of at least $50,000,000.

(d)The Remarketing Agent may in good faith buy, sell, own, hold and deal in any of the Bonds and may join in any action which any Owners may be entitled to take with like effect as if the Remarketing Agent were not appointed to act in such capacity under this Indenture.

(e)The Remarketing Agent, 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 a depository, 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 12.02. Notices. The Trustee shall, within twenty-five (25) days of the resignation or removal of a Remarketing Agent or the appointment of a Remarketing Agent of which it has received written notice, give notice thereof by Mail or Electronic Means to the Owners of the Bonds.

SECTION 12.03. Several Capacities. Anything herein to the contrary notwithstanding, the same entity may serve hereunder as the Trustee and the Remarketing Agent and in any combination of such capacities to the extent permitted by law.

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

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SECTION 13.01. 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:

(b)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.

(c)The ownership or former ownership of Bonds shall be proved by the registration books kept under the provisions of Section 2.09 hereof.

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

ARTICLE XIV
MODIFICATION OF THIS INDENTURE AND THE LOAN AGREEMENT

SECTION 14.01. 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 XIV and Section 8.04 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 14.02. 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 or any Credit Facility Issuer any additional rights, remedies,

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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;

(h)to make any amendments appropriate or necessary to provide for any Alternate Credit Facility;

(i)to make any changes required by a Rating Agency in order to obtain or maintain a rating for the Bonds;

(j)to make any changes in connection with a Conversion, including a Conversion to the Commercial Paper Rate;

(k)in connection with any mandatory purchase of all of the Bonds or purchase of all the Bonds pursuant to Section 3.06, to modify this Indenture in any respect (even if such modification is adverse to the interests of the Bondholders) provided that such amendment shall not be effective until after such mandatory purchase or purchase in lieu of redemption and the payment of the purchase price in connection therewith and provided that arrangements are made to cause notice of such changes to be given to all owners of Bonds who purchase such Bonds on or after such mandatory purchase or purchase in lieu of redemption;

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(l)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 14.03(a) hereof; and

(m)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 14.02, 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 14.03. Supplemental Indentures with Consent of Owners. (XIV) Except for any Supplemental Indenture entered into pursuant to Section 14.02 hereof, subject to the terms and provisions contained in this Section 14.03 and Section 14.05 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 or purchase price of (without the consent of the Owner of the affected Bond) 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 the purchase provisions of any Outstanding Bond (without the consent of the Owner of the affected Bond) or any impairment of the right of any Owner to institute suit for the payment of any Bond owned by it; provided, however, that revision of the redemption periods and redemption prices in accordance with the last paragraph of Section 3.01(a) when the Interest Rate Mode for Bonds is the Ten Year Call Term Rate, Five Year Call Term Rate or No Call Term Rate shall not be considered an amendment of or a supplement to this Indenture, 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 11.04 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 14.07 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 14.03, the Trustee shall cause

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notice of the proposed Supplemental Indenture to be given by Mail or Electronic Means to all Owners of Outstanding Bonds. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that a copy thereof is on file at the Principal Office of the Trustee for inspection by all Owners of Bonds.

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

(d)If Owners of not less than the percentage of Bonds required by this Section 14.03 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 14.04. Effect of Supplemental Indenture. Upon the execution and delivery of any Supplemental Indenture pursuant to the provisions of this Article XIV, 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 14.05. Consent of the Company or Credit Facility Issuer. (XIV) Anything herein to the contrary notwithstanding, any Supplemental Indenture under this Article XIV 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.

(b)Anything herein to the contrary notwithstanding, any Supplemental Indenture under this Article XIV which affects any rights, powers, agreements or obligations of the Credit Facility Issuer under the Loan Agreement or this Indenture, or requires a revision of the Loan Agreement or this Indenture, shall not become effective unless and until the Credit Facility Issuer shall have consented to such Supplemental Indenture.

SECTION 14.06. 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

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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; provided, however, that notwithstanding the foregoing, in connection with any mandatory purchase pursuant to Section 5.01(b) of all of the Bonds or any purchase in lieu of redemption pursuant to Section 3.06 of all of the Bonds, no consent of the Owners of the Bonds shall be required for any amendment to the Loan Agreement in any respect (even if such amendment is adverse to the interests of the Owners) provided that such amendment shall not be effective until after such mandatory purchase or purchase in lieu of redemption and the payment of the purchase price in connection therewith; provided, however, that notwithstanding the foregoing, the Authority and the Company may amend the Loan Agreement to make any changes without the consent of the Owners of the Bonds which may be required by a Rating Agency in order to obtain or maintain a rating for 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 14.06, there shall have been delivered to the Trustee an opinion of Bond Counsel stating that such Supplemental Loan Agreement is authorized or permitted by this Indenture and the Act, complies with their respective terms, will, upon the execution and delivery thereof, be valid and binding upon the Authority and the Company in accordance with its terms and will not, in and of itself, adversely affect the exclusion from gross income for federal tax purposes of interest on the Bonds.

SECTION 14.07. Amendment of Loan Agreement with Consent of Owners. Except in the case of Supplemental Loan Agreements referred to in Section 14.06 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 14.03 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 14.03 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 14.03 hereof with respect to Supplemental Indentures.

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SECTION 14.08. Company as Owner. Anything herein to the contrary notwithstanding, for so long as the Company holds all Outstanding Bonds, any action that may be taken by the Owners of the Bonds may be taken by the Company.

SECTION 14.09. Administrative Agent acting for Owners. During any Lender Rate Period for which an Administrative Agent is appointed, any action that is required to be taken or may be taken by Owners of the Bonds hereunder may be taken by the Administrative Agent acting alone.

ARTICLE XV
MISCELLANEOUS

SECTION 15.01. 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 15.02. 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, the Administrative Agent, the Credit Facility Issuer 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, the Credit Facility Issuer and the Trustee and their successors and assigns and the Owners of the Bonds.

SECTION 15.03. 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 15.04. No Personal Liability of Authority Officials. No covenant or agreement contained in the Bonds or in this Indenture shall be deemed to be the covenant or agreement of any director, official, officer, agent, or employee of the Authority in his individual capacity, and neither the members of the Board of Directors of the Authority nor any official executing the Bonds shall be liable personally on the Bonds or be subject to any personal liability or accountability by reason of the issuance thereof.

SECTION 15.05. 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

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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 15.05) 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; provided that Bonds delivered to the Trustee pursuant to Section 5.04(a)(ii) shall not 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 15.06. 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 15.07. 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 15.09 hereof and the computation of any period of grace provided herein.

SECTION 15.08. Notices. Except as otherwise provided in this Indenture, all notices, certificates, requests, requisitions or other communications by or to the Authority, the Company, the Trustee, the Remarketing Agent, the Credit Facility Issuer or the Rating Agencies 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 Ryley, Carlock & Applewhite PC, One North Central Avenue, Phoenix, Arizona 85004, Attention: William Wilder; if to the Company, 88 East Broadway Boulevard, Tucson, Arizona 85702, Attention: Treasurer; if to the Trustee, at 100 Wall Street, Suite 1600, New York, New York 10005, Attention: Global Corporate Trust Services; if to a Credit Facility Issuer, a the address designated by the Credit Facility Issuer upon delivery of the Credit Facility; if to Moody’s, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007 Attn: Public Finance‑MSPG Surveillance Team; if to S&P, 55 Water Street, 41st Floor, New York, New York 10041‑0003, Attention: Structured Finance LOC Surveillance Group, with a copy by email to nyloc@standardandpoors.com; and if to the Remarketing Agent, at the address designated in the acceptance of appointment or engagement, which may be included in the Remarketing Agreement entered into by such Remarketing Agent with the Company. Any of the foregoing may, by notice given hereunder to each of the others, designate any further or different

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addresses to which subsequent notices, certificates, requests or other communications shall be sent hereunder. Anything herein to the contrary notwithstanding, any notice required to be delivered hereunder may also be delivered by Electronic Notice.

SECTION 15.09. 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 15.10. 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.

SECTION 15.11. Rating Agency Notices. If the Company shall have delivered notice to the Trustee that the Bonds have been assigned a credit rating by a Rating Agency, thereafter, the Trustee shall give notice to such Rating Agency, at the address or addresses set forth in Section 15.08 hereof, of any of the following events of which it has actual knowledge or has received written notice:

(a)a change in the Trustee;

(b)a change in the Remarketing Agent;

(c)the delivery, expiration, cancellation, renewal or substitution of the term of a Credit Facility;

(d)the delivery of an Alternate Credit Facility;

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(e)any material amendment or supplement to the Indenture, the Loan Agreement, a Reimbursement Agreement or a Credit Facility;

(f)any declaration of acceleration of the Bonds pursuant to Section 10.01;

(g)payment or provision therefor of all the Bonds;

(h)any Conversion of the Interest Rate Mode applicable to the Bonds or any change of any Term Rate Period; and

(i)any other information that such Rating Agency may reasonably request in order to maintain the rating on the Bonds.

The Trustee shall have no liability to the Rating Agency or to any other Person if it shall fail to give such notice.

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IN WITNESS WHEREOF, The Industrial Development Authority of the County of Apache has caused this Indenture to be executed by its Authorized Officer of the Authority 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 APACHE

By: /s/ John V. Lang    
Name: John V. Lang
Title: Authorized Officer of the Authority

U.S. BANK TRUST NATIONAL ASSOCIATION

By: /s/ William G. Keenan    
Name: William G. Keenan
Title: Vice President

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EXHIBIT A

(FORM OF BOND)

No. R-

The Industrial Development Authority of the County of Apache
Industrial Development Revenue Bond
2013 Series A
(Tucson Electric Power Company Springerville Project)

Maturity Date: April 1, 2032    Dated: November 14, 2013

[Cusip:]    

Registered Owner:    

Principal Amount:    Dollars

The Industrial Development Authority of the County of Apache, an Arizona nonprofit corporation designated as a political subdivision under the laws of the State of Arizona (the “Authority”), for value received, hereby promises to pay (but only out of Receipts and Revenues of the Authority from the Loan Agreement as such term is defined in the hereinafter defined Indenture) to the registered owner identified above (the “holder”) or registered assigns, on the maturity date set forth above, the principal amount set forth above and to pay (but only out of the Receipts and Revenues of the Authority from the Loan Agreement) interest on the balance of said principal amount from time to time remaining unpaid from and including the date hereof until payment of said principal amount has been made or duly provided for, at the rates and on the dates determined as provided in the Indenture of Trust, dated as of November 1, 2013 (the “Indenture”), between the Authority and U.S. Bank Trust National Association, as trustee (together with any successor trustee, the “Trustee”), except as the provisions set forth in the Indenture with respect to redemption, tender or acceleration prior to maturity may become applicable hereto.

All capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Indenture.

Interest payments on this Bond shall be made by the Trustee to the holder hereof as of the close of business on the Record Date with respect to each Interest Payment Date and shall be paid (i) by check drawn upon the Trustee and mailed to the Owners of such Bonds as of the close of business on the Record Date with respect to each interest payment date at the registered addresses of such Owners as they shall appear as of the close of business on such Record Date on the registration books maintained pursuant to the terms of the Indenture, notwithstanding the cancellation of this 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 this Bond, such defaulted interest shall be paid to the Owners in whose name this 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

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more than fifteen (15) days or less than ten (10) days prior to the date of payment of such defaulted interest.

Notwithstanding the foregoing, upon request to the Trustee by an Owner of not less than $1,000,000 in aggregate principal amount of Bonds, interest on such Bonds and, after presentation and surrender of such Bonds, the principal thereof shall be paid to such Owner by wire transfer to the account maintained within the continental United States specified by such Owner or, if such Owner maintains an account with the entity acting as Trustee, by deposit into such account; provided that if the Interest Rate Mode is the Commercial Paper Rate, the Daily Rate or the Weekly Rate, interest payable on this Bond shall, at the written request of the registered owner, received by the Trustee at least one Business Day prior to the applicable Record Date (or on or one Business Day prior to an Interest Payment Date if the Interest Rate Mode is the Commercial Paper Rate), be payable to the registered owner in immediately available funds by wire transfer to a bank account of such registered owner within the United States or by deposit into a bank account maintained with the Trustee, in either case, to the bank account number of such owner specified in such written request and entered by the Trustee on the Bond Register; provided further, however, that if the Interest Rate Mode is the Commercial Paper Rate, interest on any Bond payable on the Interest Payment Date following the end of the Commercial Paper Rate Period shall be paid only upon presentation and surrender of such Bond at the Principal Office of the Trustee. 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. Principal of and premium, if any, on this Bond shall be payable to the Owners of this Bond upon presentation and surrender of this Bond at the Principal Office of the Trustee.

This Bond is one of the duly authorized The Industrial Development Authority of the County of Apache Industrial Development Revenue Bonds, 2013 Series A (Tucson Electric Power Company Springerville Project) (the “Bonds”) of the Authority, aggregating One Hundred Million Dollars ($100,000,000) in principal amount, issued under and pursuant to the Constitution and laws of the State of Arizona, particularly Title 35, Chapter 5, Arizona Revised Statutes, as amended (the “Act”), and the Indenture of Trust, dated as of November 1, 2013 (the “Indenture”), between the Authority and U.S. Bank Trust National Association, as trustee (together with any successor thereto, the “Trustee”). Pursuant to the Loan Agreement, dated as of November 1, 2013 (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 refinance a portion of the costs of the acquisition, construction, improvement and equipping of the Facilities.

Neither Apache 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 Apache 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

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obligations of the Authority payable solely from the Receipts and Revenues of the Authority from the Loan Agreement and other moneys pledged therefor under the Indenture.

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

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

In the manner provided in, and subject to the provisions of, the Indenture, the term of this Bond will be divided into consecutive Rate Periods during each of which this Bond shall bear interest at either the Lender Rate, the Commercial Paper Rate, the Daily Rate, the Weekly Rate, the Ten Year Call Term Rate, the Five Year Call Term Rate or the No Call Term Rate. The initial Rate Period for this Bond shall be a Lender Rate Period and during such initial Rate Period this Bond shall bear interest at a Lender Rate. The subsequent Rate Period(s) and interest rate(s) for this Bond shall be determined in accordance with the provisions of the Indenture.

The Bonds will be subject to optional, extraordinary optional and mandatory redemption prior to maturity, and to optional and mandatory tender for purchase and remarketing in certain circumstances, all as described in the Indenture.

If an Event of Default shall occur, the principal of all Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Indenture.

The Bonds are issuable as fully registered bonds without coupons in the denominations prescribed by the Indenture.

This Bond is transferable or exchangeable for other authorized denominations by the holder hereof, in person or by its attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations, including the limitations applicable during Lender Rate Periods, and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon any such transfer, a new fully registered Bond or Bonds, of an authorized denomination or authorized denominations and for the same aggregate principal amount, will be issued to the transferee in exchange herefor.

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The Authority, the Trustee and the Company may deem and treat the holder hereof as the absolute owner hereof for all purposes, and the Authority, the Trustee and the Company shall not be affected by any notice to the contrary.

The rights and obligations of the Authority, of the Company and of the holders of the Bonds may be modified or amended at any time in the manner, to the extent, and upon the terms provided in the Indenture, which provide, in certain circumstances, for modifications and amendments without the consent of, or prior notice to, the holders of the Bonds.

As provided in the Indenture and subject to certain limitations therein set forth, this Bond or any portion of the principal amount thereof 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 moneys and/or Government Obligations as provided in the Indenture.

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 Owners of the Bonds. The 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.

The Indenture and this Bond shall be governed by and construed in accordance with the laws of the State of Arizona; provided, however, that the laws of the State of New York shall govern the construction and enforcement of the rights and duties of the Trustee under the Indenture, the construction of provisions in the Indenture related to payments or actions required on holidays and the computation of any period of grace provided for under the Indenture.

It is hereby certified that all of the conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Act and by the Constitution and statutes of the State of Arizona and that the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Constitution or statutes of the State of Arizona.

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

IN WITNESS WHEREOF, the Authority has caused this Bond to be executed in its name and on its behalf by the facsimile signatures of the Authorized Officers of the Authority set forth below.

THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE COUNTY OF APACHE

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By:     Authorized Officer of the Authority

By:     Authorized Officer of the Authority

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EXHIBIT B

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

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

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

Dated:_______________ _______________________________________

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

[Form of DTC Legend]

[Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”) or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC, ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, inasmuch as the registered owner hereof, Cede & Co., has an interest herein.]

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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 Signatory

Date of Authentication: ______________________

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EX-4.B

Exhibit 4(b)

LOAN AGREEMENT(2013 Series A)

between

THE INDUSTRIAL DEVELOPMENT AUTHORITY
OF THE COUNTY OF APACHE

and

TUCSON ELECTRIC POWER COMPANY

Dated as of November 1, 2013

Relating To

Industrial Development Revenue Bonds,
2013 Series A
(Tucson Electric Power Company Springerville 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	3
ARTICLE III	THE FACILITIES	3
Section 3.01.	Ownership of the Facilities	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	5
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.	Purchase Payments	5
Section 5.03.	Payments Assigned; Obligation Absolute	5
Section 5.04.	Payment of Expenses	6
Section 5.05.	Indemnification	6
Section 5.06.	Payment of Taxes; Discharge of Liens	7
ARTICLE VI	SPECIAL COVENANTS	7
Section 6.01.	Maintenance of Legal Existence	7
Section 6.02.	Permits or Licenses	9
Section 6.03.	Authority's Access to Facilities	9
Section 6.04.	Tax-Exempt Status of Interest on Bonds	9
Section 6.05.	Use of Facilities	10
Section 6.06.	Financing Statements	10
ARTICLE VII	ASSIGNMENT, LEASING AND SELLING	10
Section 7.01.	Conditions	10
Section 7.02.	Instrument Furnished to the Authority and Trustee	13
Section 7.03.	Limitation	13
ARTICLE VIII	EVENTS OF DEFAULT AND REMEDIES	13
Section 8.01.	Events of Default	13
Section 8.02.	Force Majeure	14
Section 8.03.	Remedies	14

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Section 8.04.	No Remedy Exclusive	15
Section 8.05.	Reimbursement of Attorneys' and Agents' Fees	15
Section 8.06.	Waiver of Breach	15
ARTICLE IX	REDEMPTION OF BONDS	15
Section 9.01.	Redemption of Bonds	15
Section 9.02.	Compliance with the Indenture	16
ARTICLE X	MISCELLANEOUS	16
Section 10.01.	Term of Agreement	16
Section 10.02.	Notices	16
Section 10.03.	Parties in Interest	17
Section 10.04.	Amendments	17
Section 10.05.	Counterparts	17
Section 10.06.	Severability	17
Section 10.07.	Governing Law	17
Section 10.08.	Notice Regarding Cancellation of Contracts	18
Section 10.09.	U.S.A. Patriot Act	18

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LOAN AGREEMENT

THIS LOAN AGREEMENT (2013 Series A), dated as of November 1, 2013 (this “Agreement”), between THE INDUSTRIAL DEVELOPMENT AUTHORITY OF THE COUNTY OF APACHE, 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 Apache 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 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 $100,000,000 aggregate principal amount of The Industrial Development Authority of the County of Apache Industrial Development Revenue Bonds, 1983 Series A (Tucson Electric Power Company Springerville Project) all of which are currently outstanding (the “1983 Bonds”); and

WHEREAS, the Authority loaned proceeds of the 1983 Bonds to the Company to finance a portion of the costs of certain facilities for the furnishing of electric energy (the “Facilities”) as more fully described in Exhibit A hereto; and

WHEREAS, in December 1985, the Company transferred title to the Facilities to the Company’s wholly-owned subsidiary, San Carlos Resources, Inc., an Arizona corporation (“San Carlos”), but retains entitlements to all of the capacity and energy associated with the Facilities and other components of Unit 2 of the Springerville Generating Station; and

WHEREAS, the Authority proposes to issue and sell $100,000,000 aggregate principal amount of The Industrial Development Authority of the County of Apache Industrial Development Revenue Bonds, 2013 Series A (Tucson Electric Power Company Springerville Project) (the “Bonds”), pursuant to an Indenture of Trust, dated as of November 1, 2013 (the “Indenture”), between the Authority and U.S. Bank Trust National Association, as trustee (the “Trustee”), for the purpose of refinancing the portion of the costs of Facilities previously financed with the proceeds of the 1983 Bonds; and

WHEREAS, the proceeds of the Bonds will be applied as set forth in Section 4.03 of this Agreement to redeem the 1983 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

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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;

(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

(f)All of the proceeds of the Bonds will be expended to refinance a portion of the Facilities through the redemption of the 1983 Bonds.

ARTICLE III
THE FACILITIES

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SECTION 3.01.Ownership of the Facilities. The facilities are the property of San Carlos. 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 exercise all of its rights, powers, elections and options under the Plant Agreements to 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 exercise all of its rights, powers, elections and options under the Plant Agreements to 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 its interests in the same or cause San Carlos to sell or dispose of the same, and within a reasonable time shall endeavor to effectuate such sale or disposition.

The Company may, subject to the provisions of Section 6.05 hereof, at its own expense remodel or cause San Carlos to remodel, as appropriate, 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 exercise all of its rights, powers, elections and options under the Plant Agreements to 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

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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 1983 Bonds to be applied upon the redemption of the 1983 Bonds, to reimburse, as directed by the Company, the issuer of the letter of credit held by such trustee for such issuer’s payment of a drawing to be used to pay the redemption price of the 1983 Bonds or, if for any reason the proceeds of such drawing shall be insufficient to pay the redemption price of the 1983 Bonds, to the payment of the 1983 Bonds upon the redemption thereof.

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.Purchase Payments. On each applicable Purchase Date, the Company shall pay to the Trustee as Purchase Payments for deposit in the Company Fund established under Section 5.07 of the Indenture amounts sufficient and in sufficient time to enable the Trustee to deliver the purchase price of Bonds payable pursuant to Section 5.03 of

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the Indenture; provided, however, that the obligation of the Company to make any Purchase Payment hereunder shall be deemed to have been reduced and satisfied by the amount of moneys, if any, (a) then on deposit in the Remarketing Proceeds Account of the Purchase Fund established under the Indenture, and (b) paid by a Credit Facility Issuer to the Trustee for such payment in respect of the Bonds.

SECTION 5.03.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 5.04, Section 5.05, 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 and Purchase 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 Purchase 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 5.04.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 IX 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. In addition, the Company shall pay, when due, the Authority Administration Fee.

SECTION 5.05.Indemnification. The Company releases the Authority, the Trustee, the County of Apache, Arizona and their directors, officers, employees and agents from, agrees that the Authority, the Trustee and the County of Apache, Arizona, shall not be liable for, and agrees to indemnify and hold the Authority, the Trustee, the County of Apache, 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

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case of the Authority and the County of Apache, Arizona, as a result of the gross negligence or willful misconduct of the Authority or the County of Apache, Arizona or their respective directors, officers, employees and agents.

The Company will indemnify and hold the Authority, the Trustee and the County of Apache, 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 or the Plant, 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 Apache, Arizona, as a result of the gross negligence or willful misconduct of the Authority or the County of Apache, Arizona.

The Company will indemnify and hold the Authority and the County of Apache, 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.

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SECTION 5.06.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 and Purchase 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 Purchase 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.

ARTICLE VI
SPECIAL COVENANTS

SECTION 6.01.Maintenance of Legal Existence. Except as permitted in this Section 6.01, each of the Company and San Carlos 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: (i) 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 and Section 5.02 hereof; and (ii) during any Lender Rate Period, a written statement of the Lender or, if an Administrative Agent shall have been appointed, the Administrative Agent, to the effect that such action is permitted under the Lender Mode Covenants Agreement. 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; provided that, during any Lender Rate Period, such release and discharge shall be subject to the written consent of the Lender, or, if an Administrative Agent shall have been appointed, the Administrative Agent. 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

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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 and Section 5.02 hereof, and the transferee shall not be required to assume any obligations hereunder to such extent other than the obligations under Section 5.01 and Section 5.02 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.

Subject to conditions and limitations set forth in the Tax Agreement, the Company may cause San Carlos to consolidate with or merge with or into another entity organized under the laws of the United States of America, any state thereof or the District of Columbia, or to sell, transfer or otherwise dispose of all of its assets, as or substantially as an entirety, to any entity; provided, however, that (a) if, in connection with any such transaction, the Company shall engage in any transaction contemplated in Section 7.01, all the conditions set forth in said Section 7.01 shall have been satisfied; or (b) if otherwise, the surviving or resulting entity (if other than San Carlos or the Company) or the transferee entity (if other than the Company), as the case may be, prior to or simultaneously with such merger, consolidation, sale, transfer or other disposition, assumes all obligations of San Carlos under the Plant Agreements.

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.

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.

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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 Company shall exercise all of its rights, powers, elections and options under the Plant Agreements to provide for the Authority to have, upon appropriate prior notice to the Company, 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.

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

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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 8.08 of the Indenture and agrees to perform all duties imposed on it by such Section 8.08, by this Section and by the Tax Agreement. Insofar as Section 8.08 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 8.08 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 8.08 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 exercise all of its rights, powers, elections and options under the Plant Agreements to 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.

ARTICLE VII
ASSIGNMENT, LEASING AND SELLING

SECTION 7.01.Conditions. Subject to conditions and limitations set forth in the Tax Agreement, the Company’s interest in this Agreement may be assigned as a whole or in part, the Company’s investment in San Carlos may be sold, transferred or otherwise disposed of as a whole or in part and the interest of either San Carlos or (to the extent that the Facilities shall be property of the Company) the Company, 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

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from its primary liability for its obligations under Section 5.01 and Section 5.02 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 investment in San Carlos shall be sold, transferred, or otherwise disposed of as a whole or in part or (iii)(A) 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 (B) 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 and Section 5.02 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 and Section 5.02 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.

Anything herein to the contrary notwithstanding, (i) 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 and (ii) during any Lender Rate Period, the Company shall not be released and discharged from any of its obligations under Section 5.01 and Section 5.02 hereof

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without the prior written consent of the Lender, or, if an Administrative Agent shall have been appointed, the Administrative Agent.

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

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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.

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 5.03 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 or Purchase Payment, which failure shall have resulted in an “Event of Default” under clause (a), (b) or (c) of Section 10.01 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

(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

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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 5.02, Section 5.04, Section 5.06 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.

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(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

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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 IX 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.

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 IX of the Indenture and until all payments required under this Agreement shall have been made. Notwithstanding the foregoing, the covenants contained in Sections 5.04, 5.05, 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 Ryley, Carlock & Applewhite PC, One North Central Avenue, Phoenix, Arizona 85004, Attention: William Wilder; 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.

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,

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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 Apache 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 Apache 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 15.09 of the Indenture, construed as provided in Section 15.07 of the Indenture, shall apply to this Agreement as if contained herein.

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

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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.

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 APACHE

By:/s/ John V. Lang____________________

Name: John V. Lang

Title:Authorized Officer of the Authority

TUCSON ELECTRIC POWER COMPANY

By:/s/ Kentton C. Grant_________________

Name: Kentton C. Grant

Title: Vice President and Treasurer

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 Springerville Project) (the "Bonds") issued by The Industrial Development Authority of the County of Apache and referred to in the foregoing Loan Agreement.

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Certain facilities at Unit 2 of the Springerville Generating Station, wholly-owned by Tucson Electric Power Company and/or its wholly-owned subsidiary, San Carlos Resources, Inc., 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 Apache and Tucson Electric Power Company.

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EX-4.C

Exhibit 4(c)

LENDER RATE MODE COVENANTS AGREEMENT

This Lender Rate Mode Covenants Agreement, dated as of November 1, 2013 (this “Agreement”), by and among TUCSON ELECTRIC POWER COMPANY, an Arizona corporation (the “Borrower”), and STI INSTITUTIONAL & GOVERNMENT, INC., a Delaware corporation (the “Lender”).

RECITALS

The Industrial Development Authority of the County of Apache, Arizona (the “Authority”) proposes to issue and sell $100,000,000 aggregate principal amount of The Industrial Development Authority of the County of Apache Industrial Development Revenue Bonds, 2013 Series A (Tucson Electric Power Company Springerville Project) (the “Bonds”), pursuant to an Indenture of Trust, dated as of November 1, 2013 (the “Indenture”), between the Authority and U.S. Bank Trust National Association, as trustee (the “Trustee”). The proceeds of the Bonds will be loaned to the Borrower in accordance with the Loan Agreement, dated as of November 1, 2013 (the “Loan Agreement”), between the Borrower and the Authority.

The Lender has agreed to purchase the Bonds, on the condition that the Borrower enter into this Agreement.

Now, therefore, to induce the Lender to purchase the Bonds, and for other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Borrower and the Lender hereby agree as follows:

ARTICLE I
DEFINITIONS

Section 1.01.Certain Defined Terms. In addition to the terms defined in the recitals and elsewhere in this Agreement, and the Indenture, the following terms shall have the following meanings:

“ACC” means the Arizona Corporation Commission.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“Anti-Terrorism Laws” has the meaning provided in Section 3.15(a).

“Authorized Officer” means the president, any vice president, the chief financial officer, the principal accounting officer, the treasurer or the controller of the Borrower.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Bond Documents” means the Bonds, the Indenture and the Loan Agreement.

“Bond Purchase Agreement” means the Bond Purchase Agreement, dated the day preceding the Closing Date, among the Borrower, the Lender and the Authority.

“Business Day” has the meaning set forth in the Indenture.

“Closing Date” means November 14, 2013.

“Code” means the Internal Revenue Code of 1986, as amended from time to time and any successor statute thereto.

“Capital Lease Investment” of any Person means the aggregate outstanding capitalized amount of Capital Lease Obligations of the Borrower and the Consolidated Subsidiaries that are owned by such Person and in respect of which such Person has the right to receive all future payments to be made.

“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

“Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement (including, without limitation, any regulations adopted under the Dodd-Frank Act after the date of this Agreement and all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III), (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by the Lender, by any lending office of the Lender or by the Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

“Change in Control” means the failure of UNS Energy Corp. to own and control, of record and beneficially, directly or indirectly, Capital Stock of the Borrower representing 100% of the aggregate ordinary voting power of the Borrower, free and clear of all Liens.

“Consolidated Net Worth” means, at any date, the sum as of such date of (a) the par value (or value stated on the books of the Borrower) of all classes of Capital Stock of the Borrower and its Subsidiaries, excluding the Borrower’s Capital Stock owned by the Borrower and/or its Subsidiaries, plus (or minus in the case of a surplus deficit) (b) the amount of consolidated surplus, whether capital or earned, of the Borrower, determined in accordance with GAAP as of the date of determination (excluding the effect on the Borrower’s accumulated other comprehensive income/loss of the ongoing application of Accounting Standards Codification Topic 815).

“Consolidated Subsidiary” means, at any date, each Subsidiary the accounts of which would be consolidated with those of the Borrower in the Borrower’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date.

“Consolidated Total Capitalization” means, with respect to the Borrower at any time, the sum of Consolidated Net Worth and Consolidated Total Indebtedness of the Borrower at such time.

“Consolidated Total Indebtedness” means, as of the last day of any fiscal quarter, (a) the sum (without duplication) for the Borrower and the Consolidated Subsidiaries as of such day of (i) the aggregate outstanding principal amount of the Bonds, (ii) the aggregate outstanding principal amount of other Indebtedness for borrowed money (including Guarantees thereof) and (iii) the aggregate outstanding capitalized amount of Capital Lease Obligations, minus (b) the sum (without duplication) as of such day of (i) the aggregate outstanding capitalized amount of the Capital Lease Investments of the Borrower and the Consolidated Subsidiaries as of such day and (ii) to the extent included in clause (a)(ii) above, any Treasury Indebtedness of the Borrower and the Consolidated Subsidiaries as of such day, all as determined on a consolidated basis in accordance with GAAP; provided, however, that there shall be disregarded for purposes of the determination of Consolidated Total Indebtedness the aggregate outstanding principal amount of any Indebtedness for borrowed money of the Borrower or any of its Subsidiaries for which (1) cash in an amount sufficient to repay and discharge in full such Indebtedness on its scheduled maturity date or redemption date shall have been irrevocably deposited in trust with a trustee, escrow agent, paying agent or similar agent for the payment thereof on such maturity date or redemption date (as the case may be), and (2) the Borrower or such Subsidiary (as the case may be) shall have irrevocably instructed such trustee, escrow agent, paying agent or similar agent (as the case may be) to apply all such cash to the repayment and discharge of such Indebtedness on such maturity date or redemption date (as the case may be).

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Debtor Relief Laws” means the Bankruptcy Code of the United States and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency. reorganization or similar debtor relief laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Default Rate” means, for any day, the default rate of interest payable during a Lender Rate Period under the Indenture.

“Determination of Taxability” has the meaning set forth in the Indenture.

“Disclosure Documents” means (i) the Annual Report on Form 10-K of the Borrower for the fiscal year ended December 31, 2012, as filed with the SEC, (ii) the Quarterly Reports on Form 10-Q of the Borrower for the fiscal quarters ended March 31, 2013, June 30, 2013 and September 30, 2013, as filed with the SEC, and (iii) the Current Reports on Form 8-K of the Borrower as filed with the SEC on January 22, 2013, February 5, 2013, March 14, 2013, May 20, 2013, June 12, 2013, September 5, 2013, October 7, 2013 and November 1, 2013.

“Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203), as amended.

“dollars” or “$” refers to lawful money of the United States of America.

“Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Sections 302 and 303 of ERISA and Sections 412 and 430 of the Code, is treated as a single employer under Section 414 of the Code.

“ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) a determination that any Plan is in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA); (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC of any notice of its intent to institute proceedings to terminate any Plan or to appoint a trustee to administer any Plan under Section 4042 of ERISA or the providing of notice by a plan administrator of the intent to terminate any Plan under Section 4041 of ERISA; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

“Event of Default” with respect to this Agreement has the meaning assigned to that term in Section 6.01 of this Agreement.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Executive Order” has the meaning provided in Section 3.15(a).

“GAAP” means generally accepted accounting principles in the United States of America.

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

“Hedging Agreement” means any interest rate protection agreement, foreign currency exchange agreement or other interest or currency exchange rate hedging arrangement.

“Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable incurred in the ordinary course of business), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty and (j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances. The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

“Loan” means the loan made by the Authority to the Borrower pursuant to the Loan Agreement.

“Material Adverse Effect” means a material adverse effect on (a) the financial condition, assets, results of operations or business of the Borrower and the Subsidiaries taken as a whole, (b) the ability of the Borrower to perform any of its obligations under any Related Document or (c) the rights of or benefits available to the Lender under any Related Document.

“Material Indebtedness” means Indebtedness (other than the with respect to the Bonds), or obligations in respect of one or more Hedging Agreements, of any one or more of the Borrower and the Significant Subsidiaries in an aggregate principal amount exceeding $30,000,000; provided however, that, solely for purposes of Section 6.01(g) hereof, the contingent Guarantee obligation of the Borrower or a Significant Subsidiary in respect of Material Indebtedness of one of its subsidiaries that is not a Significant Subsidiary shall not constitute Material Indebtedness of the Borrower or such Significant Subsidiary unless and until such Guarantee obligation is no longer contingent. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if such Hedging Agreement were terminated at such time. “Material Indebtedness” shall not include at any time any Indebtedness that is non-recourse to the Borrower and its Significant Subsidiaries.

“Moody’s” means Moody’s Investors Service, Inc., or any successor thereto.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Obligations” means all amounts payable and all other obligations to be performed by the Borrower arising hereunder, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest thereon as provided herein or therein.

“Owner” has the meaning set forth in the Indenture.

“Patriot Act” has the meaning assigned to such term in Section 8.01.

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Sections 412 and 430 of the Code or Sections 302 and 303 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Rating Agencies” means each of Moody’s and S&P.

“Regulation D” means Regulation D of the Board as in effect from time to time.

“Regulation U” means Regulation U of the Board as in effect from time to time.

“Related Documents” means, collectively, this Agreement and the Bond Documents, all as may be amended, restated, supplemented or otherwise modified from time to time.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such Person and such Person’s Affiliates.

“Requirement of Law” means, as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or assets or to which such Person or any of its property or assets is subject.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any shares of any class of Capital Stock of the Borrower, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such shares of Capital Stock of the Borrower or any option, warrant or other right to acquire any such shares of Capital Stock of the Borrower.

“Sale Leaseback” means any transaction or series of related transactions pursuant to which the Borrower or any of its Subsidiaries sells, transfers or otherwise disposes of any property, real or personal, whether now owned or hereafter acquired, and thereafter rents or leases such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold, transferred or disposed of.

“San Carlos” means San Carlos Resources Inc., an Arizona corporation.

“S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services, LLC business, or any successor thereto.

“SEC” means the Securities and Exchange Commission.

“Significant Subsidiary” means (a) San Carlos, (b) any Subsidiary that directly or indirectly owns or Controls any other Significant Subsidiary and (c) any other Subsidiary of the Borrower whose direct or indirect proportionate share of consolidated total assets as of the end of the most recent fiscal quarter for which financial statements have been delivered pursuant to Section 4.01(a) or 4.01(b) was greater than or equal to 15% of the consolidated total assets as of such date of the Borrower and the Consolidated Subsidiaries, taken as a whole. For purposes of making the determinations required by this definition, revenues and assets of foreign Subsidiaries shall be converted into dollars at the rates used in preparing the consolidated balance sheet of the Borrower included in the applicable financial statements.

“Solvent” means, with respect to any Person, as of any date of determination, that (a) the amount of the “present fair saleable value” of the assets of such Person will, as of such date, exceed the amount of all “liabilities of such Person, contingent or otherwise”, as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of such Person will, as of such date, be greater than the amount that will be required to pay the liability of such Person on its debts as such debts become absolute and matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim” means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.

“subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled by the parent or one or more subsidiaries of the parent.

“Subsidiary” means any subsidiary of the Borrower.

“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority (including any interest or penalties or additions to tax imposed with respect thereto).

“Transactions” means the execution, delivery and performance by the Borrower of this Agreement and the other Related Documents, the issuance of the Bonds, the borrowing of the Loan and the use of the proceeds thereof.

“Treasury Indebtedness” means, with respect to any Person, the aggregate outstanding principal amount of Indebtedness of such Person and its subsidiaries that is owned by such Person or its subsidiaries and in respect of which such Person or one or more of its subsidiaries has the right to receive, pursuant to the terms of such Indebtedness, all future principal, interest and other payments to be made with respect thereto.

“Utility Business” means the business of producing, developing, generating, transmitting, distributing, selling or supplying electrical energy for any purpose, or any business incidental thereto or necessary in connection therewith, or any business reasonably desirable in connection therewith which the ACC or other utility regulatory body shall have authorized the Borrower to enter.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

Section 1.02..Computation of Time Periods. In this Agreement, in the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.”

Section 1.03.Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

Section 1.04.Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Lender that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (including the effects of the application or discontinuance of the application of accounting for the effects of regulation to all or any portion of the Borrower’s operations), or if the Lender notifies the Borrower the Lender requests an amendment to any provision hereof for such purpose, regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

Section 1.05.Pro Forma Calculations. All pro forma calculations permitted or required to be made by the Borrower or any Subsidiary pursuant to this Agreement shall (a) include only those adjustments that would be permitted or required by Regulation S-X under the Securities Act of 1933, as amended, and (b) be certified to by an Authorized Officer as having been prepared in good faith based upon assumptions believed to be reasonable.

ARTICLE II
CERTAIN PAYMENT OBLIGATIONS

Section 2.01.Certain Payment Obligations.

(a)The Borrower shall pay within thirty (30) days after written demand:

(i)if an Event of Defaultshall have occurred, all reasonable costs and expenses of the Lender (including, without limitation, all reasonable costs and expenses one counsel retained by the Lender) in connection with the enforcement (whether by means of legal proceedings or otherwise) of any of its rights under this Agreement, and the other Related Documents;

(ii)the reasonable fees and out‑of‑pocket expenses for counsel retained by the Lender in connection with advising the Lender as to its rights and responsibilities under this Agreement and the other Related Documents upon the occurrence of a Default or Event of Default or in connection with responding to requests from the Borrower for approvals, amendments, consents and waivers;

(iii)any amounts advanced by or on behalf of the Lender to the extent required to cure any Default, Event of Default or event of nonperformance hereunder or any Related Document, together with interest at the Default Rate; and

(iv)any other outstanding fees and costs due to the Lender under this Agreement.

(b)If at any time any Governmental Authority shall require revenue or other documentary stamps or any other tax in connection with the execution or delivery of this Agreement or other Related Documents, then, if the Borrower lawfully may pay for such stamps, taxes or fees, the Borrower shall pay, when due and payable, for all such stamps, taxes and fees, including interest and penalties thereon, and the Borrower agrees to save the Lender harmless from and against any and all liabilities with respect to or resulting from any delay of the Borrower in paying, or omission of the Borrower to pay, such stamps, taxes and fees hereunder.

Section 2.02.Increased Costs.

(a)If any Change in Law shall:

(i)impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, the Lender (except any such reserve requirement reflected in LIBOR, where applicable); or

(ii)impose on the Lender or the London interbank market any other condition affecting this Agreement or the Bonds;

and the result of any of the foregoing shall be to increase the cost to the Lender of purchasing or holding the Bonds or to reduce the amount of any sum received or receivable by the Lender hereunder, under the Bonds or under any Related Document (whether of principal, interest or otherwise), then, unless the Lender has caused the interest rate on the Bonds to be calculated with reference to the Base Rate as provided in the Indenture, the Borrower will pay to the Lender such additional amount or amounts as will compensate the Lender for such additional costs incurred or reduction suffered.

(b)If the Lender determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on the Lender’s capital or on the capital of the Lender’s holding company as a consequence of this Agreement or the Bonds, to a level below that which the Lender or its holding company could have achieved but for such Change in Law (taking into consideration the Lender’s policies and the policies of its holding company with respect to capital adequacy), then from time to time the Borrower will pay to the Lender such additional amount or amounts as will compensate the Lender or its holding company for any such reduction suffered.

(c)A certificate of the Lender forth the amount or amounts necessary to compensate the Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay the Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

(d)Failure or delay on the part of the Lender to demand compensation pursuant to this Section shall not constitute a waiver of the Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate the Lender pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that the Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of the Lender’s intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof.

Section 2.03.Default Interest. In the event any Obligation due hereunder (excluding interest and principal on the Bonds which shall be payable in accordance with the provisions of the Indenture) is not paid when due, such Obligation shall bear interest at the Default Rate until paid in full, which shall be payable by the Borrower to the Lender upon demand therefor.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lender as of the Closing Date as follows:

Section 3.01.Organization; Powers. The Borrower and each of its Consolidated Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite corporate, partnership, limited liability company or other applicable organizational power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business, and is in good standing, in every jurisdiction where such qualification is required.

Section 3.02.Authorization; Enforceability. The Transactions are within the Borrower’s organizational powers and have been duly authorized by all necessary corporate and, if required, stockholder action. Each of this Agreement and the Loan Agreement have been duly executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

Section 3.03.Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except for such approvals of the ACC that have been obtained and are in full force and effect, (b) will not violate any Requirement of Law, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any of its Consolidated Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Consolidated Subsidiaries, and (d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Consolidated Subsidiaries.

Section 3.04.Financial Condition; No Material Adverse Change; Secured Indebtedness.

(a)The audited consolidated balance sheet and related statements of income, stockholders’ equity and cash flows of the Borrower and its Consolidated Subsidiaries for the fiscal year ended December 31, 2012 and the most recent financial statements delivered by the Borrower pursuant to Section 4.01(a) or (b), in each case, present fairly, in all material respects, the financial position and results of operations and cash flows of the Borrower and its Consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements delivered pursuant to Section 4.01(a). Neither the Borrower nor any of its Consolidated Subsidiaries had, at the date of the most recent balance sheet referred to above, any Guarantee, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment, including any interest rate or foreign currency swap or exchange transaction, which, in any case, is material to the Borrower and its Consolidated Subsidiaries, taken as a whole, and which is not reflected in the foregoing statements or in the notes thereto. During the period from December 31, 2012 to and including the Closing Date there has been no sale, transfer or other disposition by the Borrower or any of its Consolidated Subsidiaries of any part of its business or property, and no purchase or other acquisition of any business or property (including any Capital Stock of any other Person), which, in either case, is material in relation to the consolidated financial condition of the Borrower and its Consolidated Subsidiaries taken as a whole at December 31, 2012.

(b)Except to the extent that any specific change is explicitly disclosed in the Disclosure Documents, since December 31, 2012, there has been no material adverse change in the financial condition, results of operations, business or prospects of the Borrower and its Consolidated Subsidiaries, taken as a whole.

Section 3.05.Properties.

(a)Other than as explicitly disclosed in the Disclosure Documents, each of the Borrower and its Consolidated Subsidiaries has good title to, or valid leasehold interests in, and enjoys peaceful and undisturbed possession of, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes.

(b)Each of the Borrower and its Consolidated Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

Section 3.06.Litigation and Environmental Matters.

(a)Except as explicitly disclosed in the Disclosure Documents, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any of its Consolidated Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, would, individually or in the aggregate, result in a Material Adverse Effect or (ii) that involve any of the Related Documents or the Transactions.

(b)Except as explicitly disclosed in the Disclosure Documents, and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither the Borrower nor any of its Consolidated Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability.

(c)Except as explicitly disclosed in the Disclosure Documents, there has been no change in the status of any matters disclosed in the Disclosure Documents that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

Section 3.07.Compliance with Laws and Agreements. Except as explicitly disclosed in the Disclosure Documents, each of the Borrower and its Consolidated Subsidiaries is in compliance with all Requirements of Law, including the Fair Labor Standards Act, the Americans with Disabilities Act, the Foreign Corrupt Practices Act and Anti-Terrorism Laws, applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the failure to be in compliance, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing.

Section 3.08.Federal Regulations. No part of the proceeds of the Bonds or the Loan will be used for “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U as now and from time to time hereafter in effect or for any purpose that violates the provisions of the regulations of the Board. If requested by the Lender, the Borrower will furnish to the Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1 referred to in Regulation U.

Section 3.09.Investment Company Status.

(a)Neither the Borrower nor any of its Consolidated Subsidiaries is an “investment company” or a company “controlled” by an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.

(b)The Borrower is not subject to regulation under any Requirement of Law (other than Regulation X of the Board and Requirements of Law pertaining to utility regulation) which limits its ability to incur Indebtedness.

Section 3.10.Taxes. Each of the Borrower and its Consolidated Subsidiaries has timely filed or caused to be filed all tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.

Section 3.11.ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan by an amount that has resulted or could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all such underfunded Plans by an amount that has resulted or could reasonably be expected to result in a Material Adverse Effect.

Section 3.12.Disclosure. The Borrower has disclosed to Lender all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the other reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Lender in connection with the negotiation of this Agreement or any other Related Document or delivered hereunder (as modified or supplemented by, and taken together with, other information so furnished) contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to forward looking statements, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time and notes that there can be no assurance that such expectations, beliefs or projections will be achieved or accomplished and that such projections are subject to an increasing degree of uncertainty as they relate to later periods of time.

Section 3.13.Solvency. On the Closing Date, the Borrower is Solvent.

Section 3.14.Labor Matters. There are no strikes or other labor disputes against the Borrower or any of its Subsidiaries pending or, to the knowledge of the Borrower, threatened that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to employees of the Borrower and its Subsidiaries have not been in violation of the Fair Labor Standards Act or any other applicable Requirement of Law dealing with such matters that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect. All payments due from the Borrower or any of its Subsidiaries on account of employee health and welfare insurance that (individually or in the aggregate) could reasonably be expected to have a Material Adverse Effect if not paid have been paid or accrued as a liability on the books of the Borrower or the relevant Subsidiary.

Section 3.15.Anti-Terrorism Laws.

(a)Neither the Borrower nor, to the knowledge of the Borrower, any of its Affiliates is in violation of any Requirement of Law relating to terrorism or money laundering (“Anti-Terrorism Laws”), including Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001 (the “Executive Order”), and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107‑56.

(b)Neither the Borrower nor, to the knowledge of the Borrower, any of its Affiliates is any of the following:

(i)a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order;

(ii)a Person owned or controlled by, or acting for or on behalf of, any Person that is listed on the Annex to, or is otherwise subject to the provisions of, the Executive Order;

(iii)a Person with whom the Borrower is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

(iv)a Person who commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order; or

(v)a Person that is named as a “specially designated national or blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website or any replacement website or other replacement official publication of such list.

(c)Neither the Borrower nor, to the knowledge of the Borrower, any of its Affiliates (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Person described in clause (b)(i), (ii), (iii) or (v) above or, to the knowledge of the Borrower, clause (b)(iv) above; (ii) deals in, or otherwise engages in any transaction relating to, any property or interest in property blocked pursuant to the Executive Order; or (iii) engages in or conspires to engage in any transaction that evades or avoids, or has the purposes of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

(d)No broker or other agent is acting for the benefit of the Borrower or any of its Affiliates, or benefiting in any capacity, in each case in connection with the Related Documents.

ARTICLE IV
AFFIRMATIVE COVENANTS

For as long as the Lender holds the Bonds, the Borrower covenants and agrees with the Lender that:

Section 4.01.Financial Statements; Ratings Change and Other Information. The Borrower will furnish to the Lender:

(a)as soon as available and in any event within sixty (60) days after the end of each of the first three fiscal quarterly periods of each fiscal year of the Borrower, or fifteen (15) days after the date on which its quarterly report for such fiscal quarterly period is to be filed with the SEC in order to have been considered filed on a timely basis, whichever is later, consolidated statements of income of the Borrower and its Consolidated Subsidiaries for such period and for the period from the beginning of the respective fiscal year to the end of such period, consolidated statements of cash flows of the Borrower and its Consolidated Subsidiaries from the beginning of the applicable fiscal year to the end of such period and the related consolidated balance sheets as of the end of such period, setting forth in each case in comparative form the corresponding consolidated figures for the corresponding period in the preceding fiscal year, accompanied by a certificate of an Authorized Officer, which certificate shall state that the financial statements fairly present in all material respects the consolidated financial condition and results of operations, as the case may be, of the Borrower and its Consolidated Subsidiaries in accordance with GAAP, consistently applied (except where noted), as of the end of, and for, such period (subject to normal year-end audit adjustments and the absence of footnotes);

(b)as soon as available and in any event within one hundred and five (105) days after the end of each fiscal year of the Borrower, or fifteen (15) days after the date on which its annual report for such fiscal year is to be filed with the SEC in order to have been considered filed on a timely basis, whichever is later, consolidated statements of income and cash flows of the Borrower and its Consolidated Subsidiaries for such year and the related consolidated balance sheets as of the end of such year, setting forth in each case in comparative form the corresponding consolidated figures for the preceding fiscal year, and accompanied by an opinion of independent public accountants of recognized national standing selected by the Borrower, which opinion shall not contain any qualification or exception as to the scope of such audit and shall state that the consolidated financial statements fairly present in all material respects the consolidated financial condition and results of operations of the Borrower and its Consolidated Subsidiaries as of the end of, and for, such fiscal year and have been prepared in accordance with GAAP, consistently applied (except where noted);

(c)concurrently with any delivery of financial statements under clause (a) or (b) above, a certificate of an Authorized Officer (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 5.04 (including, without limitation, a listing of any Indebtedness for borrowed money of the Borrower or any of its Subsidiaries that has been disregarded for purposes of the determination of Consolidated Total Indebtedness pursuant to the proviso contained in the definition thereof set forth in Section 1.01) and (iii) stating whether any change in GAAP or in the application thereof not disclosed in any prior such certificate has occurred since December 31, 2012 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;

(d)promptly upon their becoming available, copies of all registration statements (other than on Form S-8 or any successor form) and regular periodic reports, if any, that the Borrower shall have filed pursuant to Section 13(a) or 15 of the Exchange Act with the SEC (or any governmental agency substituted therefor) or filed with any national securities exchange;

(e)promptly upon the mailing thereof to the shareholders of the Borrower generally, copies of all financial statements, reports and proxy statements so mailed;

(f)promptly upon their becoming available, copies of all current reports on Form 8-K filed by the Borrower with the SEC, and all similar reports filed with any national securities exchange;

(g)promptly upon their becoming available, copies of (i) any notices of default under the documentation for any Sale Leaseback of the Borrower or any Consolidated Subsidiary, any notices of non-payment of rent or any other material amounts owing under any such Sale Leaseback documentation and any notices of acceleration of any amounts due under any such Sale Leaseback documentation; and (ii) any written notices from the ACC of non-compliance by the Borrower or any of its Consolidated Subsidiaries with any material ACC decision or with any other rules, regulations or orders of the ACC, and any written notices of any extraordinary audit or investigation by the ACC into the business, affairs or operations of the Borrower or any of its Consolidated Subsidiaries;

(h)as soon as practicable and in any event within five (5) Business Days after the Borrower receives written notice of an upgrading or a downgrading of any Indebtedness of the Borrower by any Rating Agency, a notice of such upgrading or downgrading; and

(i)if requested by the Lender, concurrently with any delivery of financial statements under clause (a) or (b) above, consolidating statements of income and cash flows for the applicable periods and the consolidating balance sheets as of the end of such periods, accompanied (i) in the case of a delivery of financial statements under clause (a) above, by a certificate of an Authorized Officer, which certificate shall state that such financial statements fairly present in all material respects the consolidating financial condition and results of operations, as the case may be, of the Borrower and its Consolidated Subsidiaries in accordance with GAAP, consistently applied (except where noted), as of the end of, and for, the applicable period (subject to normal year-end audit adjustments), and (ii) in the case of a delivery of financial statements under clause (b) above, by (A) a certificate of an Authorized Officer, which certificate shall state that such consolidating financial statements fairly present in all material respects the financial condition and results of operations of the Borrower and its Consolidated Subsidiaries as of the end of, and for, the applicable fiscal year and have been prepared in accordance with GAAP, consistently applied (except where noted), and (B) a certificate of the independent public accountants referred to in clause (b) above, which certificate should state that such consolidating financial statements are the consolidating financial statements that served as the basis for the audited consolidated financial statements in respect of which such accountants delivered the opinion referred to in such clause (b); and

(j)promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any Subsidiary, or compliance with the terms of any Related Document, as the Lender may reasonably request.

So long as the Borrower files periodic reports under the Exchange Act and the financial statements contained in any quarterly or annual reports filed with the SEC are prepared in accordance with the Exchange Act and the rules and regulations promulgated thereunder, such financial statements may be delivered by the Borrower in satisfaction of its obligations to deliver consolidated financial statements pursuant to clauses (a) or (b), as the case may be, of this Section 4.01.

Section 4.02.Notices of Material Events. The Borrower will furnish to the Lender prompt written notice of the following:

(a)the occurrence of any Default;

(b)the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Affiliate thereof as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;

(c)the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $30,000,000; and

(d)any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section shall be accompanied by a statement of an Authorized Officer or other executive officer of the Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

Section 4.03.Existence; Conduct of Business. The Borrower will, and will cause each of its Consolidated Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business, except to the extent the failure to do so could not reasonably be expected to result in a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 5.01.

Section 4.04.Payment of Obligations. The Borrower will, and will cause each of its Consolidated Subsidiaries to, pay its obligations, including Taxes and assessments (including water assessments by the Arizona State Land Department), that, if not paid, could reasonably be expected to result in a Material Adverse Effect, before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto to the extent required by and otherwise in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.

Section 4.05.Maintenance of Properties; Insurance. The Borrower will, and will cause each of its Consolidated Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted; provided that the Borrower or any of its Consolidated Subsidiaries may discontinue the operation of any of its properties to the extent, in the judgment of the Borrower, it is no longer advisable to operate such property, or to the extent the Borrower or such Subsidiary intends to sell or otherwise dispose of such property, which disposition is not prohibited by Section 5.02; and (b) maintain, with financially sound and reputable insurance companies, or through its own program of self-insurance, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.

Section 4.06.Books and Records; Inspection Rights. The Borrower will, and will cause each of its Consolidated Subsidiaries to, keep proper books of record and account in which entries are made of all dealings and transactions in relation to its business and activities, all in accordance with customary and prudent business practices. The Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Lender, upon reasonable prior notice, to visit and inspect its properties, and, subject to contractual or statutory limitations regarding confidential or proprietary information, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

Section 4.07.Compliance with Laws and Agreements. The Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property (including, without limitation, ERISA and Environmental Laws), in each case except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

Section 4.08.Use of Proceeds. The proceeds of the Loan and the Bonds will be used only for the purposes set forth in the Bond Documents. No part of the proceeds of the Loan or the Bonds will be used, whether directly or indirectly, for any purpose that entails a violation of any of the regulations of the Board, including Regulations U and X.

Section 4.09.Environmental Laws.

(a)The Borrower will, and will cause each of its Consolidated Subsidiaries to, comply with, and use commercially reasonable efforts to insure compliance by all tenants and subtenants, if any, with, all Environmental Laws, and will, and will cause each of its Consolidated Subsidiaries to, obtain and comply with and maintain, and use commercially reasonable efforts to insure that all tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, registrations or permits required by Environmental Laws, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

(b)The Borrower will, and will cause each of its Consolidated Subsidiaries to, conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under Environmental Laws, except to the extent that the failure to take such actions could not reasonably be expected to have a Material Adverse Effect, and promptly comply with all lawful orders and directives of all Governmental Authorities respecting Environmental Laws, except to the extent that the same are being contested in good faith by appropriate proceedings and the pendency of such proceedings could not reasonably be expected to have a Material Adverse Effect.

Section 4.10.Further Assurances. The Borrower will, and will cause each of its Consolidated Subsidiaries to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions, which may be required under any applicable law, or which the Lender may reasonably request, to effectuate the transactions contemplated by the Related Documents.

ARTICLE V
NEGATIVE COVENANTS

For as long as the Lender holds the Bonds, the Borrower covenants and agrees with the Lender that:

Section 5.01.Fundamental Changes.

(e)The Borrower will not, and will not permit any of its Consolidated Subsidiaries to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) its assets as an entirety or substantially as an entirety, or all or substantially all of the Capital Stock of any of its Consolidated Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Default shall have occurred and be continuing (i) any Person may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Consolidated Subsidiary may merge with any other Consolidated Subsidiary, and (iii) the Borrower may merge with or into or consolidate with or transfer its assets as an entirety or substantially as an entirety to any Person, so long as (A) immediately prior to and immediately after giving effect to such merger, consolidation or transfer, the Person with or into which the Borrower shall ultimately merge or consolidate or to whom the Borrower shall ultimately transfer its assets as an entirety or substantially as an entirety is in the Utility Business; (B) the Lender shall have determined (so long as such determination is exercised in good faith and after consultation with the Borrower) that the rating of the senior unsecured long-term Indebtedness of such Person that is not guaranteed and does not benefit from any other credit enhancement) of the surviving Person of any such merger, consolidation, acquisition or transfer of assets shall be at least BBB- or higher by S&P and Baa3 or higher by Moody’s (unless the requirements of this clause (B) shall have been waived by the Lender); provided that the requirement of this clause (B) shall be deemed to have been satisfied if, prior to the consummation of any such merger, consolidation or transfer, the Borrower shall have delivered written evidence from each such Rating Agency to the effect that, upon such merger, consolidation or transfer, the applicable rating of such surviving Person would be equal to or higher than the ratings specified in this clause (B); (C) in the case of any merger or consolidation or transfer of assets in which the Borrower is not the surviving corporation, the Person formed by any such consolidation or transfer of assets or into which the Borrower shall be merged or consolidated or to which such assets are transferred shall have executed an agreement in form reasonably satisfactory to the Lender containing an assumption by the surviving Person of the due and punctual performance of each obligation, agreement, covenant and condition of each of the Related Documents to be performed or complied with by the Borrower; and (D) the Lender shall have received an opinion of counsel, in form and substance reasonably satisfactory to the Lender and its counsel, with respect to the due authorization, execution, delivery, validity and enforceability of the assumption agreement referred to in clause (C) of this Section 5.01, and such other matters as the Lender may reasonably require. In the case of any merger, consolidation or transfer of assets permitted hereunder, the Lender shall upon the request of the Borrower deliver to the Trustee and the Authority a written statement to the effect that such action is permitted hereunder.

(f)The Borrower will not, and will not permit any of its Consolidated Subsidiaries to, engage to any material extent in any business other than the Utility Business.

Section 5.02.Sale of Assets.

(c)The Borrower will not, and will not permit any of its Consolidated Subsidiaries to, convey, sell, lease, assign, transfer or otherwise dispose of, or enter into any Sale Leaseback with respect to, any of its property, business or assets (including leasehold interests), whether now owned or hereafter acquired, except:

(i)inventory and other property in the ordinary course of business;

(ii)sales of accounts receivable;

(iii)property in connection with any securitization (e.g., stranded costs) or sale of assets required by law;

(iv)the Borrower and its Consolidated Subsidiaries may sell, transfer or otherwise dispose of other assets in transactions not permitted under any of clauses (i), (ii) and (iii) above; provided that the aggregate book value of all assets sold, transferred or otherwise disposed of by the Borrower and its Consolidated Subsidiaries pursuant to this clause (iv) during the term of this Agreement shall at no time exceed in the aggregate 15% of the consolidated assets of the Borrower as set forth in the most recent balance sheet of the Borrower delivered to the Lender pursuant to Section 4.01(a) or 4.01(b) hereof; and

(v)any sale of the Borrower’s assets as an entirety or substantially as an entirety in accordance with Section 5.01, provided that any assets of the Borrower not included in such sale shall be deemed to have been disposed of in a transaction subject to the limitations of this Section 5.02, including the percentage limitation set forth in clause (iv) above;

provided, that any Consolidated Subsidiary may convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets to the Borrower or any other Consolidated Subsidiary. Investments by the Borrower and the Consolidated Subsidiaries in, and contributions by the Borrower and the Consolidated Subsidiaries to, Consolidated Subsidiaries shall be deemed not to constitute transfers of assets subject to the limitations of this Section 5.02 to the extent such investments or contributions are made in cash.

(d)Without limitation of subsection (a) above, the Borrower will not, and will not permit any of its Consolidated Subsidiaries to, convey, sell, lease, assign, transfer or otherwise dispose of, or enter into any Sale Leaseback with respect to, all or substantially all of its generating assets (including leasehold interests), whether now owned or hereafter acquired, except as required by applicable law.

Section 5.03.Restricted Payments.

(c)The Borrower will not declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment at any time that any Default has occurred and is continuing or would occur as a result of such action, except that (i) the Borrower may declare and pay dividends with respect to its capital stock payable solely in additional shares of its common stock and (ii) the Borrower may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries.

(d)The Borrower will not, and will not permit any Consolidated Subsidiary to, directly or indirectly, purchase or acquire any Capital Stock, evidences of indebtedness or other securities (including any option, warrant or other right to acquire any of the foregoing) of, make any loans or advances to, Guarantee any obligations of, or make any investment or otherwise acquire any other interest in, any Affiliate of the Borrower (other than a Consolidated Subsidiary) (each of the foregoing, an “Affiliate Investment”), at any time that a Default has occurred and is continuing or, as a result of the making of such Affiliate Investment, would occur or would be deemed to occur pursuant to the next sentence. For purposes of determining whether a Default would be deemed to occur under Section 5.04 as a result of an Affiliate Investment, the applicable computations shall be made as if the Affiliate Investment were a dividend and did not result in the creation of any asset.

Section 5.04.Leverage Ratio. The Borrower will not permit the ratio of (a) Consolidated Total Indebtedness at the end of any fiscal quarter, commencing with the fiscal quarter ended September 30, 2013, to (b) Consolidated Total Capitalization at the end of such fiscal quarter, to be greater than 0.70 to 1.0.

Section 5.05.Transactions with Affiliates. The Borrower will not, and will not permit any of the Consolidated Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any property or assets from, or otherwise engage in any other transactions with, any of its Affiliates which are not Consolidated Subsidiaries, except, subject to Section 5.02 and the other terms and conditions contained in this Agreement and the other Related Documents, (a) at prices and on terms and conditions (i) not less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties or (ii) as approved by the ACC or the Federal Energy Regulatory Commission, (b) transactions between or among the Borrower and the Consolidated Subsidiaries not involving any other Affiliate, (c) any Restricted Payment permitted by Section 5.03(a), (d) shared corporate or administrative services and staffing with Affiliates, including accounting, legal, human resources and treasury operations, provided on customary terms for similarly situated companies, (e) tax sharing arrangements on customary terms for similarly situated companies, (f) customary fees paid to members of the board of directors of the Borrower and the Consolidated Subsidiaries who are not officers of the Borrower or any Subsidiary and (g) transactions to acquire, either through asset purchases, mergers or purchases of Capital Stock, the business and operations of Southwest Energy Solutions, Inc.

ARTICLE VI
EVENTS OF DEFAULT; REMEDIES

Section 6.01.Events of Default. The occurrence of any one or more of the following events (whatever the reason for such event and whether voluntary, involuntary, or effected by operation of law) shall constitute an Event of Default under this Agreement and a Mandatory Purchase Event under the Indenture:

(e)an “Event of Default” described in Section 8.01(a) of the Loan Agreement shall have occurred and be continuing;

(f)the Borrower shall fail to pay other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five (5) days;

(g)any representation or warranty made or deemed made by or on behalf of the Borrower or any Consolidated Subsidiary in this Agreement or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to this Agreement or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made;

(h)the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 4.02, 4.03 (with respect to the Borrower’s existence) or 4.08 or in Article V;

(i)the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (b) or (d) of this Article), and such failure shall continue unremedied for a period of thirty (30) days after notice thereof from the Lender to the Borrower;

(j)the Borrower or any Significant Subsidiary shall fail to make any payment of principal (regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable;

(k)any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the prepayment, repurchase, redemption (other than pursuant to provisions permitting the tendering of such Indebtedness from time to time for repurchase or redemption without regard to the occurrence or non-occurrence of any event or condition) or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness;

(l)an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Significant Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Significant Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;

(m)the Borrower or any Significant Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Significant Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(n)the Borrower or any Significant Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

(o)one or more judgments for the payment of money in an aggregate amount in excess of $30,000,000 shall be rendered against the Borrower, any Significant Subsidiary or any combination thereof and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Significant Subsidiary to enforce any such judgment;

(p)an ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, has resulted or could reasonably be expected to result in a Material Adverse Effect;

(q)any Change in Control shall occur; or

(r)any material provision of this Agreement or Section 5.01 or Section 5.02 of the Loan Agreement shall for any reason, except to the extent permitted by the express terms hereof or thereof, cease to be valid and binding on or enforceable against the Borrower, or the Borrower shall so assert in writing.

Section 6.02.Consequences of an Event of Default. If an Event of Default specified in Section 6.01 hereof shall occur and be continuing, the Lender may (1) notify the Trustee in writing that a Mandatory Purchase Event has occurred and is continuing and require that the Bonds be called for mandatory tender pursuant to Section 5.01(b)(v) of the Indenture; (2) pursue all remedies available to it by contract, at law or in equity, and (3) proceed under this Agreement, and, if an “Event of Default” shall have occurred and be continuing under the Indenture, to the extent therein provided, direct the Trustee to take action under the Indenture, in such order as the Lender may elect, and the Lender shall not have any obligation to proceed against any Person or exhaust any other remedy or remedies which it may have and without resorting to any other security, whether held by or available to the Lender.

Section 6.03.Rights and Remedies Cumulative; Non‑Waiver; etc. The enumeration of the rights and remedies of the Lender set forth in this Agreement is not intended to be exhaustive and the exercise by the Lender, of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given under this Agreement, under any Related Documents or under any other agreement between the Borrower and the Lender or that may now or hereafter exist in law or in equity or by suit or otherwise. No delay or failure to take action on the part of the Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. No express or implied waiver by the Lender of any Event of Default shall in any way be a waiver of any future or subsequent Event of Default. No course of dealing between the Borrower and the Lender or its agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the Related Documents or to constitute a waiver of any Event of Default. In case the Lender shall proceed to invoke any right, remedy or recourse permitted hereunder or under the Related Documents and shall thereafter elect to discontinue or abandon the same for any reason, the Lender shall have the unqualified right so to do and, in such event, the Borrower and the Lender shall be restored to their former positions with respect to the Obligations, the Related Documents and otherwise, and the rights, remedies, recourse and powers of the Lender hereunder shall continue as if the same had never been invoked.

ARTICLE VII
INDEMNIFICATION

Section 7.01.Indemnification. The Borrower agrees to indemnify the Lender, its affiliates and the respective directors, officers, agents and employees of the foregoing (each an “Indemnitee”) and hold each Indemnitee harmless from and against any and all liabilities, losses, penalties, damages, costs and expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) relating to or arising out of this Agreement or any Related Document or any actual or proposed use of proceeds of the Bonds; provided that no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee’s own gross negligence or willful misconduct as determined by a court of competent jurisdiction.

Section 7.02.Survival. The obligations of the Borrower under this Article VII shall survive the payment of the Bonds and the termination of this Agreement.

ARTICLE VIII
MISCELLANEOUS

Section 8.01.Patriot Act Notice. The Lender hereby notifies the Borrower that, pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001 (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Lender to identify the Borrower in accordance with the Patriot Act.

Section 8.02.Amendments and Waivers; Enforcement. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Borrower and the Lender.

Section 8.03.No Implied Waiver; Cumulative Remedies. No course of dealing and no delay or failure of the Lender in exercising any right, power or privilege under this Agreement or the other Related Documents shall affect any other or future exercise thereof or exercise of any right, power or privilege; nor shall any single or partial exercise of any such right, power or privilege or any abandonment or discontinuance of steps to enforce such a right, power or privilege preclude any further exercise thereof or of any other right, power or privilege. The rights and remedies of the Lender under this Agreement are cumulative and not exclusive of any rights or remedies which the Lender would otherwise have under any Related Document, at law or in equity.

Section 8.04.Notices. All notices, requests, demands, directions and other communications (collectively “notices”) under the provisions of this Agreement shall be in writing (including facsimile communication and email “pdf”), unless otherwise expressly permitted hereunder, and shall be sent by first‑class mail or overnight delivery and shall be deemed received as follows: (i) if by first class mail, five (5) days after mailing; (ii) if by overnight delivery, on the next Business Day; (iii) if by telephone, when given to a person who confirms such receipt; and (iv) if by facsimile or “.pdf”, when confirmation of receipt is obtained; provided that notices to the Borrower of a Default or Event of Default hereunder shall be made by first class mail or overnight delivery. All notices shall be sent to the applicable party at the such party’s address set forth on the signature pages attached hereto or in accordance with the last unrevoked written direction from such party to the other parties hereto.

Section 8.05.Costs and Expenses. The Borrower shall pay: (i) all reasonable out-of-pocket expenses incurred by the Lender and its affiliates (including the fees, charges and disbursements of counsel for the Lender including, without limitation, with respect to any opinions issued by such counsel with respect to the transactions contemplated hereby), in connection with any amendments, modifications or waivers of the provisions of this Agreement or any other Related Document (whether or not the transactions contemplated hereby or thereby shall be consummated); and (ii) all out-of-pocket expenses incurred by the Lender (including the fees, charges and disbursements of any counsel for the Lender), in connection with the enforcement or protection of its rights in connection with this Agreement and the other Related Documents, including its rights under this Section, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of the Bonds made hereunder.

Section 8.06.No Third‑Party Rights. Nothing in this Agreement, whether express or implied, shall be construed to give to any Person other than the parties hereto and any other Owner which becomes a party hereto in accordance with Section 8.12 hereof any legal or equitable right, remedy or claim under or in respect of this Agreement, which is intended for the sole and exclusive benefit of the parties hereto.

Section 8.07.Severability. The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

Section 8.08.GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.

(a)THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF ARIZONA.

(b)THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY TO THE EXCLUSIVEJURISDICTION THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c)EACH PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN SECTION 8.04 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO SECTION 8.04 (OR ITS ASSIGNMENT AND ACCEPTANCE), SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.

Section 8.09.WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY RELATED DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 8.10.Prior Understandings. This Agreement and the other Related Documents supersede all other prior understandings and agreements, whether written or oral, among the parties hereto relating to the transactions provided for herein and therein.

Section 8.11.Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument.

Section 8.12.Assignability. This Agreement is a continuing obligation and shall (i) be binding upon the Borrower and its successors, transferees and assigns and (ii) inure to the benefit of and be enforceable by the Lender and its successors; provided, however, that the Borrower shall not assign all or any part of this Agreement without the prior written consent of the Lender. The Lender may, in accordance with applicable law, from time to time assign, sell or transfer in whole or in part, this Agreement, its interest in the Bonds and the Related Documents, or grant participating interests therein, provided that if no Event of Default has occurred and is continuing, any such assignment, participation or sale or transfer of all or any portion of the Bonds shall be limited to a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act of 1933, as amended, shall be subject to the prior written approval of the Borrower, which approval shall not be unreasonably withheld, and, if the Lender proposes to transfer a portion of the Bonds, an appropriate amendment to this Agreement in form and substance satisfactory to the Borrower to reflect multiple Owners of the Bonds and decision making hereunder and the appointment of an Administrative Agent hereunder.

Section 8.13.Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

Section 8.14.Electronic Signatures. The parties agree that the electronic signature of a party to this Agreement shall be as valid as an original signature of such party and shall be effective to bind such party to this Agreement. The parties agree that any electronically signed document (including this Agreement) shall be deemed (i) to be “written” or “in writing,” (ii) to have been signed and (iii) to constitute a record established and maintained in the ordinary course of business and an original written record when printed from electronic files. Such paper copies or “printouts,” if introduced as evidence in any judicial, arbitral, mediation or administrative proceeding, will be admissible as between the parties to the same extent and under the same conditions as other original business records created and maintained in documentary form. Neither party shall contest the admissibility of true and accurate copies of electronically signed documents on the basis of the best evidence rule or as not satisfying the business records exception to the hearsay rule. For purposes hereof, “electronic signature” means a manually‑signed original signature that is then transmitted by electronic means; “transmitted by electronic means” means sent in the form of a facsimile or sent via the internet as a “pdf” (portable document format) or other replicating image attached to an e‑mail message; and, “electronically signed document” means a document transmitted by electronic means and containing, or to which there is affixed, an electronic signature.

Section 8.15.Calculation and Notice of Interest Rate. The Lender agrees to determine the interest rate on the Bonds and to provide notice thereof during the Initial Lender Rate Period in accordance with the provisions of the Indenture.

Section 8.16.Termination. Unless extended by an amendment to this Agreement entered in accordance with Section 8.02 hereof, this Agreement shall terminate and be of no further force and effect at any time subsequent to the end of the Initial Lender Rate Period (as defined in the Indenture); provided, however, that, if a Default or Event of Default shall have occurred and be continuing hereunder, this Agreement shall remain in effect until the Lender shall have been paid all amounts then due and owing on the Bonds held by it and all amounts payable hereunder.

[SIGNATURES BEGIN ON THE FOLLOWING PAGE.]

In Witness Whereof, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.

STI INSTITUTIONAL & GOVERNMENT, INC.

By:/s/ Andrew Johnson                                                

Name: Andrew Johnson

Title: Director

Address for Notices:

c/o SunTrust Robinson Humphrey

3333 Peachtree Rd. 8th Floor

Atlanta, GA 30326

Attention: Andrew Johnson, Director

TUCSON ELECTRIC POWER COMPANY

By:/s/ Kentton C. Grant                                               

Name: Kentton C. Grant

Title: Vice President and Treasurer

Address for Notices:

88 East Broadway Boulevard

Tucson, Arizona 85701

Attention: Treasurer

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